future industry themes

8/6/2019 Future Industry Themes

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FUTURE INDUSTRYTHEMES


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CLEANER ENERGY

The Challenge

Energy consumption is at a critical point.

The International Energy Agency (IEA) predicts that under a

business as usual (BAU) scenario, energy consumption willgrow by 55% between 2005 and 2030, at an average annual rateof 1.8% per year.

Developing countries accounting for 75% of the increase.

Prompt action is taken the cost is believed to be equivalent to 2% of global GDP.

Markets & Drivers

Low carbon methods of energy production.

Raising energy prices -by escalating costs of oil discovery and production.

The European Union (EU) and certain US states have led in developing innovative policiesaimed at tackling climate change.

Australia, China, India and Japan developing ambitious programmes to build the proportionof energy they get from renewable energy including through a variety of market-basedincentives and taxes.

Global wind capacity has grown at a compound annual growth rate (CAGR) of 24% since1999, reaching over 94 gigawatts (GW) by the end of 2007 according to the Global WindEnergy Council.

From 2003 to 2008, global solar installations have expanded more than fourfold fromapproximately 0.6GW in 2003 to nearly 3 GW in 2008. Some forecast this will grow to22GW by 2012.

Investment Opportunities

Focus on companies whose goods and services reduce the impacts of energy generation,increase the use of renewable energy and make the bridge to a hydrogen economy.

This includes companies in the following sub-themes:

Renewable energy including companies involved in helping to generate energy from small-scale hydro, solar, wave, wind and other forms of low carbon energy

Hydrogen economy focusing on companies involved in generating and using hydrogen as alow carbon source of power

Other businesses - providing clean fuels and/or enabling a shift to a low carbon economy

including businesses focused on carbon trading

Examples of companies within the Cleaner Energy theme include...

Fuel cell developers such as Ceramic Fuel Cells (UK)

Companies involved in manufacturing and operating wind turbines including IberdrolaRenovables (Spain)

Companies developing solar power technologies such as Roth & Rau (Germany) and JASolar Holdings (US)


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EFFICIENCY

The Challenge

ABB, the industrial goods company, estimates that for every unit

of energy consumed in industrial processes, four units are lostthrough inefficiencies.

Twin challenges of climate change and high energy and resourceprices.

Improving the efficiency of energy use in buildings, electricalproducts, transportation and industry global emissions of CO2could be reduced by 8 billion metric tonnes per year by 2020.

Markets & Drivers

Energy efficiency provides an immediate financial pay-back.

Insulation improvements, fuel efficient vehicles, lighting systems and solar water heating,there is a negative abatement marginal cost of reducing GHG emissions.

Reducing GHG emissions saves money.

The European Union, as part of its commitment to reduce energy use by 20% by 2020 isputting in place eco-design standards on 14 product groups including computers, boilers andstreet lighting to improve energy efficiency.

China is targeting ten areas for improved efficiency including energy conservation in electricmotors and buildings, and energy efficient lighting.


Focus on companies whose goods and services reduce energy and resource use.This includes companies in the following sub-themes:

Energy management & conservation providing efficient lighting and electrical systemsas well as efficient heating and ventilation systems and insulation

Process control manufacturing industrial process equipment such as pumps, valves androbotics that help to conserve energy and other resources, as well as companies providingsmart meters that help consumers

Examples of companies within the Efficiency theme includes...

Johnson Controls (USA), which manufactures energy-efficient devices for buildings Keyence(Japan), which produces instruments to save energy and improve quality in manufacturingprocesses

SIG (UK), which supplies building insulation materials


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ENVIRONMENTAL SERVICES

The Challenge

Urbanisation

Municipal solid waste (MSW) is produced by millions of people.The amount of MSW generated worldwide in 2006 was estimated at2.02 billion tonnes, and is forecast to increase by 37.3% between2007 and 2011.

Land degradation.

Mankind causing 40 billion of damage to terrestrial ecosystems each year, and predictedthat global Gross Domestic Product (GDP) could decline by 7% by 2050 if no action istaken.

Markets & Drivers

The increasing awareness of the impacts of environmental degradation, are generating strongfinancial pressures and incentives for businesses to innovate and provide solutions to thesechallenges.

The world market for environmental goods and services was valued at US$ 548 billion in2004, and is expected to grow a further 45% by 2015 - suggesting a market of US$ 800billion by 2015.

According to the Waste Business Journal, the value of the current MSW market in the USAis US$ 52.1 billion, up from US$ 46.5 billion two years ago. Historically it grew at 3-4% peryear, however, over the past two years, the figure has been nearly 6%.

The contaminated land market in the UK was estimated at 1.1 billion in 2007, an increase of7% from the previous year.

Overall the value of the market has increased by 31% between 2003-2007.


Focus on companies whose goods and services facilitate sustainable management ofenvironmental resources and reduced pollution and waste.


Sustainable waste management & recycling promoting closed-loop materialsmanagement by providing solutions to reduce, reuse, and recycle waste materials, as well aspromoting use of renewable raw materials

Pollution control & monitoring technology providing solutions to eliminate or reduce

pollution, and enable effective pollution management Ecosystem resource management promoting sustainable use of land and coastal regions,

as well as critical ecosystem resources

Sustainability/environmental consulting providing advice on good practices andsolutions for tackling sustainability and environmental impacts

Examples of companies within the Environmental Services theme are...

RPS [UK], an environmental consultancy company

Sims Group [Australia] is a leading metals recycler


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Stericycle [USA], a medical waste service company that provides collection, treatment anddisposal services

HEALTH

The Challenge

The global population predicted to surpass 9 billion by 2050. Thiswould equate to healthcare spending in 2050 of 8 trillion, comparedwith 4.4 trillion in 2005.

An ageing population also needs greater healthcare. Since 1950, theproportion of older persons (aged 60 or older) has been rising steadily,moving from 8% in 1950, to 11% in 2007 and it is expected to reach22% in 2050.

As populations in emerging and developing economies continue to adopt western lifestylesand diets, this exacerbates the challenges posed by chronic disease.

Communicable diseases are still a major case of death and disabilities for millions of peopleglobally

Markets & Drivers

Increasing emphasis on prevention and early detection can improve healthcare outcomes.WHO states that 80% of premature deaths caused by heart attacks and strokes arepreventable. Early detection can also reduce costs

The healthcare products market in 2007 was worth US$ 629 billion, with medical devicesrepresenting 34% of the total and showing sales growth of 6% (2007E 09E).

The global in vitro diagnostics (IVD) market was estimated at US$ 30 billion in 2005, withgrowth at 6-8% a year.


Focus on companies whose goods and service enhance, maintain or restore medical health.This includes companies in the following sub-themes:

Prevention & detection providing solutions to prevent or reduce the likelihood of diseaseand ill health, and enabling early diagnosis so reducing potential severity

Treatment providing effective treatment, focusing particularly on areas of high unmetmedical needs e.g. cancer, HIV/AIDS

Access providing or facilitating access to healthcare by offering key supporting goods andservices

Examples of companies within the Health theme include... Intercell (Germany), involved in the research & development of vaccines to treat infectious

diseases

Pediatrix (USA), a provider of maternal, newborn and pediatric physician services

Smith & Nephew (UK), a healthcare company focusing on orthopedics, wound care andendoscopy, making products to repair joints, skin, soft tissue


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SAFETY

The Challenge

Safety continues to be a major social and economic issue around theworld.

Work-related accidents and diseases and a further 270 million peoplesuffer non-fatal, work-related accidents.

Road accidents

Markets & Drivers

Regulators around the world continue to tighten legislation, forcing businesses to adopt moreprogressive approaches to minimising accidents at work.

In the US in particular, escalating costs of injuries from rising medical costs and insurance as

well as large jury awards against negligent employers are also impacting earnings. Consumer and public anxieties about product safety, in part driven by concerns about

chemicals in products and high-profile stories of contaminated products such as pet food andtoys, has reinforced companies commitment to extensive product testing and certification.


Focus on companies whose products and services prevent and minimise safety incidents inthe workplace, at home and in the community.


Occupational safety - reducing risks of exposure to harmful substances or dangerous

processes in the workplace. Product safety - improving the safety of consumer products through better testing and

controls.

Residential & commercial safety - making homes and businesses safer and more secure.

Examples of companies within the Safety theme are...

Autoliv [Sweden] develops and makes car safety systems such as seat belts, air bags and legprotection equipment

[USA] develops and manufactures products to increase safety of night-time driving

Intertek [UK] is a product and process quality and quality inspection and testing company


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SOCIAL PROPERTY AND FINANCE

The Challenge

No access to very basic financial services in developing countries.

In the Asia and Pacific region alone, more than 300 millionhouseholds suffer from lack of access to financial services.

In the US, it is estimated that over 40 million people do not haveaccess to financial services.

Two million adults living in 1.3 million households in the UK donot have access to any kind of bank account.

In 2008, around 90,000 homeless families are in temporary accommodation in Great Britain,this is double the number in 1997.

Markets & Drivers

Governments throughout the world are focusing efforts on resolving these problems ininnovative ways, through a mix of increased expenditure, regulation and public serviceoutsourcing, which are enabling the creation of public-private partnerships.

The UK government plans to invest 8 billion in affordable housing. At least 70,000affordable houses a year are due to be built by 2011, including 45,000 social housing; morethan double the amount built in 2004.

In the UK, 74% of new housing is being built on Brownfield land, up from 57% in 1997.

Microfinance sector worldwide has a total outstanding loan volume of US$ 25 billion..


Focus on companies who promote financial inclusion, property for social benefit, access tohousing and regeneration.


Access to housing facilitating access to affordable or social housing; providing property toorganisations delivering socially benefitcal services

Access to finance - enabling access to financial services for traditionally excluded sectionsof society

Regeneration regenerating communities and local economies

Examples of companies within the Social Property & Finance theme include...

Eaga [UK] delivers residential improvements in the environmental, energy efficiency andsocial justice arenas

Sirus Real Estate [Germany], a property investment company providing workspaces for smallto medium-sized enterprises in Germany

Bellway [UK] a property developer active in brownfield development in urban areas


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SUSTAINABLE TRANSPORT

The Challenge

The only sector almost entirely reliant on oil as the single source ofenergy:

Transport is the third largest source of green house gases (GHGs)representing 14% of global emissions.

Markets & Drivers

Government policies to strengthen public transport, tighten emission controls and liberaliseservice provision are creating new investment opportunities.

Technological innovation is also providing solutions to reduce the environmental impact of

fuels used. The worlds rail market continues to show growth of 2-3% per year and is soon set to hit

100 billion.

US highway traffic registered negative growth rates in 2007 and the sharpest fall in car trafficin the past 15 years occurred in 2007 in the UK.

Public transport passenger volume growth has started to accelerate.

Tightening pollution control regulations in North America, Europe and Asia, are driving theintroduction of catalytic converters and filter technologies.

The market for heavy duty diesel catalysts is expected to form an estimated US$ 700 millionby the end of 2008 to approximately US$ 3 billion by the end of 2014.


Focus on companies whose goods and services enable the shift to less polluting modes oftransport, and cleaner transport technologies.


Modal shift manufacturing or operating mass transport solutions such as bus, rail andtrams

Emissions reduction providing technologies to reduce transport pollution from existingtechnologies

Demand management reducing demand for energy and pollution-intensive modes oftransport

Examples of companies within the Sustainable Transport theme include ...

FirstGroup (UK) provides buses and trains services throughout the UK, and school buses andmunicipal transit services in the US

Shimano (Japan), a manufacturer of bicycle components such as air power transmissionsystems and brakes


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WATER MANAGEMENT

The Challenge

Less than 1% of the world's fresh water readily accessible for humanuse.

Global consumption of water is doubling every 20 years - more thantwice the rate of human population growth.

By 2025 two-thirds of the world's population will be living withserious water shortages or absolute water scarcity

88% of all diseases are caused by unsafe drinking water, inadequate sanitation and poorhygiene.

Markets & Drivers

In the industrialised world, the drivers are increased environmental regulation and the need toupgrade ageing infrastructure,

In emerging markets the focus is on introducing comprehensive water infrastructure to meetrising demand.

Technological innovation is driving growth in all markets.

The global water market addressing municipal and industrial water/wastewater equipmentand services is estimated to be US$ 425 billion.

Wastewater use and recycling is increasingly seen as the fastest and lowest cost way ofprocuring more water.

60% of all water main pipes in the US will be classified as substandard by 2020.

Agriculture accounts for 70% of world fresh water usage and an estimated 31% of this iswasted.


Focus on companies whose goods and services facilitate the good management andconservation of water.

This includes companies in three main sub-themes:

Water distribution & management - providing water purification, distribution, wastewatertreatment and water recycling services

Water equipment & technologies - providing solutions enabling more efficient and betteruse of water

Examples of companies within the Water Management theme...

Energy Recovery (USA) a manufacturer of energy recovery devices for desalinationprocesses

Severn Trent (UK) pwhich provides water and wastewater services in the UK TorishmaPump (Japan), a manufacturer of pumps for the water industry

Veolia Environnement (France), a multi-utility water and waste service provider


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KNOWLEDGE

The Challenge

Across the world, 77 million children are not enrolled in school.

Globally, an estimated 781 million adults are illiterate.

Between 2000 and 2010, jobs requiring post-secondary education areprojected to grow at a much faster rate than the average of all jobs:21.7% v. 15.2% in the USA.

Markets & Drivers

The number of young people entering post-secondary education is increasing and workforcedynamics are also changing, with individuals changing jobs more frequently, fuelled bychanging lifestyle choices.

The global education market is estimated to be US$ 2.5 trillion and currently 4.4% of globalGross Domestic Product (GDP) is spent on education.

The current on-line learning market in the US is worth US$ 13.6 bilion and will continue togrow at a compound annual growth rate (CAGR) of 22% over the next 5 years.

Global corporate training market is worth USD 13.51 billion and is projected to grow to USD17.29 billion by 2010.


Focus on companies whose goods and services enable education and training for bothstudents and those in employment.

This includes companies in the following sub-themes: Education & training providing solutions for post-secondary education, language or

corporate training

Solutions for the educational market facilitating access to education through provision ofkey support services

Examples of companies within the Knowledge theme are...

Benesse (Japan) offers correspondence educational services

Reed Elsevier (The Netherlands/UK) a leading publisher of scientific, technical and medicalliterature

RM [UK] provides I.T. related educational services to schools

Strayer (USA), a provider of post-secondary education services to working adults


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QUALITY OF LIFE

The Challenge

WHO projects that by 2015, 2.3 billion adults will be overweight,and more than 700 million will be obese.

In agriculture, tonnes of chemicals are used in farming each year tokill weeds, insects and other pests that attack crops. 150 of theavailable 350 pesticides used have been identified as potentiallycausing cancer.

Numerous studies have found pesticide residues in up to a third offood, including residues of more than one chemical.

Markets & Drivers

According to the Organic Trade Association (OTA), organic food sales in the USA currentlytotal US$ 17 billion and represent the fastest-growing category in food retail. Double-digitgrowth is expected to continue, having grown at a CAGR of over 18% for the 5 years from2002

The US market for elderly living solutions, which encompass nursing and housing relatedservices, totaled US$ 150 billion in 2006.

According to International Health, Racquet & Sport club Association (IHRSA), the estimatedmarket size of the US health club industry in 2006 was US$17.6 billion in revenues.


Focus on companies whose goods and services promote sustainable lifestyles among all agegroups, including children and the elderly.


LOHAS (Lifestyles of Health & Sustainability) providing solutions which promotephysical and dietary wellbeing, as well as respond to growth in green/ethical consumerism

Social care & support - providing solutions for the care of the most vulnerable in society,including the young and the elderly

Examples of companies within the Quality of Life theme include...

Care UK (UK), a provider of social care solutions for the elderly and those with specialistneeds

Life Time Fitness (USA), a manager of sports, athletic, and fitness centres

Wessanen (The Netherlands), a food company offering organic and natural foods


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