(Photo: The Iveco Stralis XP vehicle. Credit: CNH Industrial)A new CDP report published today found that the capital goods sector is driving a low carbon industrial revolution. Schneider Electric, Vestas, and CNH Industrial emerged as leaders in their fields, according to the environmental nonprofit and investment research provider’s analysis.
The report, called “Bridging Low Carbon Technologies,” takes a close look at 22 companies from the electrical equipment, industrial conglomerates, and heavy machinery parts of the capital goods sector. CDP assessed each company on how well it is adopting electrification, digitization, automation, and other strategies to help meet the Paris Agreement commitment to keep global warming below 2°C.
“Capital goods companies provide the products and solutions that major high-emitting sectors such as power generation, buildings, and transport rely on,” CDP noted.
Companies such as Schneider Electric, Mitsubishi Electric, Siemens, and Honeywell lead the way on innovation, the report concluded. These companies outperform heavy industry peers with their high R&D spend and investment in transformative technologies, according to CDP.
For electrical equipment, Schneider Electric, Mitsubishi Electric, and ABB topped the list. Vestas, Siemens, and Honeywell ranked the highest for industrial conglomerates. And in the heavy machinery category, CNH Industrial, Kubota, and Hitachi Construction Machinery ranked first, second, and third.
“From hardware to software, decentralization to digitalization, industrial suppliers are finding solutions that build low carbon into the DNA of big industry,” said Carole Ferguson, head of investor research, CDP. “Energy storage is a great example of this — the rapid price decline for renewable power is driving an estimated twelve-fold increase in demand for energy storage, catalyzing even faster integration of renewable technologies for both centralized grids and distributed generation.”
The report showed that demand for transformative technologies like microgrids, hybrid renewables, and energy storage is growing significantly. CDP says that energy storage systems could represent an investment opportunity worth $103 billion by 2030.
At the same time, the report found that heavy machinery trails electrical equipment and industrial conglomerates on innovation. “Regulation of this sub-sector has so far focused on air quality rather than CO2 emissions and the end-markets served (e.g. agriculture, mining) are relatively traditional,” CDP says. “At the same time, heavy goods vehicles are still largely dependent on diesel as a primary fuel.”
Ferguson also cautioned that despite the innovations many companies evaluated had demonstrated, disclosure and management of emissions in the value chain are lagging.
“While these scope 3 emissions can be difficult to pinpoint, they are of huge importance to the capital goods sector given the wide markets these companies supply,” she said. “Those companies that do not measure these emissions leave themselves exposed to risks and miss out on key opportunities from changing demands and regulation in the end markets they serve.”
