Each passing day, climate change is making us feel its presence a little more. As the growing pile of evidence mocks the sceptics and we inch closer to doom, the corporates have already begun charting out climate change as an unexplored market.
Last year at WEF Davos, Anand Mahindra had announced that “Climate change is the next century’s biggest financial and business opportunity”.
As governments ran to reform their agendas to better suit the impending environmental catastrophes, business sharks were also circling to find their anchor on climate crises that could bloom into profit-making ventures. Conventionally, climate change had been associated with expensive investments in cleaner and greener technologies and hence had often been sidelined by businesses who wanted no change in the status-quo and certainly no extra costs to bear.
But lately, many start-ups and large firms are realising the value of addressing climate change.
Emerging Opportunities in the Environmental Industry
Environmental Business International Inc. (EBI) is a California-based publishing and research company that generates strategic market intelligence on emerging opportunities in the Environmental Industry, Climate Change Industry, and the Green Economy. The Climate Change Business Journal produced by EBI estimated the United States’ climate adaptation and resilience services market at USD 650 million in 2018. Growth has been in the double digits and the forecast is for that rate to continue in the short term at 12-15 percent per year to at least 2022.
Climate Adaptation & Resilience is one of nine segments in the Climate Change Industry and at USD 1.7 billion, also includes Disaster Services and Climate Adaptation Equipment & Systems.
As a separate sector, Disaster Response contracting and security infrastructure construction like flood-proof housing are likely to exceed the USD 1.7 billion total as a dynamic market starts to take shape. There is huge scope for money to be minted even at the design stages of the construction.
The Start-up Scene
Some start-ups have been daring into entering the clean-tech industry headlong. Bill Gates has backed a Canadian start-up called Carbon Engineering that “pulls carbon dioxide out of the air by running it through specially formulated chemicals”.
Ocean-Based Climate Solutions has “created a device that stirs up water in the ocean to promote the growth of phytoplankton, which are algae that can take carbon dioxide out of the air and deliver it to the bottom of the sea in solid form”.
Another one, Charm Industrial, aims to “burns plant biomass to create hydrogen, capturing the greenhouse gases that are produced in the process.”
Climate Crisis as a Branding Opportunity
There are also examples of already strong businesses associating their brand value with environment-related campaigns and projects. It’s turning out as a great way of lowering customer acquisition costs especially while catering to the environmentally-conscious millennials and Gen Z.
Just last month, Airbnb opened up an offer of a month long fully-funded trip to Antarctica to five ‘citizen researchers’ who would travel to find out the existence of microplastics in the interior of the South Pole.
Airbnb is essentially giving wings to the idea of a temporary home for the five volunteers in the middle of the world’s most uninhabitable region. While the project has also received flak from the scientific community for fostering tourism to a sensitive landscape like the Antarctica which may expedite the adverse effects of climate change in the region, it adheres well to Airbnb’s tagline of providing unforgettable trips, adventures in faraway lands and access to unique homes and experiences.
The Case of ‘Buying’ Greenland
Journalist McKenzie Funk in his book ‘Windfall’ wrote about some stellar examples where states and corporates had started cashing in on ideas to explore and fight global warming. He talks about the 2009, referendum in Greenland where voters were deciding on gaining independence from Demark as the idea that Greenland stood to gain from climate change was getting firmly positioned. The thawing Arctic had opened accessibility of mining minerals, oil and gas.
President Trump’s recent offer to ‘buy’ Greenland for a trillion dollars and other offers by America in the past, stems from the American mining sector wanting to leverage this opportunity.
In other examples, insurance firms like American International Group are now offering personalized firefighting services to homeowners in California who are worried about the risk of increased wildfires as the summers get hotter and drier.
Still, It’s a Tricky Terrain
The climate change market is a tricky terrain to navigate for corporates as they have to balance perceptions of investors and consumers around the environment sensitivity as well as cash in on the resources. Consultancy firms like KPMG and EY are swooping in by offering ‘Sustainability and Climate Change’ services to help clients decipher climate change related opportunities, green tax liabilities, incentives and comprehend the holistic expanse of the market.
Opinions cannot be meted out on the ‘crisis capitalism’ debate unless a thorough due diligence is undertaken for each involved entity for they are too diverse to be generalised and bucketed as ‘pro profit’ or ‘environmentally conscious’.
On one hand, there are the pros of corporates being ready to engage in a discussion around climate change and drive business strategies while keeping it as a core element. And the cons are well, speed-racing the world into a fatal crash.
Back in 2010, the UN Framework Convention on Climate Change had floated the Climate Competitiveness Index as a measure of the enduring economic value created when accountability and performance are successfully combined. Among parameters of political leadership, policies and citizen movements, actions by a critical mass of businesses and entrepreneurs were also involved in the calculation of the index. Introduction of this index could be a beneficial first step in assessing the detrimental or progressive impact of ‘Crisis Capitalism’ in our modern economy.
(The author is a consultant at a global communications firm, APCO Worldwide, in New Delhi. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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