A $10.3 trillion Investment Opportunity for Manufacturing Companies and Businesses With an Expected 9% Annual Growth Rate. 

The concept of achieving a net zero economy is gaining momentum globally and is becoming a prime investment opportunity. Countries, businesses, and investors increasingly recognise the urgency of addressing climate change. 

The Paris Agreement and other declarations, including the recent COP28 and national commitments such as the UK’s net zero target, provide a clear roadmap for action. Massive investments in the renewable sector have made it a significant catalyst for economic growth. 

A recent report commissioned by the Energy and Climate Intelligence Unit (ECIU) has shed light on the remarkable growth of the net zero sector, which saw a 9% increase in 2023, contributing £74 billion to the UK economy.

According to the study conducted by CBI Economics, with analysis from The Data City, net zero businesses, supply chains, and employee spending accounted for 3.8% of the overall UK economy. This burgeoning sector supported the equivalent of 765,700 full-time jobs, indicating its substantial role in driving employment and prosperity across the country.

The study, which encompassed a wide range of net zero businesses, including renewables, recycling, low-emissions vehicles, carbon capture, heating, building technologies, and agritech, found that net-zero jobs were higher paying and more productive than the broader economy, attracting billions in foreign investment and driving economic activity outside of London.

For instance, the impact of net zero activity on Scotland's economy was particularly noteworthy. It adds 5.7% to the GDP and supports 85,500 jobs, mainly due to the country's natural advantages in renewable energy resources such as wind power. A similar trend was found in Wales and the Midlands, which also emerged as solid regions for the net-zero economy.

However, despite the positive trajectory of the net zero sector, the report cautions against policy U-turns that could undermine investor confidence. Louise Hellem, chief economist at CBI, emphasises the immense opportunities the transition to net zero presents for the UK economy. She calls for a comprehensive net zero investment plan to address investment gaps in the green sector and implement policies to attract private finance.

With over £200 billion in public and private low-carbon investment since 2010 and ambitious targets for green job creation, the UK is poised to build a sustainable and prosperous net-zero economy. 

Besides the ECIU report, similar studies have shown that the net zero economy presents a unique opportunity for investment and growth. Recent predictions from Oxford Economics suggest that net zero industries could be worth $10.3 trillion to the global economy by 2050.

Similarly, a McKinsey Global Institute report found that the transformation of the global economy needed to achieve net-zero emissions by 2050 would be universal and significant, requiring $9.2 trillion in annual average spending on physical assets, $3.5 trillion more than today. 

The International Energy Agency (IEA), in its 2021 report, also found that to reach net zero emissions by 2050, annual clean energy investment worldwide will need to more than triple to around $4 trillion by 2030.

Besides the massive investments going into the sector that businesses can seek to take advantage of, a study conducted by The RoundUp.org shows that consumer behaviour and preferences are changing. Environmental considerations are increasingly becoming part of the buy-no-buy decision-making process in 2024.

According to the study, 78% of consumers feel that sustainability is important, and 55% are willing to pay more for eco-friendly brands. Furthermore, 84% of customers say poor environmental practices will alienate them from a brand or company. Regarding growth, sustainable products were found to have a 17% market share and a 32% growth share. This marked a 2.7x faster growth than those that were not.

In addition, the study found there is growing interest in researching and buying sustainable products online. Global Google searches for topics related to sustainable products increased by around 130% between 2017 and 2022, with the US in particular noting a 117% increase over the same time period.

With such statistics in mind and in the interest of contributing to a more sustainable world, manufacturing companies should take the opportunity to earn while contributing to a noble cause.