🧠 #002 — Climate Risk & Intelligence

“Climate risk is investment risk” - Larry Fink

📣 TLDR

Climate data platforms help organizations measure, evaluate, and reduce climate risk and impact.

😬 Problem

Companies face increasingly costly risk from major climate events.

🎯 Solution

Climate risk and intelligence platforms use AI and predictive analytics to reduce impact of disruptions to operations.

💪🏼 Organizations

Climate Risk & Intelligence

  • Jupiter Intelligence provides risk analytics for natural disasters.

  • SINAI helps enterprises measure, analyze, price, & reduce emissions

  • Watershed helps measure, report, and reduce business emissions

  • Cervest does asset-level risk analytics and intelligence.

Earth Observation

  • Tomorrow provides insights on weather disruptions.

  • HydroSat uses geospatial thermal imagery for water and agriculture.

  • Betterview is a property intelligence platform for commercial insurance.

  • Planet and BlackSky are satellite data platforms for a variety of industries.

Environmental, Social, and Governance (ESG)

  • Project Canary is a platform for accurate corporate ESG data used by emission- intensive industries.

  • Persefoni helps companies measure and report emissions to meet stakeholder and regulatory requirements.

  • Patch measures company emissions and sells carbon offsets.

⚡️ Opportunities

  • Offer Resilience-as-a-Service.

    • One Concern built a “digital twin” to model effects of climate change on the natural and physical environment.

  • Sell data services to parametric insurance providers.

    • Traditional insurance pays out on magnitude of losses. Parametric insurances pays out on magnitude of event.

    • Descartes Underwriting offers parametric insurance for climate-related risks including floods, droughts, and supply chain disruptions.

    • Kettle offers reinsurance focused on wildfires, and predicated the location of 14 largest wildfires in California in 2020.

  • Provide a solution for a specific vertical or sector.

    • There’s no silver bullet for climate change. Focus on a narrow use case to mitigate risk.

    • ReGrow focuses on agriculture. Watershed focuses on water supply. Vibrant Planet focuses on wildfire management.

  • Solve for Scope 3 emissions. This is the hardest problem.

    • Measurement, reporting, and improvements across global value chains is notoriously complex.

    • Major supply chain cost reductions align directly with decarbonization.

⚠️ Challenges

  • Sources of climate data like satellite imagery, stationary sensors, Internet-of-Things devices, radar and sonar are capital intensive.

    • The majority of satellite data comes from government provided public sources.

    • Barriers to entry of launching new satellites has dropped significantly.

  • Turning raw data into actionable insights for enterprise organizations requires data wrangling and data quality improvements.

    • Scope 3 emissions are deep in a company’s global value chain. Connecting this data is difficult regardless of its relation to decarbonization.

    • This is what Watershed, SINAI Technologies, and Persefoni are trying to solve.

  • Time to value slower than traditional SaaS products. This slows down deployment period and and reduces chance of widespread adoption.

    • Climate SaaS, especially with hardware deployments, focus on a few pilots before full commercialization. This increases odds of success.

    • Time pilots so they experience climate events and the subsequent bullwhip effect.

📈 Predictions

  • Acquisition (satellites and sensors) and dissemination (data conversion) layers will consolidate. Intelligence layers will follow traditional venture patterns for SaaS.

  • Climate consulting will have a more real impact than sustainability consulting and lead to productized data platforms.

  • Green Banks and alternative financing will be the fuel that drives deployment of climate intelligence. See Climate Capital Stack.

😈 Devil’s Advocate

“Climate intelligence doesn’t solve climate change. It’s just a band-aid to help adapt”

Large-scale risk mitigation at requires proactive and reactive approaches.

“ESG is just a public relations stunt without real impact”

Sometimes it’s greenwashing for B2B. But new providers are tying climate impact to business impact (i.e. cost reductions) more directly. This is a more realistic approach.

🚀 Takeaways

  • Climate intelligence platforms gather data from land, sea, and air to help companies understand the risk of climate change.

  • Climate risk is investment risk. The most successful and sustainable companies will use climate intelligence when making business decisions.

  • Wrangling data across global operations is hard. Making that data actionable is even harder. Focusing on specific verticals, sectors, and use case will get traction.

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