Newsletter Subscription


Wednesday, Oct 22, 2014


The Costs of Sustainability in the Global Defense Industry

In spite of increasing awareness among customers about eco-friendly products, and the visible benefits of sustainability across the defense industry, there are a number of significant impediments to the deeper integration of sustainability into the defense sector, according to this new report: Sustainability in the Global Defense Industry 2013-2017: Trends and Opportunities, Budgets, Defense Industry Procurement, and Marketing Initiatives. Foremost amongst these is the general perception of the costliness of, or otherwise unnecessary nature of the investment in, sustainability measures. However, research suggests that such initiatives may in fact save money, and that sustainability should be considered more rigorously by those seeking to maximize the potential of the global defense market.

Financial & Political Pressure Limits Sustainability
A significant portion of respondents from this study – which saw an extensive online survey taken in June and July 2013 by 103 senior global defense industry buyers and suppliers, who cover C-level, directors, managers, technical and professional staff – identify ‘difficult to obtain finances’ and ‘lack of budget’ as key barriers to the implementation of sustainability.

As the top global defense spenders’ defense budgets are becoming increasingly constricted by broader economic pressures, the allocation of funds towards sustainability is often met with stiff opposition, as policy makers have apprehensions about its impact – despite thorough assessment, planning, budgeting, and projections. According to one senior executive of a defense organization in Europe:

‘Though implementation of sustainability is one of the top priorities for us, the European debt crisis has affected our long term business planning. Under present scenario, business survival and short term financial pressure are important priorities, than to focus on sustainability’.

Furthermore, a C-level executive of a military defense contractor company operating in the European region claimed that:

‘Implementation of sustainability within our organization requires increased capital investments. Under these uncertain economic conditions, smaller firms like us with stringent budget constraints cannot focus on sustainability’.

In addition to these sentiments being expressed by industry insiders, they reflect the broader political and economic context of our times, with the majority of policy-makers and bureaucrats focusing on the process of decision-making such as business expenses and growth plans, at the expense of environmental issues. This therefore has a detrimental effect on the long term development of sustainability plans, and is a major concern for those concerned with sustainability in the global defense industry. Furthermore, fears of a double-dip recession, rising inflation in many emerging economies, and decreasing global defense expenditure have hurt investor community sentiments, including in the defense sector.

The Cost Saving Impact of Sustainability in the Global Defense Industry
Most companies evaluate any new initiative by its financial impact, and most associate sustainability with high costs of implementation and low returns, leaving only a minority considering sustainability to be an efficient tool to cut costs. However, Strategic Defence Intelligence’s research suggests that defense organizations expect – on average – to enjoy sustainability-related cost savings to be 3.4% of organizational expenditure.

As such, in addition to the moral compulsion towards eco-friendly measures, which can enhance reputation and attract new customers, it seems as though contrary to general perceptions, sustainability initiatives can have a positive effect on organizations in the global Defense industry, and that their proper analysis and implementation can reap financial rewards.

This report is the result of an extensive online survey drawn from an exclusive panel of leading defense industry companies, analyzing sustainability and its implementation in relation to the defense industry. It offers in-depth analysis of:

  • Sustainability implementation: understands sustainability implementation levels across the industry and their impact on profitability.
  • Market-specific growth opportunities: showcases top growth regions so companies can allocate their marketing activities and budgets effectively.
  • Leading business concerns: identifies the leading concerns in the implementation of sustainability and subsequent efforts to negate them.
  • Procurement expenditure trends: forecasts the possible change in expenditure and identifies the sustainable products and services that could attract investment.
  • Factors for supplier selection: demonstrates critical factors that influence supplier selection.
  • Green marketing initiatives: categorizes key marketing methods and channels for effective promotion.

This will facilitate:

  • Identification of the most prominent and universally accepted indices or practices used for measuring and monitoring sustainability implementation.
  • Understanding of the specific cost saving targets to be achieved when implementing sustainability.
  • Identification of the leading concerns faced by companies in the effective implementation of sustainable measures.
  • Development of effective procurement strategies through the identification of shifts in sustainability budgets, and key focus areas of projected expenditure.
  • Identification of the specific marketing strategies and channels companies use to promote green credentials.

Read more on ASDReports

Source : ASDReports - Market Research

Published on ASDNews: Jul 31, 2013

 

International Armoured Vehicles 2015 Conference

Jan 26 - 30, 2015 - London, United Kingdom

Register More info


Unmanned Aerial Systems Conference

Nov 17 - 18, 2014 - London, United Kingdom

Register More info


Defence Logistics 2015 Conference

Feb 18 - 20, 2015 - London, United Kingdom

Register More info


© 2004-2014 • ASDNews • be the first to know • contact usterms & conditionsprivacy policyadvertisingfaqs