COP26 has been a major milestone event for governments, corporations & citizens of the world, in realizing the impact of our existence on the environment. It has mobilized the private sector globally, with 5,200+ businesses & 450+ financial institutes, accounting for 40% of financial assets, committing to science-based net-zero targets. These commitments & growing awareness on net-zero places technology firms at the cusp of a breakthrough growth, driven by companies embedding sustainability in their business models, instead of focusing on standalone use cases. This is evident given more than 60% CXOs across industries focusing on sustainability when considering a digital project.
In this regard, Boston Consulting Group (BCG) has launched a new report titled, “The Next “Digital”: Unlocking $50 Billion Green Tech Opportunity”. To understand the growing trend of global leaders investing in ESG, BCG conducted a study comprising 850+ CXOs across industries as part of the ‘BCG Global Digital Transformation Survey 2021’. In addition to the survey, BCG conducted detailed interviews with climate-focused VC funds, technology and consulting firm leaders investing in ESG, and secondary market research.
The report highlights that green-tech growth is driven by the increasing adoption of sustainable use-cases across IoT (Internet of Things), cloud computing, data platforms & analytics, digital twin, and blockchain, indicating clear positive signs of a vast opportunity of US$45-55 Billion every year, which is expected to grow at 25-30% annually over the next five years.
The report indicates a clear positive sign - green-tech investments have increased from US$5 Billion in cumulative investments in 2016 to US$10 Billion in cumulative investments in 2021. For green-tech investors, IoT, analytics and cloud computing are the favourites, with each technology accounting for more than US$3 Billion in investments respectively. While the bulk of this growth is expected in developed economies in North America and Europe, Asia is also expected to grow rapidly with various countries, including India, committing to net-zero targets.
While this growth is massive across business cases, green tech in the digital supply chain is the most critical use-case, followed by energy optimization solutions across offices & manufacturing facilities. Banks & investment firms are also leading the race with the rapid adoption of green solutions like climate risk monitoring systems and customer-facing products like green mortgages, carbon tracking credit cards, etc. On the retail front, giants are investing massively in transparency in ESG reporting, regenerative farming & e2e traceability solutions (farm to customer) for their products.
Sreyssha George, Managing Director and Partner, BCG India, said “Despite the growing interest and demand by companies, green tech in India is still at a nascent stage. Estimated to reach a US$45-55 Billion market by 2027, the industry will require greater innovation and investment to support this tremendous growth. Tech companies must focus on building a strong portfolio of sustainability products, by identifying priority use cases for its clients, to capture this opportunity and disrupt the market.”
A copy of the report can be downloaded here