By Mike Guggenheimer, President & CEO
Since RSC Bio Solutions sits on the leading edge with sustainable technologies and solutions, I am often asked for my view of whether the trend is accelerating and by how much. In a recent conversation with a fellow leader looking at macro trends on this topic, I found myself landing on a clear view which until recently was more opaque. I will preface this as my perspective, and I would welcome the opportunity to compare notes, discuss and share more about what is happening.
Essentially, there are a handful of factors that are causing the move towards green tech – which have been developing slowly for years – to pick up steam. . . and one new twist that I believe is adding the most horsepower to the trend and really starting to change the pace of change.
For much of our nearly 40 years in this space, the use of sustainable and green solutions was limited to a niche of lead users and early adopters. Initial industry solutions (e.g., early bio lubricants) were very expensive and performed poorly, so companies would only adopt them when regulated. But over the last decade the following trends have transitioned the niche into a viable segment, which is growing faster than the rest of the market:
- Technological improvements – green tech that works – sometimes better than – conventional counterparts.
- Experience curve, new materials, and economies of scale bringing costs down.
- Increasing regulations, globally.
- Increasing incentives, savings, and other rewards for adopting green tech
- Social media and speed of global communication increasing the risk associated with a negative environmental event or exposure.
- More prominent corporate sustainability goals and objectives are an integral part of long-term strategy and a tool to impact internal culture and talent acquisition as well as company financial performance.
There are other factors for sure, but these have been the top factors from RSC Bio’s perspective. They are continuing to gain momentum as more companies we work with are driven by these issues.
So, what is the new factor starting to dwarf the 6 above? The investor community. The most notable example is BlackRock, an investor controlling around $9 trillion. The largest and arguably the most influential investor in the world. For the second year in a row, BlackRock CEO Larry Fink, in his annual letter has made the argument that a focus on sustainability goals will be a defining factor in companies’ long-term prospects because “the creation of sustainable index investments has enabled a massive acceleration of capital towards companies better prepared to address climate risk.” He is not saying that BlackRock wants to invest in companies that focus on sustainability because it is the right thing today—he is saying those companies are the better bet in the long run and this factor will lead to a “fundamental reshaping of finance”. Companies focusing on sustainability goals are already outperforming their peers and the world’s largest investor expects that to accelerate.
So, yes, there are several factors I see supporting the adoption of green tech such as continuous improvement in performance and cost, as well as increasing regulations and incentives. But, with an increasing awareness that green (environmental) technology, as part of an overall approach to sustainability, leads to superior long term financial performance, the adoption curve is going to rapidly accelerate in the years ahead. Companies that fail to recognize this, will be left in the dust.