Even as greentech space is at a nascent stage, but there has been an increasing demand from investors and companies for green technologies and adoption of ESG (environmental, social governance) metrics, and so it has offered an opportunity of as much as $50 billion globally to technology companies, according to Boston Consulting Group (BCG).
BCG, in a report titled ‘The Next Digital: Unlocking $50 Billion Green Tech Opportunity” said that greentech will require much greater innovation and investment as it grows and as per its estimates, this space will become as large as $45-55 billion by 2027, accounting for around 1-1.5% of global information technology (IT) spending.
The report further showed that greentech is expected to grow at a CAGR (compounded annual growth rate) of 25-30% during this period.
From a technology standpoint, this growth will be predominantly fueled by IoT (internet of things) and green technologies in cloud computing, accounting for 40-50% of the overall market, the report said.
“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,” said Sreyssha George, Managing Director and Partner, BCG India.
The use of IoT will enable use-cases across multiple critical sustainability areas like green buildings and offices, carbon footprint management systems, water leakage detection, and management systems, and smart manufacturing and mining processes, among others, the report said.
Greentech investments have increased from $5 billion in cumulative investments in 2016 to $10 billion in cumulative investments in 2021, the report showed.
For greentech investors, IoT, analytics and cloud computing were the favorites, with each technology accounting for more than $3 billion in investments respectively, according to the report. Bulk of this growth is expected in developed economies in North America and Europe, but Asia is also expected to grow rapidly with various countries, including India, committing to net-zero targets.
Greentech in the digital supply chain is the most critical use case, followed by energy optimization solutions across offices and manufacturing facilities, the report said.
Banks and 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, among other products, according to the report.
On the retail front, according to the report, companies are investing heavily in transparency in ESG reporting, regenerative farming and end-to-end traceability solutions (farm to customer) for their products.