IMPACT THE ENVIRONMENT AND YOUR BOTTOM LINE POSITIVELY?
Part 2 : Energy Efficiency
Innovative business models driving impact at scale
Corporates have an immense opportunity to accelerate sustainability and create impact at scale. Thoughtful (re)design and strategic investments aligned with their purpose are becoming sources of future competitive advantage.
Discover companies with innovative business models that impact positively a key stakeholder for the future of our planet : the environment.
We have divided this section in two pages :
Part 1 : solutions driving positive environmental impact through resource efficiency,
Part 2 : solutions driving positive environmental impact through energy efficiency.
1) Help finance the energy transition
According to the findings of « The Mitigation of Climate Change » report of the IPCC, yearly investment should be around $750-800 billion per year until 2030 to achieve the °2 target.
Corporate venture investment in startups which innovate for a low carbon future is a part of the needed funding to drive innovation in the field, and has been growing over the years. The majority of oil and gas companies have framed a renewable energy strategy and have commenced considerable investment into renewable energy. They are also investing in innovative technologies. Total does it through their Total Carbon Neutrality Ventures unit. Some companies are taking a collaborative approach to investing, for example the Energy Impact Partners is the world’s leading coalition of utilities. Microsoft recently joined the 30 corporate investors. EIP invests in later-stage companies with technology that is ready to deploy.
These investments in energy technology start-ups are not just coming from energy companies. Even more money is flowing from corporate investors from the transport and information and communication technology (ICT) sectors in particular, according to IEA (2019).
Digital sensors, batteries, electric vehicles and smart algorithms are among the main recipients of the more than USD 4 billion of deals in 2019.
Another funding mechanism used more and more by corporates are the green bonds. Alphabet (Google), for example, issued $5.8 billion in green bonds, the largest ever issuance by a company. The proceeds are slated for investments in green buildings, renewable energy, water and wastewater management and sustainable living initiatives.
Banks and players in the finance industry also innovate with new funds that specialise in clean energy or the energy transition, as for example BNP Paribas. This has also considerable potential to accelerate the energy transition.
BNP Paribas Environmental Absolute Return Thematic fund (EARTH)
An equity fund launched by BNP Paribas in July 2020.
Business model innovation :
The asset manager will take long positions in the most promising and innovative companies and pair these exposures and short positions in companies with unsustainable or « technologically inferior business models vulnerable to transition risk. The manager also will incorporate its environmental, social and governance principles into the EARTH fund investment process. Executives will produce a quarterly sustainability report covering emissions, waste and water footprints for the strategy.
Impact : Short positions will increase the cost of capital for companies failing to address environmental challenges, motivating them to adopt sustainable practices.
Scale : The Environmental Absolute Return Thematic fund will invest an initial $50 million and can raise up to $1 billion
Business value (ROI) : 9% increase value within 3 months after launched in July 2020.
2) Invest in energy efficiency along your supply chain
Most companies have focused on reducing their direct emissions (scope 1) from their activities, and indirect emissions from electricity purchased and used by them (scope 2). The more advanced companies, such as Apple, are now tackling inefficiencies in their supply chain, from suppliers to distributors.
Apple’s Supplier Clean Energy Program
Apple’s program to drive its suppliers’ energy transition.
Business model innovation :
The program consists in conducting energy audits, implementing training about energy management and supervising energy efficiency projects with their suppliers.
Impact : Gain energy efficiency
Scale : Apple now has commitments from over 70 suppliers to use 100 percent renewable energy for Apple production — equivalent to nearly 8 gigawatts in commitments to power the manufacturing of its products. Once completed, these commitments will avoid over 14.3 million metric tons of CO2e annually — the equivalent of taking more than 3 million cars off the road each year. Over 80 percent of the renewable energy that Apple sources comes from projects that Apple created.
Business value (ROI) : Apple helps suppliers understand the financial benefit of making the switch, along with taking steps to make factories more efficient so energy usage also shrinks. They see a pretty big payoff and a pretty big benefit. Right now, because renewable energy has fallen in cost dramatically, the switch makes financial sense in most locations.
3) Prioritize local suppliers
Localization is a growing trend, especially after the COVID-19 pandemic. It also benefits the environment. When companies localize their suppliers, they reduce shipping and storage, and therefore also emissions and energy usage.
Urban farming is also growing fast. Not only they produce food more efficiently, but they are also located in cities, closer to the retailers, which saves energy from transportation and storage.
Home decor and furniture retailer in France.
Business model innovation : Camif selects high quality suppliers from France which adhere to the same sustainability values. They have been one of the first BCorp in France.
Impact : Boost the local economy, reduce the carbon footprint, promote the purchase of products that last…
Scale : Working with 150+ suppliers.
Business value (ROI) : 40 million euros sales in 2018, a 2 digits growth in 2019 with minimal advertising. Camif owes its success to differentiation with its sustainable, circular, local and inclusive approach.
Gotham Greens & Whole Foods Market
The first commercial scale greenhouse farm integrated within a retail grocery space, in New York, launched in 2014.
Business model innovation :
The greenhouse is powered by wind and solar energy, use hydroponics to grow salad greens and herbs year-round using fewer resources than conventional farming. The grocery store Whole Foods Market operates the greenhouse on the rooftop above its flagship store in New York.
Impact : Reduces the store’s carbon footprint, 95% less water and 97% less land than traditional farms.
Scale : over 20,000 square feet.
Business value (ROI) : The project eliminates long distance food transport cost and ensures product freshness and quality. Using a greenhouse allows them to grow 7-8 times more food than traditional soil farming. Gotham Green has 7 other sites and its total annual production is nearly 35 million heads of lettuce, with distribution to more than 30 states nationwide.
4) Embrace new mobility
Companies have started using more environmentally friendly vehicles for their shipping and deliveries, when possible. Some startups are specialized in deliveries by bike such as Bringly in the Netherlands or You2You in France.
For example, as a first step towards new mobility, Amazon announced it had ordered 100,000 electric delivery vans from the company Rivian in which it invested.
Startup offering same-day deliveries from your physical store via a networ of professional bicycle couriers and electric vehicles.
Business model innovation : Its algorithm assigns the deliveries to one of its partners such as Cycloon, DHL and Fietskoerier.nl via their APIs.
Impact : Reducing CO2 emissions
Scale : 395,000g CO2 emissions avoided
Business value (ROI) : Increased efficiency for a faster service to the client and reduction of costs. Istead of competing for the same package, their algorithm determines the most efficient bike courier to deliver a package.
5) Embrace the sharing economy
Uber-like platforms can make shipping and deliveries more efficient, and avoid trucks driving almost empty, improving both the environmental impact and the revenue for the carriers. That’s an opportunity that a few startups have detected and received considerable amount of funding to develop, such as Madrid-based OnTruck which is active in Spain and France ($60 million funding), or Convoy in the US ($665 million funding).
Online freight brokerage platform combined with a shipment dispatch and route optimization software to improve efficiency, iquidity and transparency of the freight industry.
Business model innovation :
An on-demand platform putting companies in contact with a wide network of professional carriers, in order to provide shipping and delivery service. Carriers can recieve orders and accept them if they wish through a free application, so that they can complete the loading of their vehicles at 100% capacity and increase their income.
Impact : Reduce the number of empty kilometers travelled by goods vehicles.
Scale : Ontruck has cut the percentage of kilometres driven by vehicles running without cargo from 44% – the industry average – to 19% (June 2020), which prevented 728,000 kgs of C02 emissions from entering the atmosphere.
Business value (ROI) : Increased cost efficiency by reducing the number of empty kilometers travelled by goods vehicles.
6) Help your clients improve their energy efficiency
Large companies in specific sectors can help their clients reduce their energy consumption through innovative home products, such as Google with Nest theromostats whose mission is to help households save energy, or the Swedish startup Svea Solar whose mission is to make renewable energy an easy and profitable choice for households.
Multinational furniture retailer.
Business model innovation :
Ikea has launched a global campaign – A Better World Starts at Home – to highlight « Climate Hero Products » that reduce individual carbon footprint (water saving taps, LED bulbs, recycling bins…). The retailer also introduced Ikea Better Living app that contains 75 actions that feature the Climate Hero products and references to other IKEA sustainability products and services. Challenges can be set up for a fixed time period, allowing co-workers or customers to compete for prizes.
Impact : Reduce the carbon footprint of households
Scale : The campaign was funded by IKEA Foundation which gave a Euro 40 million.
Business value (ROI) : Branding and reputation (ROI not mentionned)
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