A sustainable future needs innovative start-ups
Contributors to the discussion were Henrietta Moon, CEO and Co-founder of Carbo Culture; Inês Peixoto, Postdoctoral Researcher at Aalto University School of Business; and Michael Hummel, Professor in Biopolymer Chemistry and Engineering at Aalto University. The moderator was Patrick Timmer, a consultant at McKinsey & Company, and a CEMS MiM graduate from Aalto University.
The discussion touched upon three key themes around the topic of entrepreneurship is important to the global sustainability agenda.
The speed of change
Although industries are broadly moving in the right direction towards becoming more sustainable, change is not happening swiftly enough to limit global warming to the 1.5°C pathway outlined in the Paris Agreement.
Indeed, the IPCC has suggested the pace of change has been slacking so much, that countries and organisations must now start physically removing carbon dioxide from the atmosphere to remain in line with global warming targets, points out Henrietta Moon.
New start-ups tend to be far more agile and adaptable to new circumstances than large corporations. ‘A big company has so much friction internally that they can’t even decide anything within three weeks because it takes so many meetings, whereas a start-up can do that loop many times a day,’ she says.
Her own company, Carbo Culture, specialises in carbon capture technology, turning biomass into stable forms of carbon and creating carbon dioxide credits which are sold in voluntary carbon markets.
The level of investment
Moving towards reducing global emissions by 90 percent by 2050 will require €3.5 trillion of investment in low carbon assets every year, according to a recent McKinsey study. This presents a massive opportunity for entrepreneurs to secure funding for new business ventures.
Professor Michael Hummel is part of a team of researchers working on the development of sustainable textiles and textile recycling. He has been working on the project since 2009, and acknowledges the level of funding required to make new ideas commercially viable.
‘You have to have a very high output in order to actually start making profit. And you cannot jump from the lab straight to that. You need certain steps, and each of these steps needs investment. Considerable investment,’ he explains.
‘We are talking from the first step €10 million, then €50 million, and then once you get to the commercial stage, we’re talking something about €200 million and more.’
The need for innovation
Only 55 percent of the necessary decrease in carbon emissions by 2050 can be reached with technologies that are already in commercial use. The remaining 45 percent will need to be reached with technologies that are in the early stages of implementation, or still in the research phase. The need for innovative solutions is a golden opportunity for entrepreneurship.
‘How we see the role of start-ups is that they can imagine new futures in ways that larger companies don’t,’ says Dr. Inês Peixoto, whose research focuses on transitions to low-carbon business in the shipping and aviation industries.
For example, there are some shipping start-ups which are using artificial intelligence (AI) to make processes more efficient, reducing waiting times at ports. She has also noticed several new businesses emerging which use blockchain and other technologies to make supply chains more transparent and accountable.
How to motivate change
Henrietta Moon suggests that for change to be across the board, new regulations must be introduced to make companies pay for polluting behaviour. This would make markets more competitive for eco-friendly start-ups, she believes.
Professor Michael Hummel concurs that legislation will be an important factor, ‘legislation is a very powerful, if not the ultimate, driving force,’ he says. He also emphasises the importance of pressure placed on governments and businesses by voters and consumers.
‘You are very powerful as a voter, but you are even more powerful as a consumer,’ he adds.
Dr. Inês Peixoto cites the need for cooperation between organisations. ‘We need drivers from all sides to sort these problems,’ she says.
Patrick Timmer summarises that in order for progress to be as rapid as it must be to meet global warming targets, and to scale up new innovations as quickly as possible so they are ready for commercial use, different parties must collaborate.
This includes start-ups, universities, and regulatory frameworks which will allow new businesses to thrive in competitive markets, as well as consumers who can command corporate attention if enough of them demand more environmentally friendly products.
Contributors to the panel discussion (bios of the speakers)
You may now watch the recording of the panel discussion on the topic of ‘Technology through startups for a more sustainable business’. The event was organised at Aalto Design Factory on 1 September 2022.
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