Climate change has become an increasingly prominent topic among businesses, with leaders striving to enhance their environmental impact by reducing emissions and investing in clean technology. While the imperative to contribute positively to the environment is evident, determining how to align these efforts with business objectives poses its own challenges. Companies are eager to play their part, yet they recognize the importance of generating financial value in the process.
In a recent case, we assisted an industrial client in evaluating whether to pursue a partnership aimed at significantly reducing carbon emissions within their sector, known for its high levels of pollution. To gauge the viability of this opportunity, we set out to address several key questions:
- What is the Total Addressable Market (TAM) and Serviceable Addressable Market (SAM) for this initiative?
- Is the regulatory landscape conducive to future growth?
- Is there anticipated demand for the technology in question?
- What level of capital investment is necessary for successful implementation?
Following a thorough analysis of these inquiries, we developed three primary criteria to assess the opportunity, and then conducted analysis to score each one.
Criteria 1: Achieving the targeted Return on Investment (ROI) and meeting the desired payback period. We ran sensitivity analysis with multiple scenarios on market uptake, price, and certain costs.
Criteria 2: Ensuring that engagement with this opportunity does not divert resources or attention from core business operations. We developed organizational structure recommendations that isolated (and fully costed) resources on the initiative to ensure adequate focus and attention without disrupting the base business.
Criteria 3: Implementing robust risk mitigation measures, to contain the potential financial downside. We participated in negotiations with upstream and downstream value chain partners to guarantee demand and share upfront capital costs. We also create a clear set of milestones with targets and related go/no-go decisions so that the board could govern progress according to plan.
Various aspects of the plan are underway and we look forward to sharing our client’s innovative product launch in the coming months!