Growth in the markets for L&T’s services is outperforming long-term, general economic growth. A number of trends are affecting demand for L&T’s services:
· increasingly stringent environmental legislation
· growing material and energy efficiency requirements
· changes in public sector service production and
· efforts to combat climate change.
From consumption to recycling
A resource-efficient Europe is one of the key programmes in the EU strategy for 2020. This programme will accelerate EU’s transition from a consumer society to a recycling society. Waste management and recycling play a major role in exploring ways of replacing virgin raw materials with secondary raw materials, and of curbing climate change. Waste is the raw material of the future.
The most effective way to drive a recycling society is to enact laws that promote the use of secondary raw materials and to foster strict compliance with the waste hierarchy. To ensure compliance with the hierarchy, targets must be set for the recycling of waste fractions, and consumers must be provided with the opportunity to sort waste at source. Other factors promoting recycling include regulations on producer liability and the recycling of packaging materials.
Energy road map shows the way to renewable energy growth
In an effort to combat climate change, the EU has made a commitment to significantly promoting the use of renewable fuels. In Finland, renewable energy must account for 38 per cent of end use by 2020 instead of the current 30 per cent. According to the EU Energy Road Map 2050, renewable energy should account for more than half of EU’s energy production in 2050. Before 2050, targets will be set for 2030.
Energy efficiency equals resource efficiency
Besides environmental management and renewable energy use, measures aimed at enhancing energy efficiency also increase resource efficiency. A one-percent reduction in EU energy consumption would result in 50 fewer coal-fired power plants. With determined energy saving efforts, energy demand could be reduced by up to 40 per cent from the peak level.
Energy-saving requirements boost demand for property maintenance services. Stricter norms and building regulations improve the energy efficiency of new buildings, but half of the building stock that will be in use in 2050 has already been built. For this reason, it is important to improve the energy efficiency of the existing building stock. Buildings account for some 40 per cent of Finns’ energy consumption and for about a third of all carbon dioxide emissions.
Winds of change in the labour markets
While the commercial market accounts for approximately one half of the overall cleaning services and property maintenance market in Finland, the proportion is growing with the increasing popularity of outsourcing. At about 20 per cent, the rate at which public sector support services in Finland are outsourced is clearly lower than in most other EU member states. However, the retirement of the baby boom generation and the need for greater operational efficiency will accelerate outsourcing. Market consolidation continues in Finland and Sweden alike.
Special features of non-Finnish markets
Sweden has a much higher rate of public sector outsourcing than Finland. In fact, cleaning and office support services are, almost without exception, provided in extensive packages. Customers expect the service provider to show an innovative approach to developing new support services. Environmental values are also quickly gaining in significance.
Latvia is recovering from a deep economic crisis, which has left a mark both on environmental care and cleaning. Waste legislation is being harmonised for compliance with the EU Waste Directive, which will bolster Latvia’s recycling and final disposal markets. Riga’s geographic location is crucial to trade in secondary raw materials.
Interest is growing in Russia towards environmental management, and both private and public environmental management investments are in the pipeline. Legislation does not yet fully support waste management and recycling. In the Moscow region, waste volumes continue to grow and the sector offers huge growth potential.