Sustainability Accounts for Over One Third of Business Innovation Investment in Portugal

Sustainability is no longer regarded as a complementary aspect of innovation. It has become one of the main drivers of business investment in Portugal. According to the Business Innovation and R&D Activities Dashboard, published by the Office for Strategy and Economic Studies (GEE) of the Portuguese Ministry of Economy, 35.7% of business expenditure on innovation is now directed towards activities with direct environmental benefits, representing an investment of more than €1.209 billion.

These findings highlight a structural shift in the way Portuguese businesses approach innovation. Sustainability, digitalisation and Research and Development (R&D) are now central to business growth strategies, reflecting the direction of both national and European public policy towards a more competitive, resilient and sustainable economy.

SUSTAINABILITY IS EMERGING AS A KEY DRIVER OF COMPETITIVENESS

The findings published by the GEE demonstrate that environmentally focused investment is no longer limited to isolated initiatives. Instead, it has become an integral part of companies’ innovation strategies.

In 2022, total expenditure on innovation activities reached €3.382 billion, representing an increase of 23.6% compared with 2020. More than one third of this investment was allocated to projects delivering positive environmental outcomes, demonstrating the growing integration of sustainability considerations into corporate investment decisions.

This reflects a broader trend across Europe, where the climate transition has evolved from being primarily a regulatory objective into a key driver of business competitiveness, value creation and access to funding.

LARGE ENTERPRISES CONTINUE TO LEAD THE WAY

While innovation is becoming increasingly widespread across the business landscape, the data reveals significant differences according to company size.

Among organisations employing 250 people or more, the innovation activity rate reaches 79.1%, confirming that larger businesses continue to account for a substantial share of investment in Research and Development, digital transformation and technological modernisation.

From a sectoral perspective, Information and Communication activities record the highest level of innovation (71.2%), followed by the financial and insurance sector (65.6%). These figures demonstrate that technological innovation continues to play a decisive role in transforming the Portuguese economy and strengthening long-term competitive advantage.

PUBLIC POLICY IS ACCELERATING THE TWIN TRANSITION

The progress observed across Portuguese businesses has also been supported by stronger public policies promoting innovation, sustainability and digital transformation.

Among the most significant initiatives are the Mobilising and Green Agendas for Business Innovation, funded through Portugal’s Recovery and Resilience Plan (RRP). These programmes encourage collaborative projects involving businesses and organisations from the National Scientific and Technological System, supporting the development of innovative technologies, strengthening national industrial capacity and enhancing the competitiveness of the Portuguese economy.

At the same time, the National Network of Digital Innovation Hubs has played an important role in helping businesses adopt emerging technologies such as Artificial Intelligence, cybersecurity, advanced computing and data analytics.

Together, these initiatives demonstrate that the green transition and digital transformation are becoming increasingly interconnected, forming two of the main pillars of both Portuguese and European industrial policy.

INNOVATION WILL BE THE DEFINING COMPETITIVE ADVANTAGE OF THE NEXT DECADE

The latest indicators published by the GEE confirm a clear structural trend: sustainable innovation is no longer simply a response to regulatory requirements. It has become a critical driver of business competitiveness.

This direction is also reflected in national and European funding programmes, which continue to prioritise projects capable of combining innovation, digitalisation, sustainability, decarbonisation and economic value creation.

For businesses, the ability to develop projects aligned with these priorities will be essential not only to strengthen competitiveness but also to maximise access to the funding opportunities expected over the coming years.

NOW IS THE TIME TO PREPARE THE NEXT GENERATION OF PROJECTS

The data clearly shows that business innovation in Portugal is evolving towards models increasingly driven by sustainability and technological adoption.

In an environment characterised by growing competitive pressures and rapidly changing markets, developing investment projects aligned with these priorities will enable businesses to respond more effectively to future funding opportunities while strengthening their position in an increasingly dynamic economic landscape.