How do businesses view investment in low-carbon technologies?

Recently, there has been much talk of the threat to targets aimed at achieving climate neutrality, as well as increased use of fossil fuels. It may therefore seem that investment in cleaner energy sources is losing momentum. Peter Bakker, CEO of the World Business Council for Sustainable Development, says that despite geopolitical pressures and economic obstacles, companies continue to invest in the transition to net zero. The primary motivation is not simply blind compliance with rules and regulations, but the desire to gain a competitive advantage, build resilience and secure sustainable, long-term growth.

The findings of the Business Breakthrough Barometer survey show that 91% of participating business leaders believe their companies maintained or increased investment in measures related to the transition to carbon neutrality over the past year.

According to Bakker, businesses are now already in the investment and implementation phase. This is despite regulators in some countries scaling back their climate ambitions. In his view, the risks posed by climate change represent a significant business risk, and reducing the negative impact is the main driver. The Barometer findings support this: 92% of executives believe that if they did not act now to support the transition to climate neutrality, the costs would ultimately exceed the investment in low-carbon technologies.

The biggest obstacle is not regulation, but an unpredictable policy environment

The right combination of favourable conditions is an essential foundation for increasing investment. These include a stable and predictable policy environment, access to affordable clean energy and growing demand for low-carbon solutions. These prerequisites create the right conditions for industrial transformation.

Germany was presented as an example of an ideal environment. Thanks to its national target of 100% renewable energy by 2035, strong planning for grid infrastructure and clear incentives for hydrogen projects and energy storage, it attracted nearly EUR 37 billion in clean energy investment in 2023.

However, some policy measures send mixed signals. One example is EU climate policy, whose original aim was to support the development of a market for sustainable products. European climate policies are now mired in uncertainty, weakening the market signals businesses rely on to invest with confidence.

According to the Barometer findings, as many as  94% of respondents said that supportive policies for the transition are among the most critical factors in investment planning. This means governments must create conditions in which market participants can operate with confidence. A path to stable investment planning lies in putting consistent frameworks, demand signals and infrastructure plans in place. If these signals are absent, capital looks elsewhere.