Promoting a Sustainable Business

 Sustainable business

Sustainability has become a necessity for both businesses and the environment. Reduced environmental effect was once considered a "good to have" for businesses. Employees, consumers, and investors are putting increasing pressure on leaders to take action on environmental challenges. It's now a must as well as a legitimate and lucrative business opportunity.

However, there is a problem: too many incumbents are behind, maybe uninformed of or uninterested about the growth in climate technologies. Emerging climate technology companies are changing the game when it comes to how businesses may and should approach sustainability all around the world and across all industries. They're getting more money, and as one CEO put it, they're "moving rapidly and boldly." You can't make small things in a small way; you have to think big."

This pattern has been witnessed previously, most notably in the field of digital disruption. First movers or, at the very least, organisations at the forefront of handling the disruptive threat are frequently rewarded disproportionately. So, what can well-established businesses do? They can identify what differentiates disruptors, establish the groundwork for action, and prioritise four imperatives.

flex their operational model, with leaders role-modeling a bold experimental mentality take an agile approach to risk capital, knowing that commercialization of products and services won't come overnight

From access to cash to deep institutional expertise, incumbents have various advantages over innovators. While applying the start-up playbook to incumbents can be challenging, it is feasible. They may learn how to be faster, compete more effectively, and win by understanding what makes their emerging competitors tick.

Three sustainable epochs

Sustainability was a niche problem for many firms until just over a decade ago, which is hard to believe now. Concerns about the changing global climate—and the impact of human activity on emissions—had been building for decades, but just 20% of S&P 500 businesses submitted sustainability or corporate social responsibility (CSR) reports in 2011. While these studies spoke about sustainability, concrete action was rare.

Then the tsunami picked up speed. Select countries adopted Kyoto Protocol greenhouse-gas reductions from 2008 to 2012, and in 2011, the basis was created for what would become the comprehensive Paris Agreement, which was signed in 2015. The quick rise in public and investor awareness, along with the advent of legislation that encourage decarbonization, prompted swift action: by 2013, 72 percent of S&P 500 corporations had published a sustainability or CSR report.

Sustainability has emerged as a significant value driver in the last five years. As it became clear that current measures to limit temperature rises might not be enough, corporations began to see the chance to address the problem. Organizations began to adopt and promote environmental, social, and governance (ESG) measures, and the number of corporations subscribing to science-based sustainability targets more than tripled between 2020 and 2021. Finally, corporate entrants began to promote sustainability as a strategic lever for creating value, and "climate unicorns" began to emerge.

1. Genuinely motivated by a sense of purpose and passion

Climeworks, a Swiss startup developing technology to extract CO2 from the air directly and permanently, began in 2009 with "a modest laboratory gadget and a little bit of persistence," according to CEO and cofounder Jan Wurzbacher. "But we wanted to establish a firm that has actual clout—that makes a major difference—and climate change is one of, if not the largest, issues humanity is facing right now." Over the next 30 years, we really intended to take the hard and long road to build up and enter a new business."

Disruptive start-ups in the climate technologies industry share this deep sense of purpose. That belief can be beneficial early on, when funds are scarce and technology is still being developed. It can, however, linger long after those anxieties have passed. "There's a supportive attitude," Wurzbacher added. "Everyone understands the larger purpose for what we're doing, which is quite beneficial." We must exercise extreme caution in terms of what we plan and what we deliver in comparison to our plans."

2. A deep technological grasp combined with a vision for the future

Becoming a disruptor demands profound knowledge augmented by creative thinking, and being a climate start-up necessitates not only knowledge and creativity but also deep technological understanding. In certain ways, businesses are aware of the rules—and yet break them. "In the beginning, we focused on making ethanol—nothing fancy, nothing groundbreaking—but with a very, very novel technique," Sean Simpson, LanzaTech's cofounder and chief scientific officer, told us.

Few disruptors work alone, attempting to solve apparently insurmountable challenges on their own. TAE Technologies, for example, worked with Google AI to meet the key goals for their fusion platform using machine optimization and data analytics. LanzaTech has combined synthetic biology, bioinformatics, and artificial intelligence (AI), as well as machine learning and engineering. Carbon Engineering, which, like Climeworks, is working to commercialise CO2 direct air capture (DAC), has collaborated with LanzaTech to combine DAC technology with hydrogen generation to offer near-carbon-neutral synthetic fuels.

Start-ups in this field are known for bringing in complementary technology and cooperating with companies that bridge knowledge gaps. While businesses are fiercely competitive, there is a sense that they are working together to make huge, brave risks in the name of sustainability. Michl Binderbauer, CEO of TAE Technologies, which is developing commercial technology based on nonradioactive nuclear fusion power, remarked, "You have to bridge the gap between different disciplines." He encourages people to work in specific areas of expertise, claiming that the combination of deep individual knowledge results in a process that "will function better in the end—higher quality and faster."

3. High levels of empowerment and risk-taking

Larger, traditional firms, according to start-ups, struggle to leverage disruptive technology since their organisations are risk cautious by nature. Academics, according to Binderbauer, choose settings that are less risky. He stated, "They want predictability." "We attracted people by saying, 'You can do things here in ten years that you couldn't do in ten years at your academic job.

When asked why he left academics to join a firm attempting to develop a fully functional quantum computer, PsiQuantum cofounder and CEO Jeremy O'Brien said it "simply didn't compute at all." "It would be insane to spend 20 years cracking the problem, then decide—oh, I'll just stay in academia and not develop a quantum computer because you can't construct a quantum computer in a university, right?" We learned from O'Brien. "When my cofounders and I discovered we could use semiconductor manufacturing to develop a practical quantum computer on a reasonable time and money scale, a machine capable of producing world-changing advancements in climate, healthcare, energy, and beyond, we left academics to launch PsiQuantum." PsiQuantum has been awarded $665.

Others face a systemic rather than a personal risk. Carbon Engineering, created in 2009 by Harvard professor David Keith, is working to develop and market CO2 collection technology. While the science pointed Keith to the possibilities, the company is taking the risk that the world will not do anything with the technology, according to John Bruce, vice president of strategic development. "Our biggest competition is complacency and failing to handle net zero," Bruce explained. "I don't believe it's a technological issue." Can CO2 be removed at a large scale? I believe that between us and a variety of other technologies, we can figure it out. The question is whether we as a society will pay for it."

4. A fast-paced test-and-try mentality

TAE Technologies had to employ a trial-and-error method, according to Binderbauer, because its goal was to produce "dramatic" rather than incremental progress. "You don't always know everything right away," he explained. "You're not planning on it." You have a vision of where you want to go: finding a way to generate power in the fusion space that is absolutely free of carbon and radiation. That characterised the product we wanted to create. But then we embarked on a path toward a reasonably concise vision statement that turned out to be far more difficult than I had anticipated."

TAE Technologies took a decade to progress from tabletop trials to producing something at scale, all the while trying to persuade investors of the value of its technology and approach (today, the company holds more than 1,400 patents). Climeworks took years to develop, with engineers believing the project would be difficult, if not impossible—skepticism met with "continuous optimism," as Wurzbacher put it. He and cofounder Christoph Gebald were "a little bit like the two crazy guys," he remarked. "It's either full throttle or nothing." Binderbauer also had another motivator: "There's no better force than knowing we'll run out of money tomorrow if we don't deliver." What you do today is what you do tomorrow.