50 shades of green: lessons about business models for climate services
Contributed by Francesca Larosa (Euro-Mediterranean Center on Climate Change (CMCC), Ca’ Foscari University, and UCL Energy Institute | UCL Institute for Sustainable Resources)
Climate services are essential for adaptation to climate variability and change
The transition towards a zero-carbon economy is profoundly reshaping the business-as-usual. If, on one hand, we must cut down our emissions and restructure the way our economies work, on the other hand we need to use the science we have and the tremendous technological progresses we made to assess future risks and increase our preparedness.
Climate services are risk management tools; they offer data products and tailored information and they allow the user to take climate-smart decisions. Practitioners and researchers use them to produce sophisticated impact studies. Companies and policymakers can exploit them to plan and enhance their resilience. The European Commission and other international initiatives have recently supported the creation and development of a flourish market for climate services: a fruitful meeting between supply and demand. As CLARA Horizon 2020 project we contributed to this effort through the co-generation of fourteen market-ready climate services. Together with the technical aspects and the scientific knowledge behind every innovation, we focused on business models for climate services and their role in promoting a well-functioning market. We were not alone. Prior to us, other projects (EU-MACS and MARCO among others) paved the road. It is thanks to this collective effort that we can now share some important lessons.
Business models to ensure market uptake
Business models are the 50 shades of green in climate adaptation. They act as market devices, competition boosters and even strategic management tools. The most adequate business model can turn a good idea into a viral innovation. Business models are means to achieve a shared value and promote a paradigm shift to meet societal needs, beyond the conventional economic needs. In the context of climate services, they entail the evolving logic of an organization to co-create value with its users, so as to promote innovation and support decision-making through the transformation of climate data into bespoke knowledge services. They are not static instruments, but they require the organization to adapt to internal and external forces, embracing a systemic view where markets are creators and not passive venues to achieve social good.
In the CLARA project we had the opportunity to develop the most adequate business model for fourteen climate services, operating in five crucial sectors and across them: disaster risk reduction, agriculture, water management, air quality and energy. It was a difficult task: how can we strategically think about a new service when the market is still at early stages? The main question was not what the climate service can do to support adaptation strategies, but rather how is the climate service going to reach its users, be competitive and for whom.
Lessons learnt from gathering market intelligence
Through this engaging exercise, we learnt some important lessons. First, regulation matters. Boosting the market for climate services will not happen overnight, nor without effective policies in place. Anchoring climate services to risk assessment strategies at company, urban and regional level has the power to boost their uptake and to stimulate the market of purveyors currently transforming raw climate data into tailored information.
Second, the public actor is a driver of change. The European Union is leading the way by supporting the R&D activities of research institutions and private companies. It is fueling the new-born market with financial resources that would otherwise be difficult to find. The Horizon 2020 programme and the Copernicus Climate Change Service Demo and Use Cases are examples of that. By stimulating the creation of consortia and strategic partnerships, they also promote the conditions to trigger positive spillover effects and knowledge exchange. However, time has come to launch a permanent observatory, capable of collecting these innovations in a single and standard portal. Europe has the capabilities to sustain this, by using existing networks of climate services. The creation of a one-shop portal would become the tangible product of a market that would otherwise be fragmented.
Third, we need a more systemic view. Through business models we learnt that every component of each organization is vital to the success of climate services. A good value proposition without users is meaningless. An aggressive marketing strategy without a strong scientific background will lead to a successful uptake in the reference market. Similarly, climate services have to be linked to other pressing topics now in the arena: ecosystem services, nature-based solutions, energy efficiency and disaster risk reductions. A systemic approach looks at knowledge in different fields as nodes of the same network; the macroscopic outcomes will be defined only through the interaction of the micro dynamics. A fueled market for climate services at European level is the one that goes beyond the sole climate services domain and widens the horizons to other sectors. This implies a stronger interdisciplinarity, but also a tighter cooperation between different and often neglected actors in the arena, i.e. communities, to begin with. If anything, the COVID-19 emergency proved the world the importance of good governance. This holds especially in the market economy, where competition is the engine of a shared vision of sustainable future.