The most enormous business opportunity since the invention of the PC!
In the face of the unprecedented challenges posed by climate change, a new frontier of business opportunities emerges, where sustainability and profitability intertwine to shape a better future for our planet and economy. Computers were the source of the 20th century’s wave of growth and prosperity. Climate change is the equivalent opportunity for the 21st century. Innovation and entrepreneurship are the keys to unlocking it.
Tackling issues as significant as climate change can seem daunting. Still, our most fantastic opportunity lies in leveraging the knowledge and tools we already use every day, tools that are in our pockets right now!
In our connected world – which we have spoken about extensively in past Digigram newsletters – our always-on lifestyles can and should intersect with sustainability in big and small ways. Climate change is not about lamenting and tree-hugging. It is about creating innovations and taking them to market thru entrepreneurship. Using today’s tools, we can effectively address climate change challenges.
In November 2021, President Biden introduced the bipartisan infrastructure deal, comprising three crucial laws and spending plans aimed at promoting clean energy jobs, bolstering resilience, and advancing environmental justice. With a staggering $2 trillion of government spending allocated on cleantech, the scale of this investment is remarkable: The world’s largest polluter is going sustainable. To put it into perspective, this amount is nearly three times the entire GDP of Switzerland ($870 billion in 2023) and exceeds the Swiss government’s annual budget by 30 times.
Climate Tech is the only venture investment sector that is actually growing:
Moreover, private venture capital investments in the United States surpassed those of China and the European Union combined in 2022, reaching an impressive $28.6 billion. With such substantial resources, there has never been a more opportune moment to propose practical solutions to climate change while benefitting from once-in-a-century governmental incentives.
As an entrepreneurship lecturer at UC Berkeley, I have the privilege of teaching the next generation of innovators and challenging them to develop business ideas that make a meaningful impact on the world while addressing significant global issues. Throughout my experience teaching innovation and entrepreneurship, I have gleaned valuable insights, which I am eager to share. Allow me to present some key lessons I learned and provide practical tips to empower you in making a difference as well.
Step One – Identifying Problems in Search of Solutions
Insights into the wicked climate problems – When solving climate change issues, one might be curious about where to start. Such a global phenomenon can’t all be solved by one person. It can neither be solved by one company or one country. However, many innovative people working together can make immeasurable contributions to their communities and create scalable models that can work on a national or global scale. One key aspect of tapping into this potential lies in effectively identifying the problems that need innovative solutions.
Design thinking is the tool – To start, it is crucial to stay informed about the latest developments and research regarding climate change to draw valuable insights into the areas where urgent action is needed. By understanding the specific climate challenges, you can identify opportunities in unsolved problems. Design thinking is an ideal tool to stay focused on the actual needs of those impacted: By leveraging their diverse perspectives and knowledge, insights are uncovered, and ideas for innovative solutions can be developed.
Data is the new oil and is widely available – Technology can be a powerful tool in problem identification. Advances in data analytics, machine learning, and remote sensing have made it possible to gather and analyze vast amounts of information related to climate change impacts – often from public sources accessible to anyone with a computer.
Step Two – Selecting Your Model and Aligning it with Sustainability Goals
Triple Bottom Line is a tool to design sustainable businesses – One crucial aspect of leveraging climate change for a business opportunity is choosing a business model that not provides good economic returns but also aligns with sustainability goals and satisfies societal expectations. Modern businesses not only serve stakeholders but also address climate change and will be accepted by people because it emphasizes a human-centered approach, placing the needs and desires of individuals at the core of problem-solving.
RRR: Reduce, repair, recycle or repurpose reduces emissions – Business models that promote resource efficiency and circularity at scale are paramount, e.g., when solving waste-related issues. A great example of this is the work that my friend Kieran is doing in Kenya with his company Mr. Green Africa, which incorporated design thinking into coming up with a solution that now employs hundreds of people to offset hundreds of tons of plastic waste in the country. Their recycling produces plastic so pure that it can produce entirely new plastic bottles.
A fun thought experiment when coming up with new business ideas is to find a model that has worked successfully in other larger contexts and work backward to apply that successful model to community-based projects.
With my colleague Shomit Ghose, I introduced a new class at UC Berkeley that applied Shomit’s “Amazoogle” business model to the United Nations’ 17 Sustainable Development Goals. Amazoogle dissects how companies like Amazon and Google leverage data to gain a significant advantage. We took these principles and asked the students to work them backward by applying them to sustainability opportunities.
As a result, our UC Berkeley students created eight startups with prototypes demonstrating how to harness and leverage data, according to Amazoogle, to solve one or several of the 17 SDGs, using data to forge a uniquely competitive and sustainable advantage. One of these remarkable ventures was Bodego, which discovered the vast $3.4 trillion worldwide food waste market. Did you know that approximately 70% of store inventory ends up as excess food that is ultimately discarded? It’s an unfortunate waste of both food and financial resources. Bodego, like many Amazon and Google products, uses predictive analytics for store managers to nudge prospective customers thru dynamic pricing for items approaching their expiration date, creating budget-conscious solutions for budget-conscious customers and decreasing wasted inventory for the store. Everybody wins! The business, the consumer, and the Bogeda startup.
Step Three – Test and Deploy
So you have a great idea, a sustainable business model, and some brilliant minds ready to make it a reality – now what?
Even with issues as big as climate change, it helps to start small. Effectively testing, prototyping, and deploying a business model that addresses this global challenge is essential for success. In the examples of Bodego and SAFEST that I previously spoke about, multiple tests by pilot users from the target groups were conducted to validate the product’s real-life use case, which was used to demonstrate the potential to build a scalable business future.
A notable example of a sustainability-focused business that grew to a large corporation is Patagonia. What started as a small outdoor clothing company committed to environmental sustainability gradually transformed into a massive global brand. Patagonia incorporated sustainability into its core business model, emphasizing durable and high-quality products that encourage longevity and reduce waste. Through its authentic commitment to environmental stewardship, such as its 1% for the Planet program, Patagonia has not only gained a loyal customer base but also demonstrated that a sustainable business model can thrive and create a positive impact at scale, generating millions of dollars donated to various environmental initiatives, including those targeting climate change. Patagonia implemented the Triple Bottom Line perfectly – benefitting the shareholders, society as well as the planet.
While climate change presents a formidable challenge, it also offers tremendous opportunities for innovative entrepreneurs to make a difference. By effectively identifying problems, selecting a suitable business model, incorporating design thinking principles, and testing and deploying solutions, individuals and organizations can contribute to addressing climate change while building successful and sustainable businesses. There is not only a great need for sustainable solutions but also a great demand. And in many countries, there are large grants available to help develop new solutions and to bring them to market.
The key to creating solutions that not only benefit climate change reversal but that people will want to buy lies in creating products that resonate with the next generation’s values of sustainability and take advantage of their digital proficiency. Companies must care about these values genuinely. By aligning business objectives with the concerns and aspirations of the next generation, companies can attract them as both customers and talent organically. Everybody wins.
As a part of the previous generation, I must acknowledge that it is the current generation that truly matters in the fight against climate change. They are the ones who care deeply about the issue and bear the brunt of its consequences more than I ever did or will in my lifetime. The key to engaging the current generation is addressing the challenges they care about, as evidenced by the student startups focusing on Sustainable Development Goals (SDGs).
Digital technologies should be harnessed to solve people’s problems and address the needs of society as a whole. The past decade has witnessed companies often failing to fulfill this responsibility, leading to a societal backlash against them (Cambridge Analytica, Uber/WeWork, and Facebook in Myanmar are but a few examples). To avoid being at a disadvantage, companies must embrace digitalization and utilize it to create inclusive solutions that cater to everyone’s needs.
The timing is opportune. The next generation desires sustainability, digital tools are available to facilitate its implementation, and financial resources are accessible to support such endeavors. Now, it is up to us to take the necessary steps and embrace these opportunities. Let us seize this moment and shape a more sustainable future together. I am trying my best, and I encourage you to find your way of making a difference.