The UK is failing to adequately invest in low carbon products and services and risks falling behind international rivals such as Germany in the pursuit of ‘green growth’.

That is the conclusion of a new survey commissioned by the Carbon Trust, which today reveals that the majority of business leaders are reluctant to step up investment in green products and services, despite recognising that low carbon growth is essential to the long-term health of the economy.

The survey of more than 700 senior executives found that while 92 per cent believe green growth represents an opportunity for their business, only a third are actually investing money in the research and development of green products and services.

The green policy environment was widely blamed for the reluctance to invest with only one in eight respondents claiming the UK was the best prepared country for delivering green growth, compared to 34 per cent who said that Germany is leading the development of the low carbon economy.

Dr Neil Bentley, CBI Director of Business Environment, said that the government needed to step up efforts to deliver the kind of policy framework that will attract green investors.

In particular, he urged the government to move quickly to clear the backlog of delayed clean energy planning applications and finalise the details of flagship policies such as the proposed Electricity Market Reform, the Green Deal and the Green Investment Bank.

Tom Delay, chief executive of the Carbon Trust, warned that the failure to step up investment in green products and services risked derailing the UK’s fragile economic recovery.

“Green growth is the only show in town,” he said. “No other sector can drive the recovery. The consequences of British business failing to grasp this opportunity are almost too horrific to consider: anaemic growth, a jobless recovery and the risk of a return to the economics of boom and bust. We cannot afford to carry on as we did before.”

The survey also revealed that many businesses continue to see green investments as a marketing exercise, with more than three quarters of respondents arguing that the key benefit of ‘going green’ is to enhance their corporate reputation.

Meanwhile, fewer than a third recognised that having a ‘sustainable business plan’ in place can help to drive profits, despite government figures suggesting the environmental and low carbon market is worth over £112bn a year in the UK and is forecast to grow by 25 per cent over the next four years.

The survey was released to coincide with the launch of the Carbon Trust’s ‘Green Growth’ campaign, backed by business leaders keen to demonstrate how investments in low carbon initiatives are helping to deliver financial results.

Richard Evans, President of PepsiCo in the UK & Ireland, which is supporting the campaign, said that early adopters of greener business models were enjoying a wide range of benefits. “Sustainable businesses that invest in green economic growth can cut costs, drive innovation, reduce risk and motivate employees,” he said.

The campaign comes at a crucial time for the Carbon Trust, which is expected to find out within the next few weeks whether the government will continue to fund the advisory body.

The government placed the organisation under review as part of October’s comprehensive spending review, prompting speculation that the Carbon Trust could face deep budget cuts, be merged with other agencies such as the Energy Saving Trust, or be axed altogether as part of the government’s spending cuts programme.