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CNBC European Business editor Richard Lofthouse explains the background to this year’s list, what’s new for 2008 and the methodology behind the ranking. Extra reporting and panel participation by Flemmich Webb, Elisabeth Jeffries and Mike Scott; further reporting by Ben Oliver, Ross Tieman and Tom Stevenson. Illustrations by Chris Haughton.
A year ago when we produced our first low carbon pioneers list, it was with an air of experimentation, if not trepidation. Yet in the face of a defining, single problem with manifold solutions – climate change - we perceived an enormous opportunity for corporations and start ups alike.
We said then: “The research for our list convinced us that we are in the early stages of an emerging market of vast scope and future. The scale and intricacies cannot yet be imagined but whether viewed in terms of geography or sector, it will certainly surpass all previous emerging markets. In fact, it may have to.”
A year on this prophecy is in full flood and the landscape has changed a great deal. First, the UN climate change panel has delivered its tripartite report, confirming the high likelihood that climate change is caused by humans, and that it is progressing at an alarming rate.
Secondly, the fifth Carbon Disclosure Project gained the active support of former US president Bill Clinton and German chancellor Angela Merkel, became more global in scope than ever before and made the link between shareholder value and corporate action on climate change more visible and explicit than ever before.
In other words, climate change mitigation and adaptation is a matter of fiduciary risk now – it’s no longer a voluntary, ‘moral’ position that a company can politely discard.
Thirdly, rising oil prices led to widespread speculation in the US press about the lunacy of America continuing to consume oil at current rates, making renewable energy the respectable face of patriotism and national security rather than the shrill protest of the anti-war hippies and left wing environmentalists.
Against this wider backdrop, there was a ferment of entrepreneurial and corporate activity partly captured by this year’s list. The so-called clean tech and renewable energy sectors are in a phase of rapid growth, so much so that one can hardly keep abreast of often severely technical subject matter ranging from the nanoengineering of quantum dot particles to competing interpretations of thin film solar technology.
Many of these companies make it into our expanded list as ‘low carbon pioneers’ because they are risk takers who sincerely believe they hold the solutions to tomorrow’s low carbon economy. The list boasts 14 solar energy and technology companies; 10 biofuel/ biomass players; 6 wind; 5 wave and 2 tidal.
These numbers are not meant to be representative of the global state of these technologies, yet they reflect the fact that solar is on the verge of a breakthrough in thin-film technology that will make solar applications vastly cheaper and more ubiquitous in the near future. Solar mobile phone chargers will transform some communities in emerging markets. By contrast, wind is already established while tidal and wave energy remain much more experimental.
The investor perspective has to be one of caution. Far better than attempting to cherry pick individual stocks whose future success is unknown, the route is surely to invest in a team of professional investors whose sole professional activity is to pick the winners from the losers. Several such companies are in the list and some of them have already floated, mostly on London’s Alternative Investment Market. We predict that the likes of Low Carbon Accelerator, Ludgate Environmental, Guinness Atkinson and Climate Change Capital will soon become much larger and more mainstream.
The other trend of 2007 was the emergence of retailers whose reliance on climate-worried consumers prompted a tectonic shift of priorities. That is why Walmart is placed second, although Marks and Spencer’s Stuart Rose is also featured. Snapping at their heels are much smaller yet purer retailers such as Abel and Cole, who do not air freight any products, support local farmers and deliver organic produce to people’s doorsteps in carbon neutral vans powered by re-cycled chip fat. So the wider question is whether the ‘any time, any place’ mentality of modern supermarkets will continue. Consumers are the most likely determinants of the outcome.
That leaves Number 1 – Iberdrola. Twenty years from now, it is possible that we will have de-centralised, microgenerated energy making entrepreneurs of all of us (It is allowed for in the UK’s recently passed Climate Change and Sustainable Energy Act). Producing energy where it is consumed is vastly more efficient than the centralised, dramatically wasteful power station model that we currently have, and other companies in the list are hastening this new era – companies such as Combined Heat and Power developers Ceramic Fuel Cells and Ceres.
But until this universe emerges, we’re stuck with large scale, gridded utilities whose role in guiding us towards a low-carbon future could hardly be understated given that power generation accounts for over a third of Europe’s current greenhouse gas emissions. Iberdrola is a beacon in this regard because CEO Ignacio Galán has reinvented it as the greenest utility one could imagine, short of doing away with it altogether.
It goes without saying that we congratulate all the other companies in this list and wish them well in 2008.
Methodology
The list was researched between June and December 2007, and an extensive shortlist of companies built up through multiple interviews with leaders in both the profit and non-profit low carbon sectors – an extended form of peer review. In addition to CNBC European Business’ editorial team, an external panel was also appointed to nominate and review candidate companies. The final list was decided on the basis of the degree to which the company had taken a courageous or ground-breaking stance on climate change (typically larger corporations), or that it embraced a future, low carbon solution in the form of clean technology or renewable energy (typically a smaller SME or recently listed public company.) The underlying philosophy of the list, as in its first edition, continues to be respect for companies that have explicitly connected climate change to their bottom line. The preponderance of larger companies earlier in the list reflects their larger impact on actual emissions and power to influence the rest of the business community; conversely, the crowd of smaller companies in the second half reflects their commercial immaturity and general volatility. Despite this broad pattern no attempt has been to quantify the carbon savings of the companies. In this respect we refer readers to the Carbon Disclosure Project, noting that the emissions figures reported to the CDP are self-reported rather than third party audited, and that there is no accepted orthodoxy as yet for the measurement and disclosure of Scope 3 emissions under the GHG Protocol.
23
G24i
Cardiff, UK
Private
Clean tech
J Clemens Betzel, [President]
Americans Ed Stevenson and Bob Hertzberg invested the proceeds from their previous company, Solar Integrated Technologies, in start up G24i two years ago. UK-based production of the company’s Swiss-derived, dye-sensitized thin film solar cells began late last year. G24i is remarkable for its large-scale production techniques and global game plan. Its first product is a mobile phone recharger, but CEO Clemens Betzel foresees over 600 product applications. Sales began in Kenya where the absence of power infrastructure allows small scale recharging technology to completely transform lives. Surely a possible future IPO?
For the complete list of companies, click here
