VERDANTIX FORECASTS THAT US SPENDING ON ENERGY, ENVIRONMENT & SUSTAINABILITY WILL BE LOCKED IN A LOW GROWTH TRAJECTORY UNTIL 2017

New York, June 19, 2013. Spending in the US market on energy, environment and sustainability initiatives by large corporations will grow at just 5% per annum until 2017, according to a new market size and forecast study from independent analyst firm Verdantix. Based on the proprietary Critical Moments® methodology, interviews with 500 energy and sustainability budget-holders and an analysis of more than 1,000 corporate initiatives, the model forecasts the US market will grow from $34.6 billion in 2012 to $43.6 billion in 2017.

“Large corporations in the US have no financial incentive to increase their investment in energy and sustainability beyond annual increases of 5%,” commented Patty Satkiewicz, Verdantix Industry Analyst and author of the report. “Policy on renewable energy, energy efficiency, GHG reporting and environmental compliance will not change. And low natural gas prices will keep downward pressure on electricity prices during the forecast period. CFO interest in energy management will not see an uptick. Suppliers into the corporate energy and environment market such as ABB, Eaton and SAIC need to plan for mid single digit organic growth over the next four years.”

The Verdantix market size and forecast model provides a rich data-set to help commercial leaders understand spending by more than 2,856 firms with $1 billion revenues in the US. The analysis tracks spending on 29 initiatives grouped into energy management, environment, health & safety, sustainability innovation, sustainable transport, strategy and risk management, and human capital. Highlights from the study:

Three industries dominate spending. In 2013 the oil and gas, utilities and retail sectors will account for 42% of total spend by US corporations on energy, EH&S and sustainability initiatives representing $15.4 billion. Technology, industrial engineering and pharmaceuticals are all $2 billion markets.

Energy management is the largest category of spend. US corporations will spend $13.9 billion on all aspects of energy management in 2013, compared with $13.1 billion on EH&S management, and $5.3 billion on sustainability strategy, branding and risk management.

Hidden spend on employees tops $12 billion. Cash-strapped firms are keeping a lot of activity in-house resulting in a $12.1 billion wage bill for energy, environment and sustainability management. The consulting market represents $6.8 billion and program management $102 billion.

Few industries will increase spend above 5%. Compound annual growth rates for virtually all industries are trapped in a 4% to 5% bracket for the 2012-2017 period. Only automotive (7%), food and beverage (6%) and chemicals (6%) will grow above the overall trend.

“CEOs love to talk about their commitments to sustainability, environmental protection and energy efficiency, but press releases are not followed up with extra cash commitments” commented David Metcalfe, Verdantix CEO. “Weather impacts in 2012 like Hurricane Sandy and the drought in the mid-West were wake up calls without being cash calls. For spending growth to reach double-digits the US economy would need to expand at more than 4% per annum, Congress would need to pass new regulations on energy efficiency and environmental compliance, and corporations would need to compete more intensively on sustainability innovation. We do not forecast that will happen.”