The newest opportunity for selling to climate-conscious businesses is data.
Once the purview of scientists projecting the impact of climate change, data — and especially ever-more granular climate-related data — is now a growing investment target of businesses keen to cater to information-hungry customers.
The professional services firm Deloitte has assigned a team within its sustainability and climate practice who were hired from financial data firms or data-focused startups to scout for data. Schneider Electric, an energy and automation-focused firm, sees data as a growing business, one of its executives said. And for more consumer-oriented companies, the U.K.-based energy company Octopus is gathering vast quantities of data to optimize how it operates both electricity distribution and transmission infrastructure.
“On top of decarbonization, one of the top needs that our customers come back with is data,” Mike Kazmierczak, a vice president in Schneider Electric’s decarbonization division, told me. “That’s what I’ve been working on, actually, heavily right now is data as a business opportunity. … Providing data as a service is really where I think the market is going to continue to grow.”
Data offers companies a major business opportunity. An ever-growing number of businesses and governments have public net-zero commitments, but actually achieving — and verifying — reductions in carbon emissions requires a degree of granularity that is sorely lacking.
Tabulating the emissions attributed to erecting a building, for example, is based largely on aggregate and average data: Steel tends to emit a certain amount of carbon in its development, cement another generalized amount, and so on. These figures vary, however, depending on factors including where the raw materials are sourced from, how they are transported, whether suppliers are more or less efficient than the industry average, and by how much. As a result, few property developers are able to say with genuine precision how much carbon their projects emitted in construction.
Similar issues are present in other parts of the economy: Utilities or grid operators are only able to see aggregate data across a large geographic area, often with a lag, while companies with multiple factories can mostly just identify the climate-related risks to those facilities in general terms.
Several consultants and advisers I spoke to said that companies seeking to reduce their carbon emissions are increasingly demanding hyper-specific data from suppliers on their carbon emissions and those of their products, as well as information on the carbon resulting from operating existing facilities such as factories or offices. They also want more precise information on the physical risk to their facilities of climate change and related extreme weather events, as well as details on how their suppliers perform on ESG-related metrics.
That’s expanding the customer base for data significantly.
“We’re spending a significant amount of money” on data, said John Mennel, a managing director in Deloitte’s sustainability practice. (He declined to offer specifics on the sums being spent, pointing only to Deloitte’s announcement in April 2022 that it would invest $1 billion in its then-newly founded global efforts on climate and sustainability.) “There are a proliferation of sustainability data firms, and I would say that their market even a couple years ago was really the financial sector,” he continued. “It’s expanded much beyond that, where all kinds of companies have different sustainability data needs.”
The View From the UK
Data isn’t just a commodity to be sold and packaged by consultants and experts to clients: Some utilities are investing heavily in it to better manage their power requirements. The U.K. based company Octopus Energy’s Kraken software platform uses data to forecast customer behavior to more precise intervals, rather than the daily meter readings they get from users’ homes, and to better predict demand on low-voltage networks — the kind used to power electric vehicles, home heat pumps, and the like.
Octopus is unusual, however, in that in addition to being the U.K.’s second-biggest home energy supplier, it provides energy-management software — what it dubs an “operating system for utilities” to rivals in the country and around the world — meaning that it gathers data not simply from its 6.5 million customers, but huge numbers of others.
Room for Disagreement
To some extent, describing data as a revenue stream is so obvious as to be almost meaningless: Data is the new oil has been a cliched catchphrase for years. Companies providing data and selling it to customers, as well as businesses fine-tuning their approaches based on newly available information, have existed for a long time. In the climate space, however, the degree of imprecision remains remarkable, and new datasets are fast being devised: The European Central Bank, for example, only published climate-related statistics for the first time this year.
- Among the first companies to mine data for cutting carbon emissions was Microsoft. Fast Company looked at how the tech giant used existing information to build up an understanding of its overall climate impact.