Market Intelligence 101
What follows is an experiment in open source market intelligence. Please contact us about information sources and studies that you have found particularly useful.
Anyone who has used market research knows that the quality and reliability of market studies can be highly variable—while the forecasts are rarely reliable and, often, are just plain wrong. Still, the effort still has to be made to understand the underlying market dynamics and trajectories. One pre-condition of scaled solutions will be the availability of reliable, timely and affordable research on—and valuations of—the markets likely to emerge as the great social and environmental divides are bridged.
So where in the world can we turn for research and intelligence on the markets that underpin the emerging Phoenix Economy? Areas where such information is available, at a price and for some regions, include:
Well served
Among well-served sectors are cleantech (or greentech) and renewable energy.
Cleantech/greentech: Cleantech is a term coined by Nicholas Parker, founder of the Cleantech Group, ‘cleantech’ embraces new technology and related business models that offer competitive returns for investors and customers while providing solutions to global challenges. An alternative term, greentech, is used by venture capitalists Kleiner Perkins Caufield & Byers.
Preliminary 2008 results for clean technology venture investments in North America, Europe, China and India totaled a record $8.4 billion, up 38% from $6.1 billion in 2007.”
A New Energy Finance study estimates that the world will need to invest at least $515 billion a year between now and 2030 to avoid adverse climate change, whereas in 2008 only $155 billion was invested. Major players like Deutsche Bank are now doing reports on green infrastructure opportunities. Deutsche Bank has also published its 2009 edition of Investing in Climate Change. The report tracks 250 new regulations that support renewable energy and climate change mitigation across the world, as well as ‘green’ initiatives amounting to more than $200 billion in global stimulus packages.
Renewable energy: Internationally, clean energy markets are predicted to quadruple in the decade from 2006 to 2016, the year after the Millennium Development Goals were meant to be achieved, growing from $55.4 billion in revenues in 2006 to more than $226.5 billion by 2016 in four key renewable energy sectors, according to a report by the research and publishing firm Clean Edge, Inc.
Moderately served
Among moderately well served sectors are fair trade and organic food, sustainable finance and water.
Fairly traded and/or organic food: There are significant numbers of market research firms focused on organic food, where sales have been hit hard by the downturn in some countries. One of the sources referred to by entrepreneurs in this space is the LOHAS movement, promoting lifestyles of health and sustainability. Its market assessments, however, are mainly for the US.
Sustainable finance: In addition to such market studies, several initiatives and networks aim to serve the needs of developed world and entrepreneurs. These include the Enhanced Analytics Initiative (EAI). This focuses on so-called extra-financial issues, encouraging investors to do better research in related areas. “We have assessed more than 1000 broker research reports that cover environmental, social and governance (ESG) issues since 2005,” EAI’s Ivo Knoepfel told us. “Some of them are impressive, thorough and original efforts at quantifying the financial impacts of long-term, difficult-to-quantify issues (e.g. physical impacts of climate change on different industries), others are more superficial and cover ‘low hanging fruit’ issues (such as the effect of EU carbon emission trading on utilities).” The key thing to note, he says, is that the financial materiality of ESG issues is not questioned anymore and there is a general acceptance that (in some cases) they are relevant and need to be integrated in financial decision-making.
Another excellent source of market-related information is the London Accord. The idea here is that “sell-side and independent financial analysis has a short life within the industry, less than three months for most research reports. The audience for investment research is a narrow one, perhaps several hundred people for most reports, yet there is additional value to gain by sharing this research appropriately with society. The financial services industry produces copious research on a variety of topics of interest to policy-makers, politicians, industry and NGOs, for example on:
Water: The global water market was estimated to be worth some $463 billion a couple of years back. This is a market that will likely be transformed in the coming decades by a combination of demographics, environmental destruction and climate change.
Poorly served
Among poorly served sectors are bottom-of-the-pyramid markets.
Bottom-of-the-pyramid (BoP) markets
There has been much discussion of the potentially huge scale of BoP markets, involving supplying affordable products and services to the world’s poorest people. As some critics argue however, “the BoP stratum, therefore, should not be seen at this time as another business opportunity but a social obligation for more privileged individuals and businesses to take cognizance of”. Among centers taking a somewhat different approach is Cornell University’s Center for Sustainable Global Enterprise, which focuses on the poor as business partners and innovators, rather than just as potential producers or consumers. Also well worth keeping an eye on is The Earth Instituteat Columbia University.
A key resource in this area, published in 2008, is Creating Value for All: Strategies for Doing Business with the Poor. This moves well beyond the well-known examples of microfinance and mobile telephony to explore “how inclusive business models can set off a virtuous circle, improving people’s lives and incomes and benefiting from the growth that results.”