THE COWEN INSIGHT
This is part IV of a collaborative series examining the global robotics landscape – see parts one, two, and three. Climate change is a universal threat that companies are now beginning to formally prepare for and combat. The tools employed will be broad. Robotics will be a critical element to ensure demand is fulfilled in a carbon-efficient manner as GDP and customer desires continue to expand.
UTILIZING ROBOTICS TO ACHIEVE CLIMATE GOALS
Robotic deployment in non-traditional markets (e.g., autos) is still in the growth phase. The landscape is full of new, upstart companies. The goal for robotics has always been speed and efficiency.
With the emergence of climate focuses by end-users, we believe robotic solutions will be evaluated in a more holistic, ESG-centric fashion and viewed as tools to help accomplish climate goals. While most are still targeting big items like plane/truck usage, etc., robotic solutions are part of the equation to maximize output per unit of carbon. Newer companies who typically don’t think in these terms will be forced to do so much earlier in their journeys.
The potential for the robotics industry to be a change agent is substantial. We evaluated a leading eCommerce robotics solution using Cowen’s recently updated retail/eCommerce estimates as a foundation. Our work suggests that if it is 100% deployed in the market using solar power as its energy source, this one application will reduce average annual carbon output over the 2022-2050 evaluation period by over 10MM metric tons. This is equivalent to 25+% of UPS’s total 2020 output and over 15% of Amazon’s. While we acknowledge that 100% deployment of any technology is unlikely, and many deployments will not use solar/fully renewable energy, this is only one solution we are evaluating.
SURVEYING THE ROBOTICS LANDSCAPE THROUGH AN ESG LENS
We worked with our partners at MassRobotics to survey both robot manufacturers and end-users. We did this to understand:
- How robust existing and/or publicly communicated climate plans are.
- Where robotics falls in the climate toolkit.
- What applications will be targeted.
The runway appears long – over 90% of participants expect to use or develop robotics to achieve climate objectives. However, less than 50% have deployed or are in the process of deploying them.
An interesting extension of this result is that over 90% of robotics users surveyed have or plan to establish public climate commitments in 2022. However, over 40% of robot manufacturers do not plan to commit to objectives. We think it will be critical for robotic tech to be models of the solution as well. In other words, they would be sustainable in their own manufacture/operation. Most viewed their public commitments as highly formalized - something that feels inconsistent with anecdotal evidence and our conversations in the industry.
We also developed a framework using Cowen's eCommerce growth estimates to evaluate robotic technology with a climate lens. We collaborated with Locus Robotics and spoke with one of their key customers to understand the impacts of this technology on existing operations. We leveraged these conversations to develop a model that could be applied to various types of technologies to determine their carbon impact upon deployment.
Finally, we collaborated with 3 members of Cowen Washington Research Group and 8 senior research analysts to explore policy implications for carbon emissions and how robotics are being deployed across end-markets spanning retail, transportation, machinery, clean energy, and cybersecurity.
DETERMINING THE CARBON IMPACT OF TECHNOLOGY ADOPTION
Our carbon model determines the projected carbon impact from technology adoption. It does so by focusing on energy requirements to operate the solution, the reduction in required labor to satisfy demand, and the benefits of higher precision in the task itself (lower error rates translating to fewer returns, etc.). The model is underpinned by Cowen's recently published updated eCommerce growth estimates and square footage requirements to support it.
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