75% Organizations Say They Need Climate Tech to Achieve Net Zero Goals but Lower Costs Essential for Widespread Adoption

High green premiums mean that further investment and regulation are required to ensure cleaner products and services are commercially viable

Many of the technologies able to address climate change are already available and will play a critical role in helping businesses reduce greenhouse gas emissions. That is according to the Capgemini Research Institute’s latest report “Climate Tech: Harnessing the power of technology for a sustainable future”, which found that three quarters of organizations say they will not achieve their sustainability goals without climate tech. However, close to eight in ten (77%) executives suggest that product costs are likely to increase due to the green premium attached to these technologies and they are unwilling to pay this markup.

Expectations are high for climate technology to contribute to decarbonization

Growth in key climate technologies, including renewable power and electric vehicles (EVs), has helped accelerate decarbonization efforts around the world. Other climate technologies such as low-carbon hydrogen, carbon capture and alternative fuels are becoming available and, if scaled, could help businesses achieve their sustainability goals. According to the report, executives expect climate tech to contribute to 37% (on average) of their organization’s decarbonization or net zero goals, and 65% of organizations plan to increase investment in climate technology in the next two years. For example, two thirds of steel companies view low-carbon hydrogen and carbon capture as a priority. The top drivers for this increased investment are awareness of the worsening climate crisis, stricter regulation, and increased maturity of climate technologies.

The green premium is a major barrier to adoption

While climate tech is critical for decarbonization, it comes at a price. Close to eight in ten (77%) executives suggest that their product costs are likely to increase due to investment in climate technologies. This increase in costs can be attributed to a number of factors including higher R&D, capital, and operating costs, as well as the cost of adapting manufacturing processes. The research reveals that organizations are willing to accept an average increase in product cost due to climate tech adoption (the “green premium”) of around 9%. However, the existing green premium for many clean products is typically significantly higher than this. For example, cost of low-carbon cement produced using carbon capture is estimated to be 75–140% higher than conventional cement, and sustainable aviation fuel (SAF) is estimated to cost 123% more than conventional jet fuel. As a result, climate technologies cannot currently help create cleaner products and services in commercially viable way.

Pockets of rapid progress

Despite the challenges, there are pockets of rapid scale up in climate tech adoption. These include technologies where green premiums have fallen significantly, such as solar photovoltaic (PV) and electric vehicles (EVs), as well as technologies where green premiums are still high, such as carbon capture for cement, green hydrogen for steel, and SAF for aviation. Executives in these industries expect adoption of the technology to spread rapidly: within three years for EVs in the automotive industry, within four years for solar PV in the energy and utilities sector; within three years for SAF in the aviation industry; and within two 
years for carbon capture in the cement industry.

“As the world races to find solutions to address climate change, we can see there is an extraordinary appetite for these technologies, supported by an increased awareness on the urgency to act”, said Florent Andrillon, Global Head of Climate Tech at Capgemini. “We are in the beginning of a “Clean Industrial Revolution”. Public support and private funding have started to ignite the green investment wave, but accelerating the scale up of these solutions will require further capex investments, cost reductions and business model innovation. Before climate technologies reach cost parity with their traditional counterparts, businesses or consumers can’t be expected to handle large green premiums alone. Public policies need to level the playing field and adequately support the scaling up. For example, the spectacular uptick in electric vehicle adoption has a lot to do with public subsidies and various local incentives and regulations. Consumers and organizations alike understand the need to quickly adapt their behaviors, and that solutions exist. It will take increased intervention from governments to support and speed up that paradigm shift for industry and end-users alike.”

Addressing the investment gap

The research also found that on average, organizations plan to increase investment in climate tech by 7.7% in the next two years. However, average annual investment in environmental sustainability initiatives and practices across industries represented only 0.92% of total revenue in 2023, a proposition which stayed flat since last year[1]. In absolute terms, it means that the current investment in environmental sustainability of the top 2,000 largest companies globally represents less than $500 bn per year overall. This is a small portion of the $1.8 trillion of estimated global investment in clean energy in 2023, and far below the $4.5 trillion a year required in the early 2030s, for the energy sector to achieve net zero emissions by 2050, according to the IEA.[2]

Venture capital funding and financial institutions are already filling some of the gap, and should play a critical role in scaling climate tech. The report finds that 37% of surveyed VCs plan to increase investment in climate tech in 2023, with this proportion rising to 48% for 2024 and 56% for 2025. In addition, close to half (47%) of asset-management firms and banks planned to increase climate tech financing in 2023, with nearly as many (46%) planning to do so in 2024, growing to 53% in 2025. This increased investment will be focused on EVs (for 55% of them) as well as decarbonization software (45%), biofuels (36%) or nuclear (33%).

Full report: https://www.capgemini.com/in-en/insights/research-library/climate-tech-research

Methodology

For this report, the Capgemini Research Institute surveyed 1,350 senior executives (director-level and above) from large organizations (~90% of which had annual revenue above USD 1 billion) that have plans to decarbonize or reach net zero, and a survey of 500 large VCs and financial services organizations on their climate tech financing plans. In addition, the research team interviewed more than 15 experts across industries, including VCs. The global survey took place in August and September 2023 and covered 13 countries in North America, Europe, and Asia-Pacific (US, UK, France, Germany, Italy, Spain, Netherlands, Sweden, India, Singapore, Australia, Japan and China) across 16 industries.

[1] Capgemini Research Institute, “A World in Balance 2023: Heightened Sustainability Awareness Yet Lagging Actions,” November 2023

[2] International Energy Agency, “Executive summary – Net Zero Roadmap,” 2023 update

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Covid-19 Lays Bare The Disadvantages Of The Digital Divide - Research

The public and private sectors must act now to enable access to critical services, tackle social exclusion, and enable career mobility for the offline population

There is an urgent need to tackle the sharp digital divide between the world’s online and offline populations, according to the latest research from the Capgemini Research Institute, and intensified by the COVID-19 pandemic. Its latest report, launched today, highlights that the responsibility for addressing digital exclusion lies jointly with public and private organizations, who must come together to ensure that access to essential services isn’t denied to the digitally marginalized.

“The Great Digital Divide: Why bringing the digitally excluded online should be a global priority” reveals that even before the pandemic hit, 69% of people without online access were living in poverty and that 48% of the offline population wanted access to the internet – trends that will have intensified due to worldwide events over recent months. 

The report highlights that even without the global pandemic the digital divide intersects age, income and experience. Nearly 40% of offline people living in poverty have never used the internet because of its cost, and the age group with the highest proportion offline in the sample is those between 18 and 36 years old (43%).

Complexity of using the internet (36%) and a perceived “lack of interest” stemming from fear (38%) was also cited by certain segments of the offline population. These reasons mean that people are unable to access public services such as critical healthcare information as governments increasingly move to online resources. 

COVID-19 has demanded a global change in how people live, work and socialize; as unemployment soars and people isolate from their communities, a basic level of digital inclusion has become almost universally vital. Conducted just prior to the outbreak, the research findings are now even more pertinent in the current context – with the increasing reliance on digital services exacerbating what was already a desperate situation for the offline population. 

Key findings from the report include:

Being offline leads to social exclusion and hinders access to public services 

• Being offline can lead to feelings of isolation, inadequacy, or loneliness: 46% of offline respondents said they would feel more connected to friends and family if they had access to the internet. 


• Only 19% of offline people living in poverty said they had claimed a public benefit in the past 12 months due to their income, age, disability or any other factor. This could become problematic when e-Government and online public services are increasingly prevalent cites the report.


• 34% of respondents expressed interest in using the internet to apply for public benefits such as housing, food and healthcare, following the digital transformation of public services and increasing difficulties to do their online administration.    

Being offline limits career mobility

Difficulty in applying for jobs online and a lack of access to online learning and education tools can make upwards career mobility more challenging for the offline population, while a lack of digital skills development can inhibit the potential for career mobility once in a role: 

• 44% of offline respondents believe they would be able to find better paying jobs and educate themselves if they had access to the internet. 


• Overall, 29% of offline respondents wish they could search and apply for jobs online; this jumps to 41% for those aged 22 to 36.

The digital divide is also about a skills and learning divide

The digital divide is not just about access, it’s about improving skills and learning for those who are online. By improving their online skills, respondents said they could educate themselves better and find a better paying job (35%), give their children more opportunities (34%), not struggle to pay bills (33%) and get public benefits they don’t currently have (32%.) 

The responsibility of bridging the gap must be shared

Capgemini’s research notes that the responsibility for digital inclusion and access to the internet cannot fall to one group. Private organizations need to consider their role in today’s world – increasingly beholden not only to stakeholders but also to their customers, employees and communities, they must look more broadly at how they can benefit society in the long term by incorporating digital inclusion and equality into their business strategy. Meanwhile, governments and the public sector need to play a leading role in enabling internet access and availability, especially for marginalized communities. This can be tackled at several levels: internet access in public spaces, internet access in private homes, as well as with the acquisition of the necessary fundamental digital skills; but it means improving greater accessibility to online public services and making sure to maintain low costs for consumers. 

Together, organizations and policy makers need to work to build a global community of action on digital inclusion. They can mobilize peers, NGOs, academics, and governments to foster evidence-based policies on digital inclusion and work with partners to promote digital inclusion through pro-bono projects that leverage their expertise.

“COVID-19 is likely to have a lasting impact on access to public services and attitudes to opportunities like remote working, so there’s a collective responsibility for organizations which work to challenge the digital divide do so in a way that it creates a long-term change, not just a quick fix,” said Lucie Taurines, Global Head of Digital Inclusion at Capgemini. “In the wake of this pandemic, we expect to see a closing of the digital gap – for example, elderly people who have previously not felt a need for digital access will quickly find themselves engaging with digital tools in place of face-to-face socializing and the provision of goods. However, this is reserved for those who can get access to the internet but have previously chosen not to. The impact will be felt among those who still can’t use online services, whether through a prohibitively high cost or a lack of local provision. Here we’ll see a polarizing effect, especially for those already living in or falling under the poverty line.”

As an organization, Capgemini is focused on four key areas to reduce the digital divide and lead digital inclusion: 

• Digital literacy: providing meaningful support to empower the digitally excluded to have more autonomy in accessing public and private online services and unlock new opportunities


• Digital academies: enabling employment for disadvantaged populations and people away from the job market through digital skills training 


• Technology for positive futures: bringing together technology, business, and society to solve key societal issues and deliver positive impact through cutting-edge technologies


• Thought leadership: working with think tanks and intellectual bodies and joining forces with clients, NGO partners, public bodies and academies to continue driving impact through Digital Inclusion initiatives 

To find out more about Capgemini’s global CSR program and the digital inclusion initiative, visit the CSR page. 

To read a full copy of the report, please click here. 

Research Methodology 

For this research, the Capgemini Research Institute undertook a two-pronged approach to survey over 5,000 respondents across France, Germany, India, Sweden, the United Kingdom, and the United States. The research took place from December 2019 to February 2020. 

• To understand the online population, the Institute conducted an online survey of 3,750 individuals with 56% living in poverty and 44% not in poverty.


• To understand the offline population, the Institute conducted a telephone survey of 1,000 individuals not online and a face-to-face survey of 304 individuals not online. 69% percent of the offline population is living in poverty and 31% is not in poverty. 

The Institute also conducted one-on-one interviews with 26 executives at 22 non-profit organizations, charities, and NGOs working in the digital inclusion space as well as private companies with digital inclusion initiatives in France, Germany, India, the United Kingdom, and the United States.

Capgemini is a global leader in consulting, digital transformation, technology and engineering services. The Group is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year+ heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. Today, it is a multicultural company of 270,000 team members in almost 50 countries. With Altran, the Group reported 2019 combined revenues of €17billion.

The Capgemini Research Institute is Capgemini’s in-house think-tank on all things digital. The Institute publishes research on the impact of digital technologies on large traditional businesses. The team draws on the worldwide network of Capgemini experts and works closely with academic and technology partners. The Institute has dedicated research centers in India, Singapore, the United Kingdom and the United States. It was recently ranked #1 in the world for the quality of its research by independent analysts. Visit https://www.capgemini.com/researchinstitute/

Europe Leads the Way in AI in Manufacturing Operations Adoption - Report

Over half of European manufacturers are implementing AI use cases in the sector with Germany a frontrunner on 69% AI adoption versus US at 28% and China at 11%

A new report from the Capgemini Research Institute highlights that the European market is leading in terms of implementing Artificial Intelligence (AI) in manufacturing operations. 51% of top global manufacturers in Europe are implementing at least one AI use case. The research also analyzed 22 AI use cases in operations and found that manufacturers can focus on three use cases to kickstart their AI journey: intelligent maintenance, product quality control, and demand planning.

Capgemini’s report entitled ‘Scaling AI in manufacturing operations: A practitioners’ perspective’ analyzed AI implementation among the top 75 global organizations in each of four manufacturing segments: Industrial Manufacturing, Automotive, Consumer Products and Aerospace & Defense. The study found that AI holds tremendous potential for industries in terms of reduced operating costs, improved productivity, and enhanced quality. Top global manufacturers in Germany (69%), France (47%) and the UK (33%) are the front-runners in terms of deploying AI in manufacturing operations, according to the research.

Key points from the report include:

AI is being utilized and making a difference across the operation value chain

Leading organizations are using AI across manufacturing operations to significant benefit. Examples include food company Danone which has succeeded in reducing forecast errors by 20% and lost sales by 30% through using machine learning to predict demand variability. Meanwhile, tire manufacturer Bridgestone has introduced a new assembly system based around automated quality control, resulting in over 15% improvement in uniformity of product.



Manufacturers tend to focus on three main use cases to kickstart their AI journey

According to the report, manufacturers start their AI in operations journey with three use cases (out of 22 unique ones identified in the study) as they possess an optimum combination of several characteristics that make them an ideal starting point. These characteristics include: clear business value, relative ease of implementation, availability of data and AI skills, among others. Executives interviewed by Capgemini commented that product quality control, intelligent maintenance, and demand planning are areas where AI can be most easily implemented and deliver the best return-on-investment. For instance, General Motors piloted a system to spot signs of robotic failures before they occur. This helps GM avoid costs of unplanned outages which can be as high as $20,000 per minute of downtime. While there is consensus on which use cases are best to get started with AI in operations, the study also points out the challenge of scaling beyond the first deployments and then systematically harvest the potential of AI beyond those initial use cases.

“As implementation of AI in manufacturing operations matures, we will see large enterprises transitioning from pilots to broader deployment,” said Pascal Brosset, Chief Technology Officer for Digital Manufacturing at Capgemini. “Quite rightly, organizations are initially focusing their efforts on use-cases that deliver the fastest, most-tangible return on investment: notably in automated quality inspection and intelligent maintenance.

“The executives we interviewed were clear that these are functions which can deliver considerable cost savings, improve the accuracy of manufacturing and eliminate waste. However, the leaders do not solely focus on these use cases but, in parallel with their deployment, prepare for the future by reinvesting part of the savings into building a scalable data/AI infrastructure and developing the supporting skills.” He further added.



The report concludes by outlining recommendations to scale AI in manufacturing operations (see the figure below):

To read the full report, click here.

Report methodology

Capgemini conducted extensive secondary research on the AI initiatives being tested and implemented by 300 global manufacturers – the top 75 global organizations in four manufacturing segments (Automotive, Industrial Manufacturing, Consumer Products, and Aerospace & Defence) by their annual global revenue in each of the four sectors listed above.

Capgemini also interviewed over 30 senior executives from the manufacturing sector, belonging to the following industries: Industrial Manufacturing, Automotive Consumer products, and, Aerospace & defense. 

These executives belonged to four distinct profiles:

1. Department/function head in one or more manufacturing plant(s) e.g., maintenance, production, quality


2. Plant leadership (plant manager/director)


3. Director/VP Operations (corporate / multi-country responsibility)


4. AI Heads/ Heads of Innovation/ Chief Digital Officers 

For In-Car Voice Assistants, India Consumers willing to Pay Highest Premium - Capgemini Research

With decline in auto sales in the month of September, India recorded robust sales in the month of October, driven by high discounts during the festival period. Irrespective of the sales figures, India consumers are willing to pay the highest premium for the voice assistants embedded in a car than consumers in other countries.



For instance, voice assistants will be useful in case of an accident. Consumers want voice assistant to automatically launch the emergency number.

• Ford is gearing up to launch models with Alexa as the in-car assistant in India by 2020. Amazon is training Alexa to understand Indian dialects for this launch.


• Leading automakers are already experimenting with sensor data such as physical location, past searches and application activities etc.


• In-car voice assistants are being widely used, a trend set to accelerate.

The key highlights of Capgemini’s "Voice on the go" report are:

• Three years from now, 50% of consumers expect to use conversational voice assistants, to access information inside the car, explains Capgemini report.


• India ranks first among the consumers willing to pay a premium of 68% for voice assistants, according to a research report by Capgemini. While other countries are willing to pay around 38% premium.

Almost every driver (95%) will be using a voice assistant in the next three years, but automotive companies must improve the experience to meet user expectations, a new research report from the Capgemini Research Institute has found.

The “Voice on the go: How can auto manufacturers provide a superior in-car voice experience” report looks at the consumer adoption of the in-car voice experience and their expectations. It identifies the opportunities for automotive companies to grow revenues and boost engagement through voice technology, but also finds that the industry rates the current performance of voice assistants more highly than consumers.

Key points from the study include:

In-car voice assistants are being widely used, a trend set to accelerate

Almost half (49%) of consumers surveyed are using voice assistants in their vehicles for a variety of functions; this figure is expected to surge to 73% in the future. At present, 77% of consumers use voice to play music and check directions (this is expected to rise to 85% in the future), 46% book appointments for their vehicle to be serviced (set to rise to 74%) and 45% order specific services such as food (set to rise to 72%). Within the next three years, 95% of consumers expect to be using a conversational assistant, including a voice assistant in the car to access information, 54% of them “all the time."



Consumers want the user experience to improve, but have security concerns

When asked to rate their experience using in-car voice assistants, only 28% described it as “great,” with 59% agreeing that “it was satisfactory, but the experience needs to be improved.” A clear majority believe improvement is needed when using voice assistants to integrate with at-home systems such as temperature control (63%), providing feedback or making complaints (61%), ordering specific mobility services (60%) and booking vehicle service appointments (60%). 



As well as improving the experience across key use cases, automotive companies must address concerns over privacy and data security, cites the report: 50% of consumers said they do not trust voice assistants with their personal data, and 48% that they are too intrusive and seek too much personal information.

“Voice assistants are becoming an essential part of how people experience cars, and safely manage their lives while on the move,” said Markus Winkler, Global Head of Automotive at Capgemini. “This report demonstrates how the automotive industry should be using voice as a strategic asset both to build customer engagement and grow revenues with connected services over time."

“To make further progress, the industry needs to educate consumers about voice capabilities and data security. It must build adaptability and personalization but also more intelligence to achieve better situational relevance and better integration between in-car and at-home voice assistants to maximize value,” he further added.

Voice offers revenue and customer engagement opportunities

According to the report automotive companies that can improve their voice assistants stand to benefit from both higher customer engagement and improved revenue opportunities. Customers who have a good experience with a voice assistant said they are likely to tell their friends and family (73%), rely more on the voice assistant over traditional customer service systems (65%), and subscribe to other services offered by the same automotive company (58%).

In addition, that greater engagement has the potential to translate into revenue gains. Globally, over a third of consumers (37%) said they would be willing to pay a premium or monthly subscription price for a voice subscription installed or embedded in their car and 48% said they might consider this in the future. Younger drivers were most likely to be willing to pay, including 47% of those aged 22-31 compared to 29% of 45-59 year-olds and 18% of over-60s.

The industry overestimates the capabilities of its voice assistants

Automotive executives understand the strategic importance of voice assistants, with 72% saying they are a key enabler of the organization’s business and customer engagement strategy. However, the report highlights that they are currently out-of-tune with their customers about the capabilities of voice assistants. The vast majority, 81%, said that assistants “understand the consumer’s needs and preferences when making suggestions,” a view endorsed by only 59% of consumers. There was also a gulf between the proportion of executives (84%) and consumers (65%) who believe assistants keep improving based on a user’s personalized suggestions; and on the question of whether they take context into account when interacting (74% of executives compared to 59% of consumers). 

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Report methodology

For this research, Capgemini Research Institute surveyed:

• Over 7,000 consumers using in-car voice assistants across France, Germany, India, Italy, Netherlands, Norway, Spain, Sweden, United Kingdom, and United States.


• 300 executives from large automotive organizations, across these ten countries, with revenues of more than 1 billion US dollars


• Conducted more than ten in-depth interviews with senior auto executives and voice-service providers.