Investors keen to profit from supporting the sustainable development agenda should be heartened by recent signals that the prospect of "green growth" as a strategic policy goal is becoming ever-more a reality at a global scale. While news flows around policy support can often run both hot and cold, there is an underlying current of increasing commitment to green solutions as a principle driver of economic growth.
"Will Blue and Yellow make Green?" was the headline question I posed shortly after the UK coalition government took shape in May. Much light has been cast on this matter since, and on balance there is positive news for green investors. Most recently, the spending review left key green sector themes relatively insulated from otherwise deep spending cuts. The renewables sector came out well, with the feed-in tariff for small-scale renewables left largely unscathed. Following the welcome news of job-creation in the UK wind sector, the spending review has made available £200 million to support low-carbon solutions including offshore wind technology and manufacturing infrastructure at port sites.
Meanwhile, the much-publicised Green Investment Bank (GIB) received formal go-ahead. Announced as part of the spending review, the government will initially capitalise the new institution with £1 billion of funding together with significant proceeds from the sale of public-owned assets. The government aims to have a fully-designed model for the GIB in place for launch in spring next year, however the intention is to attract several times the government's contribution from private sector investors seeking attractive opportunities in large-scale environmental infrastructure projects.
At the heart of these policy developments is a recognition of the strategic importance of low-carbon and sustainable growth to the UK economy as a whole. Chancellor George Osborne was clear in this regard when delivering the spending review to parliament in October: "When money is short, we should ruthlessly prioritise those areas of public spending which are most likely to support economic growth, including investments in our transport and green energy infrastructure, our science base and the skills and education of our citizens."
A similarly progressive sentiment is even more apparent further afield. In China, the state council released policy measures in October designed to accelerate the development of its seven 'new strategic industries' that have been identified as long-term growth drivers. The seven industries include energy saving and environmental protection, high-end equipment manufacturing such as high-speed rail, "new" energy incorporating renewables, and clean-energy vehicles. Research from Merrill Lynch estimates that the value-added of these industries will account for 8% of China's GDP by 2015 and 15% by 2020.
Ambitions for enhancing international competitiveness are without doubt a key driver of such policies. It is perhaps no surprise, for example, that the Chinese government sees an opportunity in new, emerging and low-emission technologies for its domestic vehicle manufacturers to compete with the established players in overseas markets. The South Korean government has been explicit about its expectations for its domestic green sectors in the global marketplace. As reported by the Economist, government officials aim to quadruple the country's share of the global market for clean-technology to 8% by 2013. To help achieve this, a five-year "green growth" strategy is allocating 2% of the country's GDP to promote related innovation.
At a corporate level, business leaders are acutely aware of the global opportunities. With revenues from General Electric's Ecomagination products growing at nearly twice the company average, in June the company announced a further US$10 billion worth investment to the strategy by 2015. Drawing parallels between corporate and government leadership, Jeff Immelt, the company CEO, said recently that "clean energy is a way to create jobs, a source of economic competitiveness, not an economic risk...this is a place where competitive countries are getting an advantage."
He has in recent past, of course, been a vocal critic of the lack of robust energy policy in his home country, the US. Indeed as well as the environmental costs of inhibiting progress towards carbon reduction targets, many commentators such as Mr Immelt now point towards the long-term economic and competitive disadvantages that stem from relatively weak policy support for green growth. A recent report from HSBC's Climate Change Centre of Excellence estimates that although the low-carbon economy should grow to around US$2.2 trillion by 2020, the US and EU will suffer a reduced market share.
Noting that "this reflects not just the wide differences in underlying growth rates across the globe – but also the diverging policy packages that governments are putting in place," research such as this is welcome to green investors. In time, and with the fruits of green growth beginning to emerge, the economic argument for low-carbon investment should provoke a renewed bout of policy development.
• Emma Howard Boyd is head of socially responsible investment and governance at Jupiter Asset Management
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