WELSH BUSINESS AND OPPORTUNITIES IN THE GREEN ECONOMY

Is Wales taking advantage of opportunities within the fast growing green economy?

According to a survey of 103 businesses across Wales by the Carbon Trust, it seems not.

Their research showed that:

• while 75% of decision makers considered enhanced corporate reputation as the major company benefit of the green economy, only 30% expected it to increase profits.
• only 27% of businesses in Wales are currently investing money in research and development of green products and services.
• when asked what businesses need to have in place to ensure they can harness green growth as a commercial opportunity, the most important factor is visionary leadership, with 63% of business leaders saying its essential.
• access to investment capital was also viewed by 44% in Wales as a critical determining factor.
• the majority of Welsh decision makers think legislation to reduce energy consumption and carbon emissions is needed (72%). Increasing consumer demand for eco friendly products and services (63%) and advances in new green technology (62%) are seen as other important drivers for the green economy.

These are mixed results at best, especially as Carbon Trust Wales argue that “the low carbon market, already worth £3 trillion a year globally, is set to increase by 25% over the next four years.”

This is not too surprising to those of us that follow trends in the green industry. For example, a  recent report by GreenBiz showed ten major trends by US companies:

• Consumer Giants Awaken to Green — big push by consumer package good companies to make bold sustainability commitments
• Companies Aim for 'Zero' — growth of zero-waste goals and achievements by big companies
• The Developing World Yanks the Supply-Chain — key issues like "conflict minerals" and sustainable palm oil rattling supply chains
• Greener Transport Gains Speed — new green technologies coming to market — not just electric vehicles and plug-in cars, but also trucks, trains, and planes
• Sustainable Food Sourcing Becomes Palatable — more commitments by big companies, led by Walmart
• Metrics and Standards Become the Rule — a surge of interest on sustainability standards and on standardizing metrics for assessing companies
• Greener Chemistry Comes Out of the Lab — combination of toxics headlines around the world and surge of new products from Big Chemical makes this a mainstream market
• Companies Learn to Close the Loop — the growth of new products made from recycled materials
• Water Footprinting Makes a Splash — the growth of methodologies and technologies for understanding the footprint of a product, facility, or company
• Bioplastics Become Material — a steady flow of new materials emerges, made of corn to coconut to cashews.

In addition, China’s central government is currently thrashing out details of how best to steer towards greener growth as part of closed-door discussions aimed at finalising the country’s 12th Five Year Plan (2011-2015), which will be announced in March. According to reports, "The plan is expected to become China’s first national plan to shift the development agenda decisively toward a pattern of green growth, accelerating the country’s efforts at green modernization. Expect ‘establishing a low carbon society’ to be a key political slogan over the next five years."

Therefore, if the two major economies of the World are driving forward with green initiatives at both a government and business level, then surely we must be taking advantages here in Wales?

Yet one has to wonder why there is no significant support programme to support the development of a greener Wales. If there is a need for access to investment capital, is there a priority given by the Finance Wales managed JEREMIE fund to green project applications for financial support?

Surely this should have been a priority for European structural funding in Wales and yet, with the exception of the Low Carbon Research Institute which is largely a university project, there has been no significant programme developed to ensure that businesses are incentivised to become greener?

It would seem that, to date there has been far too much rhetoric on green issues by the Assembly Government and very little action. If Wales is to take advantage of the massive opportunities being created by the expansion of the green economy, then more must been done to ensure that our business sector is at the forefront of any new developments.

THE CONTINUING DECLINE OF WELSH ENTERPRISE

No of enterprise births in Wales 2002-2009

Last week, I tweeted on the latest enterprise data for Wales.

Fortunately, I have now been able to get some time over the weekend to examine the more detailed longitudinal data for Wales between 2002 and 2009.

The picture, I am sad to say, is not good for the Welsh economy.

During the period 2002 and 2004, the number of new enterprise births in Wales went up from 8,970 to 11,525, an increase of 28 per cent.

In contrast, in the period 2004-2009, there has been a 28 per cent DECREASE in the number of new businesses being created in Wales.

As I have said before, surely it is not a coincidence that the Entrepreneurship Action Plan, with its strategy for increasing entrepreneurial activity, was at its zenith during this period before being abolished in 2005.

So what is the impact on the Welsh economy?

Let’s look at the scenario where Wales could have maintained the 2004 level of new enterprise creation supported by an Entrepreneurship Action Plan that was the envy of the rest of Europe.

This would have resulted in 9,540 more business births in Wales over the period 2004-2009.

Assuming enterprise survival rates over this period and that all of these reach the VAT threshold for sales in the first year (£70,000), then it would have resulted in a minimum £500 million in additional sales in the Welsh economy in 2009, much of it spent within local communities.

One would also assume that each business would also be employing at least one person as well as the entrepreneur.

Now I am sure that the cynics amongst you will argue that it would have been difficult to maintain that level of enterprise birth during this period BUT it is worth noting that during the period 2004-2009, the number of new businesses in Scotland grew by 2 per cent.

Clearly, something has gone drastically wrong for Wales to go from having one of the most admired entrepreneurship strategies in Europe (which was copied by the European Commission itself) to having one of the worst performances for business start-ups in the UK.

One can only hope that the next Assembly Government, if it serious about revitalising the Welsh economy, makes the development of a supportive environment for entrepreneurs a key priority.