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A Framework for Building a Climate Innovation Startup

by Esme Learning

More than ever, consumers expect businesses to play a role in curbing climate change. In fact, they think businesses should be as responsible as governments.

It’s not just the 66% of consumers who consider sustainability when making a purchase that’s spurring businesses to follow a climate innovation framework. The World Economic Forum estimates that adopting climate-positive practices can generate over $10 trillion in annual business value by 2030 and create 395 million jobs.1

The Climate Initiative and The World Economic Forum are driving forces in encouraging greater climate change action. Ensuring that business, government and civil society are working together to meet existing commitments, as described in the "Global warming can be beaten thanks to this simple plan" video.

 

Imperial College Business School's Climate Innovation: Accelerating to Net Zero Emissions programme is an excellent opportunity to become part of this transformation, which will become critical due the current environmental challenges, in addition to addressing the impact that the energy crisis is expected over the coming period on business activity and society worldwide.

Sign up for the Imperial College Business School Executive Education Climate Innovation: Accelerating to Net Zero Emissions programme to learn the methodologies, tools and processes to solve climate-related challenges.

This programme is for people who want to leverage their business skills and sectoral expertise to create a new way to tackle climate change – whether it be a product, service or way of working. You will get inspiration and practical advice on how to become an innovator in this space.

You may additionally download our free ebookBuilding a Climate-Crisis Proof Business, to explore how to launch climate innovation projects that drive long-term sustainability and create impactful solutions.

Climate innovation projects are also a lucrative opportunity for innovators and entrepreneurs who want to go to market with products that help combat climate change. The UK government pledged £116 million towards green-tech businesses2 and £3 billion in climate financing in developing countries over the next five years.3

The US government aims to deliver a $400 billion investment in climate innovation over the next ten years.4Besides, nearly 75% of adults in the US support investments in climate innovation. 

Cristianne Close, Global Markets Practice Leader at the World Wildlife Fund, says, “Brands that deliver on sustainable innovation…are the frontrunners in consumers’ eyes.”1

The Core Principles of Climate Innovation for Startups 

For climate innovation ventures to be impactful businesses, entrepreneurs have to align their startup ideas with broader climate change goals. 

Their business models have to commit to:

  • Protecting nature and natural systems and setting science-based targets for nature. 
  • Setting stringent greenhouse-gas-emissions reduction targets. 
  • Creating a nature-positive economy in the way they source and operate their businesses. 

With climate innovation, entrepreneurs have the opportunity to solve some of the biggest challenges by:

  • Innovating solutions that eradicate the major sources of pollution: while some sectors, like energy, have received attention for both causing pollution and being a hotbed for climate innovation, other sectors have lagged. Obviously, entrepreneurs have to innovate for those sectors, like building and agriculture, and prioritise solutions based on the greatest potential climate benefits. 
  • Building solutions that support the entire process of climate innovation: projects in the realm of climate innovation can range from early-stage R&D to cutting-edge real-world solutions to commercialisation programmes that help adoption in the market. Entrepreneurs need to help solve the challenges of climate change from every angle and throughout the whole process. 
  • Taking a multidisciplinary approach to solving climate change issues:breakthroughs in climate innovation rarely happen without a cross-cutting, holistic approach. Innovators need to know how to leverage the latest technologies, research, insights and expertise to bring out solutions that have the most significant impact. 

Development of low-carbon emitting technologies crucial to address climate  change: WEF - The Environment

The Biggest Areas of Opportunities for Climate Innovation Startups  

Based on the principles set by the Accountability Framework,6 climate innovation will require solutions that: 

  • Protect nature and natural systems. 
  • Protect human rights, particularly indigenous people and local communities. 
  • Help other organisations meet their climate-related pledges. 
  • Promote supply chain assessment and traceability. 
  • Manage supply chain compliance. 
  • Provide long-term protection and conservation of land and cultural values.
  • Help companies collaborate to address social and environmental issues. 

According to the Global Startup Heat Map, the greatest concentration of solutions and investments in climate innovation are in the following areas: 

  • Renewable Energy: startups are building solutions that help optimise large, carbon-dependent processes, in addition to solutions that enable alternative energy like wave and geothermal energy. 
  • Low Carbon Construction: startups are helping the construction industry transition to circular practices, incorporating cleaner and sustainable materials that align with the principles of living nature. 
  • Smart Mobility: beyond electric vehicles, startups are helping innovate solutions like hyperloop tech and plug-in hybrid vehicles as well as sustainable fuels such as green hydrogen to help decarbonisation. 
  • Carbon Capture, Usage and Storage (CCUS):solutions that help capture and upcycle carbon, thus undoing its negative impacts, are also gaining popularity. Climate innovation entrepreneurs are developing solutions like artificial photosynthesis and upcycling carbon into biochar that remove the pollutants from the environment. 
  • Sustainable Automation:automation systems not only speed up different processes in the manufacturing, agriculture and transportation sectors, they can also optimise functions and prevent energy wastage. 

Circular processes, green materials and energy consumption management are a few of the other areas where startups are building green solutions. But the potential of cleantech is such that it can pervade every aspect of the value chain and create more sustainable economies.

4 Strategies to Build a Climate Innovation Game Plan 

Given the breadth of opportunities, need and urgency for innovation in climate change, entrepreneurs have a wide choice of where to focus their innovations. In fact, investments in cleantech doubled in 2021 compared to the year before to a record $66.3 billion8 across an expansive range of climate innovation projects. 

However, to build a solution that’s both lucrative and is climate-positive, entrepreneurs need to consider the following9

  • Is the climate innovation solution strategically sound: entrepreneurs have to consider if they have any strategic advantage, are their solutions competitively placed, can they take a multidisciplinary approach and will the solution work regardless of industry. 
  • Will the climate solution create value for their business and society: they need to consider what commercial potential the solution has, how difficult it will be to go to market and scale the solution, and what kind of climate impact the solution provides. 
  • Is the climate solution-resilient:entrepreneurs need to plan how changes in the macro-environment, such as a change in regulations, will impact their solution and business, will their solutions be flexible enough to change course to address short-term uncertainties and can they balance potential risks with the upside of the solutions. 
  • Will the climate innovation startup be sustainable:climate innovators need to focus on solutions that create social and environmental impact, and help overcome the challenges of climate change while bringing value to the founders as well as the communities where the business  operates.  

The next few years present an exciting opportunity for climate innovation startups to bring exciting and transformative solutions to the market that help solve the challenges of climate change. Apart from learning about the scope and regulation in the climate innovation space, entrepreneurs will need to understand innovation techniques that help commercialise sustainable and impactful solutions to fight climate change. 

Sources:

  1. https://www.weforum.org/agenda/2021/05/eco-wakening-consumers-driving-sustainability/
  2. https://www.computerweekly.com/news/252510572/Government-makes-116m-pledge-to-help-UKs-green-tech-firms-innovate-to-fight-climate-change
  3. https://www.gov.uk/government/news/pm-launches-new-initiative-to-take-green-industrial-revolution-global
  4. https://www.whitehouse.gov/wp-content/uploads/2021/04/FY2022-Discretionary-Request.pdf
  5. https://www.edf.org/sites/default/files/documents/2112047_EDF_Climate%20Innovation%20Perceptions_Voters.pdf?_
  6. https://accountability-framework.org/the-framework/contents/core-principles/
  7. https://www.startus-insights.com/innovators-guide/top-8-cleantech-trends-2022/
  8. https://www.s-ge.com/en/article/expertise/2022-e-clean-venture-capital-investment-cleantech-trends-2021
  9. https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Energy-and-Resources/gx-tracking-the-trends-2022-digital.pdf
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