Innovation for Implementation: How corporate innovation can be applied to the United Nations Sustainable Development Goals.
The increasingly popular concept of “open innovation,” defined here as multi-lateral corporate-startup collaboration, has the potential to tangibly reduce the environmental impact of corporations when approached through the lens of sustainability. Specifically, an ecosystem of corporations, startups, and investors can dedicate resources toward one another to enable innovation and the implementation of the United Nations Sustainable Development Goals (SDGs) or other social and environmental sustainability agreements.
Pressure for action is mounting; global climate compacts like the Paris Agreement are failing to meet targets. As emissions rise and the effects of climate change become even more obvious, it is increasingly apparent that current actions are not sufficient to mitigate the impacts of climate change. There are many organizations that aim to influence the governance of major corporations and subsequent customers toward more sustainable behavior. However, aside from creating a discourse for action and a sense of urgency around climate change, these organizations often fall short of implementation and desperately struggle to reduce the environmental footprint of those with the greatest impact. However, where discourse falls short, innovation can drive action.
The SDGs, launched by the United Nations in 2015, “are the blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including those related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice.” Applying corporate innovation within the framework of the SDGs makes it possible to identify ways that venture capital and corporate-startup initiatives can help achieve decarbonization and improve efficiency in energy, materials and transportation.
Open innovation can be understood as an ecosystem of corporations and investors that work together to identify industry pain points and contribute capital, test facilities, data, administrative support or other resources to startups. These resources are contributed by corporations and investors in order to facilitate the launch of pilot projects or commercial agreements. Open innovation can also take the form of best practice sharing among a group of corporations with newly implemented startup engagement programs. Investors, whether they are strategic corporate venture capital funds or traditional firms, supplement innovation platforms by providing capital to startups in need of hiring and operational support to take on the projects initiated by corporations and new customers.
Applying the open innovation approach to energy, packaging, and what the Mission Possible report by the Energy Transitions Commission labels as the “harder- to-abate sectors in heavy industry (in particular cement, steel and chemicals) and heavy-duty transport (heavy-duty road transport, shipping and aviation),” can create new economic opportunity while ensuring social and environmental responsibility. At a glance, at least 5 of the 17 SDGs can be addressed by connecting startups with clean technology solutions to corporations and investors in hard-to-abate industries.
Examples of the ways in which open innovation can be applied to the SDGs include:
Goal 7 Affordable and Clean Energy: The joint projects resulting from connecting cutting-edge startups in renewable energy, energy efficiency, grid management and energy storage with incumbent energy producers and utilities can speed up consumer adoption of smart home systems, residential solar and electric vehicles. Examples of companies in this area include FlexiDAO, Enervalis, and Ampere Energy.
Goal 8 Decent Work and Economic Growth: As technology beacons a shift in workforce development, the introduction of technologies like augmented/virtual reality, or UAV for long-ranged asset monitoring, reduces the operational cost of maintenance, improves worker safety, reduces menial labor and can assist workforce retraining efforts. Examples of such collaborations can be found between Holo-Light and BASF.
Goal 9 Industries, Innovation and Infrastructure: Companies like Metislabs, CabronOrO, Sensewaves, Carbicrete and Circularise, that focus on Industry 4.0, transportation and the built environment allow startups to implement solutions that reduce emissions, waste water, and other harmful pollutants from industries with complex manufacturing processes.
Goal 12: Sustainable Production and Consumption: Innovation enables sustainable production and consumption by introducing startup technologies in biomaterials, decomposable packaging, the decentralized tracing of raw materials, and “as-a-service” business models to steal, cement, petrochemical, packaging, and several other types of companies. Some of the companies working on solutions within these industries include, Biofiber Tech, Polytential, and Mango Materials.
Goal 17 Partnership for the Goals: Open innovation models that support corporate-startup collaboration and cross-sector innovation.
In addition to the reduction of carbon emissions, the application of innovation within the scope of sustainability can produce new economic opportunities. These opportunities can take place in the form of acquisitions or commercial relationships that improve operational efficiency and even lucrative venture capital exits. One recent example includes the acquisition of Sonnen by Shell New Energies.
The dedication of resources to clean and collaborative innovation can also increase the capacity to manage impeding regulation, like the kind being called for by US presidential candidates including Jay Inslee and trending divestment movements. Additionally, sustainable innovation can result in the creation of products that connect with a conscious generation of consumers like Gretta Thünberg.
Existing examples of collaborations that frame open innovation within sustainability include Plug and Play’s Sustainability platforms which directly apply the scouting, evaluation and piloting approach to clean technology startups, thereby enabling the growth of solutions that reduce the environmental impact of industrial processes. Other examples of private sector vehicles for SDG implementation include cleantech venture capital funds, which support startups financially and ESG (Environmental Social Governance) investment funds, which create shareholder value for companies that have demonstrated environmental and social responsibility.
Undoubtedly, the role of technology and heavy industry in relation to the SDGs is debatable. However, the goal of this perspective is not to focus on how current systems inhibit progress but rather how existing systems, and the corporations that comprise them, can be exploited to achieve sustainability targets in the near term.