TECHNOLOGY TRANSITIONS ARE ALWAYS TOUGH.
Fighting old tech doesn’t work as well as building new ones.
As the automobile and other forms of fossil fueled engines reshaped the country, anyone shooting horses to make way for the transportation future would have been in trouble, as would those who invested heavily in buggy whips and stagecoaches. For businesses that face large investments to adapt to such technology shifts, timing is everything.
We are now in the middle stage of a technology revolution focused on making energy, transportation and water more robust and efficient. As businesses leaders see this future, they invest in new ideas, technologies and approaches. Their investment ultimately benefits other businesses looking to these innovations, balancing future threats against current financial demands.
Large companies, that stand to save millions, help vendors design products to scale up so that they are more affordable, while developing services that make processes more transparent. This latter is especially important as it helps control outcomes of investments with long term horizons. The more those vendors invest in R&D (Research and Development), the better the outcomes.
Estimates by the Economist Intelligence Unit that the risk to global assets from climate change will be between $4.2 trillion and $43 trillion over the next ten years, or that Ceres reports that 190 large companies saved an average of $20 million each by instituting efficiency measures make executives and boards start to think in new ways.
A new report by Ethical Markets highlights the role of investment in R&D in developing such technologies. The report shows how new ‘green’ technologies touch more aspects of our economy than just energy.
Tim Nash, Sustainable Economist, provided the data on R&D for the report. He defined sustainable R&D by searching annual reports and Bloomberg. He attributed 100% of R&D to companies that are primarily in the sustainable business, such as solar companies, and 1/3rd for companies that did not itemize their research, but did report development of sustainable products or services in their annual report.
R&D is, by its very nature, part of a long term strategy. Research results in only a few potentially useful products or improvements, and development further defines those that have a viable market. As economies throughout the world stake a claim in these new markets, how much United States companies invest in that future is critically important. However, the United States invests far fewer in Sustainable R&D than most other large economies as a percentage of GPD, except China. GDP figures are from the World Bank, while the Green R&D are from the above mentioned Ethical Markets report.
There are likely many reasons for this, but one is a lack of public policy that sets a vision for a sustainable future for our companies and our people. The partisan nature has made such policies increasingly out of reach. Being sustainable — creating a country with a future for our children and grandchildren — is an undertaking that demands that we all engage in real proposals that can be implemented immediately. The horses of today are fossil fuels. Our goal should not be focused on a war between the fossil fuel industry and the new clean technologies. Like it or not, fossil fuels are going to have a part to play for a very long time.
But efficiency will ‘win’ because it is better: cheaper, more reliable, better for national security and cleaner. We can’t shoot the horses, but we can realize that the ride is changing and if we, as a country, don’t focus on investing in that future, we will be left behind.
