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Corporate Giants Court Climate Startups in Race to Net-Zero Future

Companies big and small are undertaking a green rethink, as awareness grows of the need for businesses that take better care of the planet

Chile’s climate action champion Gonzalo Muñoz has the tough task of teaming businesses with governments to help meet the global warming limits set in the 2015 Paris accord. As an entrepreneur who runs a winery and a recycling firm, he knows the challenge.

Muñoz co-founded circular economy company TriCiclos in 2009 after a decade of managing food businesses, where he noticed “how much garbage I was putting into the market” with unsustainable packaging.

Unable to convince executives to shift to a greener model, he and his partners started producing mobile recycling stations, which can handle 90% of household solid waste and are now deployed in about 10 Latin American countries.

“We identified the problem (of) waste as an error of design,” he said. And to deal with that environmental problem, “we have to correct every single design”, including how a product is disposed of and its materials reused, he added.

Today, a growing cohort of companies – big and small – are undertaking a similar rethink, as awareness grows of the need for goods and services that take better care of the planet.

Many are rushing to sign up to responsibility initiatives such as B Corp, which legally requires its more than 3,500 certified companies to consider how their decisions impact workers, customers, suppliers, community and the environment.

Almost 800 B Corp firms, and 200 other companies, have also pledged to more rapidly cut their planet-heating emissions to net zero by 2030, aiming to keep global warming to 1.5 degrees Celsius, the lowest goal in the Paris Agreement, Muñoz said.

Ahead of this year’s postponed COP26 U.N. climate summit, one key aim is to bring smaller businesses, including startups, together with multinationals under a new “Race to Zero” alliance launched by the U.N. climate secretariat in June, he added.

“This (climate challenge) is something that none of us can solve alone,” Muñoz told the Thomson Reuters Foundation. “A fundamental part of this is that we have to solve it together.”

Unilever announced recently that it would allocate 1 billion euros ($1.2 billion) for a “Clean Future” program to help it remove fossil fuels from its cleaning products and replace them with renewable and recycled ingredients by 2030.

The household products giant invited those with “an idea for an innovation, solution or opportunity” to contact it about becoming a partner.

Huge corporations are increasingly looking to work with smaller, nimbler companies with cutting-edge technology and ideas that could help fix the damage done by global capitalism, those working to foster such partnerships said.

Genecis Bioindustries, a Canada-based clean-teach startup that converts food waste into biodegradable plastics, for instance, aims to help big brands turn to eco-friendly packaging for everything from food to textiles, according to its website.

Its twin aim is to cut plastic pollution and greenhouse gas emissions from landfills.

Genecis’s growth and partnerships lead Robert Celik said the company was already working with French food services multinational Sodexo to take waste from its clients’ cafeterias and transform it into biopolymers to use in new products.

It also has a collaboration with Danish pharmaceuticals manufacturer Novo Nordisk to re-purpose medical waste.

Such deals are important because “they provide us with the resources we really need to implement the solution at scale”, said Celik.

For big firms, the advantages of such hook-ups lie in being able to tap into disruptive technology and business models without assuming all the risk — and then scaling up fast if something works, he and others said.

“If big companies want to make a difference they really should be engaging startups,” Celik said.

“It actually might make it easier for them to achieve very ambitious targets” — whether on climate change or other sustainable development goals, he added.

Genecis hopes to launch commercial bioplastic products in two to three years, Celik said. But working with larger corporations could speed up that process, and is helping it make products that meet real needs in the market, he added.

Meeting market demand is just as important for success as bring driven by a green, ethical mission, said Frans Nauta, founder of ClimateLaunchpad, an annual competition that selects and trains startups tackling climate change around the world.

“Even if your personal motivation might be to help the problem of the polar bear – it is not your customer,” Nauta said. “You can’t talk too much about your obsession for the climate. You should be obsessed with your customer.”

Celik said Genecis aims to make convenient, sustainable replacements for conventional plastics rather than simply target the small percentage of consumers with a green conscience.

“That is a huge game changer,” he said.

Genecis last year won a competition for startups working towards a net-zero emissions future run by global technology conference Web Summit.

Summit organisers put together a new group of green startups that were showcased and introduced to big investors at its virtual gathering in December last year, under a tie-up with the U.N.-backed “Race to Zero” campaign.

Peter Gilmer, Web Summit’s chief impact officer, told the Thomson Reuters Foundation that the profit potential for clean tech startups had “notably increased” in the past decade as more businesses began to sew sustainability “into their DNA”.

But many startups still need to reduce their costs before their low or zero-carbon products can compete on price, he said.

“It’s not that hard an issue to solve… once you get to a certain scale,” said Gilmer, adding that Web Summit aims to help the small firms it curates reach that point more quickly.

Start-ups featured at the summit included Australia-based Soil Carbon Co., which applies a microbial fungi to crops to increase natural carbon deposits in soil.

Another sign-up, Sweden-based Volta Greentech, has developed a red-seaweed cattle feed supplement that can cut an animal’s emissions of methane — a potent greenhouse gas — by up to 80%.

Climate Launchpad’s Nauta said climate action would require changes across a wide range of businesses, involving myriad solutions — from electric transport in cities to biodegradable packaging for food delivery and green aviation fuel.

“Climate change is a thousand problems, so… you need tens of thousands of people trying to fix it in all these different areas,” he said.

By Megan Rowling @meganrowling; editing by Laurie Goering.

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