The Five Pillars of Sustainable Innovation
The developed world stands in the shadow of a climate apocalypse. Still, it is also on the brink of a profound shift towards sustainability entrepreneurship, ushering in a new gold rush of opportunity. We are witnessing the launch of significant business disruptors embracing eco-friendly movements and, as a result, momentum is being gained. This signals a substantial transformation in business as the word of the day is “opportunity” in crisis.
In this article, we have the privilege of delving into the insights of some executives from some of the foremost innovative sustainability companies who are at the forefront of this transformative wave. Their perspectives offer a glimpse into the surge of sustainable evolution and these disruptive companies' pivotal role in shaping our future.
With the introduction of President Biden’s FY 2024 budget and spending strategy, sustainable industries should expect a gold rush of investment into green tech and other firms that are willing and able to make a strong impact in decisive industries. According to this data, the green-tech and sustainable market anticipates a growth rate of approximately 20.8% from now until 2030. This creates an environment of extreme, rapid development across all sectors, especially those affecting the climate in larger ways. Those aiming to expand into a sustainably integrated society need to be aware of certain firms, ideas, and thought leaders.
Figure I: Forecasted Market size of Green Tech from 2022 - 2030
ONE: From Policy to Action
Where did the concept of sustainable business originate? How can we ascertain that the meaning of "sustainability" has remained intact since its creation? For innovators, it's imperative to recognize this, as it will likely form the foundation of future large-scale transformations in all elements of business and lifestyle. Sustainability, as a broad concept, is remarkably dynamic and adaptable across a diverse range of industries. One might assume that such versatility would have led to a multitude of interpretations of "sustainability." Yet, despite the idealistic view that creativity is a hallmark of successful companies, large corporations often face risks in adopting large-scale sustainable transformations and are, therefore, reluctant.
This hesitancy to commit to impactful movements has led to a narrow interpretation of sustainability. A modern implementation of ESG would focus predominantly on policy adherence and audit strategies. As we continue to view sustainability as a policy police station, we forget that while regulatory-compliant, it stifles creativity and the innovation of existing markets. In the broader context, a shift in focus is necessary.
While navigating an increasingly volatile political and economic landscape, business leaders must embrace transformative ideas and translate them into significant business impacts. The marketplace teems with brilliant minds and innovative ideas; the challenge lies in their scalability.
TWO: Today’s Sustainable Consumer
In an era where consumer demand for sustainable products is sharply rising, understanding the nuances behind this trend becomes crucial for businesses aiming to align with these evolving preferences.
To gauge this transformation in real time, Bain & Company’s Global Consumer Lab led a group of ethnographic researchers who surveyed 23,000 global consumers. We can now fully understand the minds of the modern sustainable customer on a much more intimate level.
People are willing to pay a higher price for sustainable products, but we run into the issue when the cost is generally higher than their willingness to pay.
Globally, the average consumer says that they are willing to spend up to 12 percent more, on average, for a product with a reduced environmental impact than for one that does not. Yet in the US, for example, products marketed explicitly along sustainability lines carry an average price premium of 28 percent.
Furthermore, the demographic most concerned with sustainability transcends price. It is closely linked with younger generations and their instinctive mission as young disruptors. In a separate discussion with former Natura CEO Alessandro Carlucci, standing chairman at BSR, a global nonprofit organization that works with its network of more than 250 member companies to develop sustainable business strategies, points out that from Gen Z onwards, there is growing importance placed on sustainability. The "sweet spot" combines sustainability with the overall well-being of these consumers, indicating a shift towards more conscious consumption patterns.
But companies need to communicate it right!! People often lack trust in big corporations for sustainable products because reliable information on the benefits of these products is scarce. However, according to Harvard Business Review, Gen Z and Millennials are 27% more likely to engage with sustainable brands that they trust.
The task ahead involves educating these young people on the importance of sustainability and ensuring that sustainable choices are appealing and fundamentally beneficial to the cause.
THREE: Blowing Up the Business Model
Today, it is evident that fresh, sustainable ideas have the potential to disrupt or even redefine traditional industries. However, only addressing their environmental inefficiencies isn’t going to cut it. As innovators, we need to be able to identify holes in the overall delivery, production, and supply chains until there is nothing left but a new idea and a blank slate. The evolution into a sustainable future will only be postponed by conforming to older industry tactics, such as implementing sustainable audits or sticking to carbon quotas. We must direct our attention to those willing to take the next step, blowing up the business model.
Sustainable innovations to big, traditional business models deemed ineffective or wasteful can transform market dynamics by leveraging technology and consumer preferences for green products. They offer more than just eco-friendly alternatives; they pave the way for a new mainstream that integrates sustainability at its core. This challenges us to change the status quo, turning sustainable solutions from niche options into the new standard.
FOUR: The Right Spot at the Right Time
Sustainable ideas embarking on the path of innovation have a golden opportunity to either join forces with the giants of today or surpass them, charting a course into the world's emerging markets.
Bert Chen, a principal consultant at ERM—a global consulting firm dedicated to implementing a sustainable future, explains that “growth can be achieved by shifting to developing markets with outsized returns, rather than where traditional markets already exist.” Armed with the courage to manage risks thoughtfully and the vision to integrate sustainable practices, these fledgling companies are not just participants in the shift to sustainability but potential pacesetters in the global economic race.
By capitalizing on developing regions' potential and heightened returns—achieving what might be threefold or quadruple the gains in mature economies like North America—they can quickly rise to prominence. It's not just about catching up; it's about redefining the pinnacle of success.
Through resilience, adaptability, and a sustainable ethos, these innovators can transform the industry landscape, turning what was once seen as a daring venture into a beacon for the future of global business.
FIVE: Big Ideas Will Be Rewarded
Big ideas in sustainability are not only rewarded—they're igniting movements that consumers like you and I are eager to join. Forging these movements hinges on empowering consumers to see the tangible impact of their choices across industries.
Consider these trailblazers reshaping sustainability:
NFW, under the leadership of visionary CEO Luke Haverhals, is pioneering a sustainable textile revolution, creating alternatives to environmentally harmful materials like polyester or leather. Their plant—and fungi-based fabrics are eco-friendly and aim to meet the high-performance standards expected from traditional textiles. By doing so, NFW actively contributes to the circular economy, showing that sustainability can go hand in hand with functionality and style.
HolyVol+ is a cutting-edge startup in the energy sector, making strides with its innovative printable battery technology. Their use of nanoparticles is a scientific advancement and a design revolution, enabling batteries to become part of the product design. From smart clothing with self-regulating temperature, to sleek, efficient electric cars, HolyVol+ is setting the stage for a future where power supply is seamlessly integrated into the very fabric of our devices.
BSR is a beacon in the sustainability consultancy space, advising companies on integrating ethical, environmental, and economic strategies. Their work underscores the importance of corporate responsibility in the fight against climate change. By shaping business practices around sustainability, BSR is helping to build a resilient and equitable economy where businesses can flourish alongside the planet.
Among the coolest in sustainability, these companies are the ones to watch as they craft a more sustainable industry and, consequently, a more sustainable world. They exemplify the power of aligning consumer choices with big ideas that have the potential to create a healthy, thriving planet.