According to a recent Ayming study, nearly 80% of companies devote one fifth of their development budget to sustainability-related concerns. Governments are not doing enough to encourage this, and the lack of subsidies for R&D makes it more difficult for businesses to prioritize long-term investment.
Ayming found that a resounding 78% of businesses gave sustainability up to 20% in their yearly budget, with nearly a third allocating around 11% and 20%.
Ayming polled 853 directors of innovation, research and development, chief financial officers, and executive officers from around the world in the summer of 2023 and discovered that this commitment was mostly driven by the effects that climate change events are already having on businesses.
Investment in sustainable development is mainly motivated by financial factors, with 47% citing reducing expenses and efficiency as their justification. This is because of the past several years of disastrous heatwaves throughout Europe, in addition to unprecedented rainfall and fires, that have destroyed lives and wrecked havoc on the business supply chains. As the crisis worsens, this will only escalate. However, many businesses are worried that, given the state of the economy, they won’t be able to rise to the occasion.
The large upfront cost and commitment necessary, according to 41% of respondents, is their biggest obstacle to pursuing sustainable innovation. Eighty-seven percent of them said they support open creativity and information sharing in relation to sustainability advances, which lowers the price of private development.
However, 33% of respondents stated that a barrier to their sustainability advancement was a lack of government support in terms to tax advantages and state funding.
Respondents from businesses of all sizes in Belgium, for instance, Canada, China, the Czech Republic, Germany, France, Ireland, Italy, Hungary, Netherlands, Poland, Portugal, the city of Singapore, Slovakia, Spain, the US, the UK, and seven industries—automotive, development, finance, manufacturing, finance, pharma, and technology—finally verified that inflation has driven up costs and severely harmed fragile profit margins.
This makes obtaining finance from other sources more crucial than ever. However, the hazardous stock and debt funding remain the most popular options, nearly tripling between 23% in 2022 to 41 percent in 2023. Self-funding decreased by a quarter during this time.
Majority of small as well as big companies rely substantially on federal or local funding at the same time. Over a quarter of respondents said they needed R&D tax credits, and 45% of large enterprises and 37% of smaller firms said they needed that source of money to make innovation that is sustainable happen. However, more and more people are realizing that these sources are insufficient.