Shell soon to follow Philips in sustainability equity-investments
January 15, 2009
For large corporations it is incredibly difficult to react on the rapidly shifting demands of today’s society. They are often too big, too inward-looking and too conservative to come with the innovations that the market and other stakeholders ask for. But small niche-players, like Tendris, do know how to anticipate to those demands. Tendris has even done its trick twice. First it founded and set up Oxxio, a leading green energy supplier in the Netherlands, and sold it after three years for € 137 million. And Tendris is now conquering the world with the Lemnis LED light, an invention that has even been recognized as a Technical Pioneer by the World Economic Forum.
The speed at which niche-players come up with new green solutions is impossible to follow for industry mastodonts. They acknowledge that sustainability serves as a platform for business innovation, but the simply lack the entrepreneurial spirit that is required. The coming trend will be that large companies will acquire this competence by buying small-sized sustainability entrepreneurs in order to keep up with their changing environment and anticipate on shifting stakeholder demands. The advantage for the acquired companies is that the multinationals with their resources and experience can help the small niche-players with scaling up their businesses. We predict that Shell will follow this example and that it will buy the very promising Econcern, a company that delivers innovative products and services for a sustainable energy supply. Shell is still strongly leaning on its fossil-fuel business model and focuses on reducing the impact of this traditional energy-approach. Shell does invest in renewable energy, but the level of investment is dwarfed by investment in regular business (£4bn on renewables over 10 years compares with well over double this amount being poured into oil and gas investment annually).Econcern, on the other hand, is putting sustainability at the core of its business and is leading the radical shift towards a new way of energy supply. Although new shareholders have strengthened the company’s balance sheet last year, the amount and the size of opportunities may exceed the financing capacity of the company sooner than it would hope. Given the fact that the strategic shareholders may not walk away from a good return, a partner with the exceptional financial power and synergy potential of Shell may offer an attractive fit.
It wouldn’t surprise us if such a deal would materialise any time soon. What do you think? Would it be a win-win?
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