Performance of cleantech sector shining through bleak economic outlook

3 September 2012

Business leaders in the cleantech sector remain very positive about their prospects for growth over the next 12 months according to the latest research from the Grant Thornton International Business Report (IBR). The global survey finds the sector expanding rapidly despite pervading economic uncertainties such as the eurozone crisis.

The IBR survey indicates that net 68% of cleantech businesses expect to increase revenues over the next 12 months compared with 52% of businesses globally. Similarly, net 62% expect profits to rise compared with just 38% globally. Moreover, cleantech leaders appear to be investing in the long-term growth of their businesses: 52% expect to increase R&D spend over the next 12 months and 51% plan to invest more in plant & machinery, both well above the global averages.

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This optimism is borne out by the growth rates experienced in the sector over recent years. According to a recent WWF report , the sector globally expanded by 31% per annum in 2009 and 2010. Although it slowed to 10% in 2011, this is still well above average GDP growth rates. In China the sector grew from $17.5 billion to $71.3 billion between 2008 and 2011, a rise of 77%. In the United States, the sector expanded by 17% between 2010 and 2011 to $46.3 billion.

Nathan Goode, global leader cleantech at Grant Thornton said: “The cleantech sector continues to demonstrate remarkable rates of growth, with economies such as China increasingly playing a leading role. Global economic uncertainty is weighing on short-term business growth prospects but the data suggests that dynamic businesses in the cleantech sector are willing to invest in bold growth plans to boost competitiveness.

“Demand for cleantech products and services is fairly robust. China, the United States and Europe account today for around 50% of total global output, but their share of cleantech output is nearer to 75% so we would expect them to drive future innovation and growth.”

The major constraint on expansion for cleantech businesses emerges as regulations/red tape, cited by 41% of businesses, compared to the all-sector average of 34%. A lack of skilled workers is cited as a growth constraint by a further 38% of businesses in the sector, ten percentage points up on the all-sector average. This scarcity of talent perhaps explains why 79% of businesses are offering workers a pay rise over the next 12 months, compared with just 68% of all businesses.

Nathan Goode added: “Cleantech is still a relatively young sector so it not surprising to see innovation outgrowing talent. However, with unemployment rates high, particularly in many mature markets, rapid growth in the sector clearly offers an opportunity for economies to boost employment and output. 

“Governments can help in this regard through targeted industry and energy policies. For example in South Korea, R&D and manufacturing incentives as well as energy efficiency and renewable energy targets have been introduced to attract investment.”

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Notes to editors
The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of over 12,000 businesses per year across 40 economies. This unique survey draws upon 20 years of trend data for most European participants and 10 years for many non-European economies. For more information, please visit: .

Data collection
Data collection is managed by Grant Thornton International's core research partner -Experian. Questionnaires are translated into local languages with each participating country
having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone.
IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 3,000 businesses across all industry sectors in May/June 2012. 123 interviews were conducted with cleantech businesses. The target respondents are chief executive officers, managing directors, chairmen or other senior executives.