Kieron Stopforth

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On November 25, 2017, Kieron Stopforth commented on A Green Merchant of Death? :

Very interesting piece – I had no idea PMI is one of the leaders of climate action. It’s surprising that a company would invest so much into making cigarettes more sustainable, when this is likely not a large driver of value for customers. In my opinion, there are two main reasons for the company investing so heavily. First, ensuring the resilience of PMI’s supply chain. PMI will face similar pressures to other agricultural companies in the near future – sourcing crops in climate-resilient locations. By acting on climate now, it will protect its core business, ensuring a constant supply of tobacco in the coming decades. Second, bringing greater legitimacy to its operations. As said in the piece, action on climate will mitigate some of PMI’s negative image.

On November 25, 2017, Kieron Stopforth commented on Supplying the World’s Thirst for Data… Storage :

It’s interesting to learn about the hardware side and how IBM is pursuing opportunities. There are also large opportunities for service providers in data. Many traditional companies struggle with the new demands of managing and using data. One example is electric utilities. These companies haven’t had large data analytics functions and must now cope with 1.6 billion data points per day from 65 million smart electricity meters in the US [1].

The first major opportunity was in providing data storage services. Amazon, Microsoft and Google are the top three in this space. But this is a very competitive and increasingly commoditized industry and margins are very slim. Now, a lot of the value is in developing analytics tools to unlock value in company data on the cloud – many companies are looking at the potential for artificial intelligence and machine learning to optimize data analysis. Change will likely be driven by third-party data services providers and not by companies in traditional industries.

[1] US Energy Information Administration, accessed November 2017

On November 25, 2017, Kieron Stopforth commented on Displacing Excel Monkeys: How Facebook is Automating the Forecasting Process :

Very interesting piece. Two ideas for how they can develop this are in digital advertising and in fashion and entertainment. First, it could help companies assess the effectiveness of their digital advertising. Understanding the true value of digital advertising is hard because its often not clear what a real sales baseline would be without the ads and because its hard to attribute growth in sales to digital adverts (while it’s easy to get data on clickthrough rates – it’s very difficult to get data on actual purchases). Facebook’s Prophet tool and its other advertising data would help companies create a reasonable baseline and then test adverts against it more accurately. Second, Facebook could apply Prophet to the fashion and entertainment industries. Facebook contains a trove of user information on current trends. Its Prophet tool could help companies understand and forecast developments in these trends and popular products and stay ahead of the curve.

It’s been very inspiring to see Chile’s leadership on clean energy, as illustrated very well by this detailed piece. However, measures Chile takes to make its own energy system more renewable will have a limited impact since the majority of the climate impacts that it faces will be caused by emissions from other countries. How can a country like Chile intervene at a broader level to reduce global emissions? It could continue its strong leadership on renewables. The auctions mentioned in the piece have been an example to many other countries, who are using the Chile model to secure cost reductions at home and increasing the amount of renewables supply around the world. Chile can work bilaterally with large emitters. Carbon offsets would allow Chile to reduce its own emissions while larger emitting nations pay. Chile can also work through regional initiatives, partnering with other Latin America countries, to promote climate measures and increase its clout internationally at climate negotiations.

It’s very interesting to see more examples of companies taking raw materials production into their own hands to make their supply chains more resilient and sustainable. Just as IKEA was considering taking over control of forests, Sierra Nevada and ABInBev are taking more control of their hop production. It’s notable that there is no sustainable, resilient supplier that can meet these companies needs. It raises the question: what value would a more sustainable raw materials supplier have to these companies and what premium could such a company charge? There may be a market opportunity for a company that can guarantee raw materials supply and is insulated from climate effects.

On the question of how can Sierra Nevada lead, I think the most important thing is to not worry about effecting change in the broader industry and focus entirely on preserving its supply chain. It must ensure its supply of hops is resilient, in areas that are protected from climate change, and which it can defend from other companies (eg, ABInBev). Proving the sustainability of its own business model will be sufficient example to the rest of the industry. Doing this will help it answer consumers’ primary concerns too: does the beer taste good and is there enough?

On November 24, 2017, Kieron Stopforth commented on Profits Starting To Wind Down: A Setback for Wind Turbines? :

This piece illustrates a very important question for solar and wind manufacturers: how to preserve value as renewables become increasingly commoditized. Renewables costs have fallen dramatically over the last 10 years, through economies of scale and more competitive policy measures (the shift from direct subsidies to auctions). Turbine manufacturers need to find ways of generating greater value to survive in the more competitive landscape. The piece talks about several options: providing operation & maintenance services, opening up new markets and investing in R&D. The companies could go further. First, increasing activities in offshore wind (typically larger, higher value projects with fewer existing competitors). Second, providing more broader energy services. Wind companies have partnered with battery providers to provide less intermittent energy. But by owning project development of the batteries themselves, these companies could provide a higher-value service to the grid. This could be a more attractive opportunity than similar companies providing solar with storage as costs of wind energy tend to be slightly lower than solar (depending on how good the resources are).