"Green" Innovations Favour New Employment

Companies that have introduced eco-friendly process innovations registered an up to five per cent larger growth in employment than companies that have introduced non-eco-related process innovations. Especially strong stimuli resulted from "green" innovations that lead to reductions in the consumption of material and energy. These are the findings of a recent study conducted by the Centre for

European Economic Research (ZEW) in Mannheim in cooperation with Prof. Jens Horbach from the University of Applied Sciences Augsburg. The study analyses the impact of eco-innovations on the employment behaviour of approximately 2,100 companies in Germany between 2006 and 2008.

The study employs information from the Mannheim Innovation Panel, a representative survey among German industrial companies. More than 6,700 companies have been asked about their innovation behaviour. About 2,100 indicated to have introduced eco-innovations within the survey period between 2006 and 2008. The study defines eco-innovations as product or process innovations with a positive impact on, e.g, the quality of air, water, or soil, or which have a low demand for resources, and protect the climate. The positive impact on the environment may be revealed within the production process of a material or a service, or even during the consumption of the product by the costumer.

The study shows that, all in all, eco-innovations lead towards an increase of the companies’ employment. Particularly many posts have been created by process innovations aiming at savings in the input of material and energy.  Within the assessment period, companies that had realised process innovations in order to save material on average had an increase in employment of 7.3 per cent. Companies which had introduced process innovations in order to save energy, even revealed a growth of nearly eight per cent. On the other hand, companies that have been innovative, but did not introduce "green" innovations, only had an increase in employment of three per cent. Companies that have not been innovative experienced an increase of 1.7 per cent.

"Companies can reduce costs by introducing eco-friendly process innovations, since there is a smaller input of resources or energy required. Furthermore, improvements in product quality are possible. In both cases, the competitiveness of innovative firms increases, there is an increase in sales and there is also an increase in their demand for personnel", says Dr. Klaus Rennings – researcher at ZEW and responsible for the study – explaining the connection between eco-innovations and employment.

Meanwhile, the study also shows that "green" innovations in the field of clean air and water do have an impact below average on the employment of innovating firms. "In this field, so-called end-of-pipe technologies are dominating", says Rennings. "These are eco-friendly innovations that are introduced at the end of the production process, e.g. air and water filters or catalysts. It seems that there are high costs implied, which is something that rather decreases the competitiveness of these firms."

For further information please contact

Dr. Klaus Rennings, Phone +49 621/1235-207, E-mail rennings@zew.de