European businesses need to double low carbon spending to be on track with the EU’s target of reaching net zero by 2050.
That’s the suggestion from a new report published by non-profit CDP and global management consulting firm Oliver Wyman, which say European companies reported a total of €124 billion (£104bn) in new low carbon investments last year, making up 12% of their capital expenditure (CAPEX) spending on average.
However, the study notes this needs to more than double to 25% per year to be aligned with the 2050 goal.
The report reveals 882 stock-listed European companies reported €59 billion (£49.5bn) of new low carbon capital investments and €65 billion (54.5bn) in new research and development spend last year, with this largely spread across investment in electric vehicle technologies, renewable energy, grid infrastructure and demand-side response programs for intelligent energy use.
It highlights current low carbon investment is concentrated in a few key sectors, with more than 90% of investment being spent by transport, energy and materials companies – it stresses more investment is needed in breakthrough technologies such as carbon capture and storage.
Steven Tebbe, Managing Director of CDP Europe, said: “European companies are making significant investments in transformational low carbon technologies that can help the EU deliver its climate neutrality target by 2050. Across many types of investment, the business case for transitioning businesses onto a low carbon pathway is clear and the opportunities vast.
“But overall current investment levels are still short of putting European firms on track for net zero emissions. For industries where decarbonisation is more challenging, there is a serious need for financial markets and policymakers to create better conditions for low carbon investment and deliver stronger incentives to drive investment into breakthrough technologies, where capital expenditure is often high and returns long-term.”