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Post-pandemic landscape ushers in era of green investment


Salient features: Report by Arthur D Little assesses how the crisis has transformed the green investment environment and stresses that now is time for organizations to pursue bold green transformation strategies previously considered too risky

In pre-pandemic times, progress towards transformational change remained remarkably slow, despite climate change and sustainability rising higher than ever before on large companies’ strategic agendas. Although Covid-19 may have temporarily pushed climate change off daily newsfeeds, 2020 was a year in which political ambitions towards addressing climate change started to look much more robust.

Arthur D Little (ADL), the leading management consultancy firm, expounds this viewpoint in their latest report entitled ‘The Green Gambit: Investing for corporate strategic advantage in the post-Covid-19 world’. The report assesses how the crisis has transformed the green investment environment and stresses that now is time for organisations to pursue bold green transformation strategies previously considered too risky.

As per the report’s findings, industrial companies should be well-positioned to capture success in this direction and contribute to the ecosystem as it addresses mega challenges based on three building blocks — winning technology on which breakthrough solutions critically depend, scale and scale-up capabilities to create lasting value, and capital to sustain rapid and successful development.
Crucially, this cycle was far from perfect in pre-pandemic times but key players are now conducting comprehensive re-evaluations and pursuing new or improved strategies.

“Recent events stemming from the pandemic have encouraged governments, corporates, and investors to take a fresh look at their priorities, and we are now seeing new drivers for green growth emerge’’, said Adnan Merhaba, Partner and Energy practice Lead at Arthur D Little MEI.

“Governments are exploring green investments as they transition to cleaner economies, investors are advancing their strategies through sustainability targets, and private equity firms are allocating more funds and monitoring the carbon footprints of companies they work with. These are encouraging signs, with many examples and proof-points indicating a successful long-term transformation that the Middle East will witness in due course.”

The report urges companies to focus on two imperatives as they strive to take advantage of greater volumes of better-connected investment funding.

Firstly, they should adopt new approaches to nurturing disruptive ventures that may be outside the normal core business. Secondly, they should work collaboratively to shift the entire business ecosystem, which is often needed to successfully deliver green initiatives.
The report also explores the positive benefits that organisations can capitalise upon through innovative funding options, for e.g. Special Purpose Acquisition Company (SPAC) route, which is an alternative way to raise capital and access public equity markets.

“To date, the majority of corporates to set-up innovative transformation programs have experienced varying outcomes, and the SPAC route is an effective way to invest in public ventures and overcome associated risks’’, added Merhaba. “From our perspective here at ADL, SPACs will offer vast opportunities to experience notable results whatever the scenario, propelling corporate ventures to greater heights and boosting their appeal both internally and to public investors.”

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