In a speech to the CBI yesterday, the U.K.’s Business Secretary Alok Sharma calls on businesses to “build back greener”. To be fair to politicians, this is one area where the U.K. has done quite well over the last few decades. As he says: “Over the last 30 years, the U.K. economy grew by 75%, and yet we also cut our emissions by 43%. We were the first major economy to legislate for achieving Net Zero emissions by 2050.”
In the same speech, Sharma expressed his hope that businesses “take advantage of the immediate opportunities this green agenda brings, as we recover from the COVID pandemic.” But what more can the Government itself do to support this aspiration?
As luck would have it, we have a report just out with the Enterprise Trust with twenty policy ideas of how it could do just that. It approaches the problem through the lens of economics, making the case that we need to better align incentives to overcome market failures. In essence, making polluters bear more of the responsibility for the full costs of their actions, while rewarding those who develop solutions to environmental challenges. The ideas wouldn’t cost the earth, but would go some way to helping save it.
First, the good news. Green Entrepreneurship finds that U.K. business owners are on board with the green agenda. Over three-fifths think that the move to a greener economy presents positive opportunities for businesses, with only eight per cent disagreeing. The Opinium polling also finds that most business owners report their customers and employees are demanding more action to protect the environment.
Now some more good news: the U.K. isn’t short of innovative entrepreneurs aiming to solve these big problems. The report has seven case studies to illustrate the great work being done to tackle them.
Jamie Crummie, Cofounder, Too Good To Go
Too Good To Go is the Uber but for unwanted food. Consumers can pick up food at low prices that would have otherwise gone in the bin. It helps 40,000 businesses across Europereduce their food wastage at scale. Their leading KPI is meals saved. In the U.K. alone, almost £20 billion worth of food is wasted each year. When it started back in 2015, the early adopters were typically ‘eco warriors’, but as the business has grown, so have its customers and the conversation around the redistribution of excess food.
Crummie says “It’s a win-win. It’s a win for our businesses who are able to recover sunk costs on food that would otherwise go to waste. It is a win for our consumers who are able to enjoy and discover amazing food at prices that don’t cost the earth, and, ultimately, it is a win for the environment as amazing food isn’t going to waste.”
Katrina Borissova – Founder, Little Danube
Little Danube launched in August, with its first product of vegan soap bars. For Borissova, sustainability is an integral part of Little Danube’s vision. A stepping stone in her decision to create vegan products was a Forbes article on clean beauty, in which Richard Kestenbaum of Triangle Capital is quoted as saying: “there’s probably a time five years from now where, if you’re not natural and clean, you’re not on the shelf.”
One potential solution that Katrina puts forward to deal with the plastic problem post-pandemic is for the government to support programmes that invest in companies that develop sustainable non-plastic products: “You just need some brainstorming. You take a green scientist, a designer, a maker and put them in a room for a few days and they will come up with something. Plastic can definitely be replaced.”
Jo-Jo Hubbard, Cofounder & CEO, Electron
Net zero means moving away from predictable generation, towards majority wind and solar power, which is intermittent, impossible to turn up, and – increasingly frequently – impossible to export due to local energy traffic jams, called ‘grid constraints’.
Electron was co-founded in 2015 by Jo-Jo Hubbard. Its ElectronConnect platform allows network operators, distributed energy resources, and others to cocreate local markets and trade and optimise the combined use of network capacity and renewable generators. “Where once we had big gas plants to manage flexibility”, she explains, “we could instead have tens of thousands, or even millions, of decentralised microgenerators and energy users doing that role instead.”
Jo Bamford, Founder and Executive Chairman, Ryse Hydrogen
Founded in 2018 by Jo Bamford, Ryse is at the forefront of Britain’s green hydrogen industry. “We take electricity generated by wind turbines throughout the U.K. and use it to power our electrolysers, which in turn split water into oxygen and hydrogen molecules. The hydrogen can then be used in all sorts of applications, from transport, to heating, to industry. As it’s made from renewable electricity, it is 100% climate friendly, and it improves air quality too.”
Hydrogen is steadily gaining traction in the government, with the Prime Minister, Boris Johnson, one of its most prominent fans. But Bamford now wants to see the rhetoric backed up with meaningful action. “At the moment, the way we subsidise buses is rather counterproductive: the funding allocation is biased against cleaner fuels such as hydrogen, and this is slowing the transition from polluting diesel buses to zero emissions ones which we could provide the fuel for. The government’s enthusiasm for green hydrogen is brilliant, and with a couple of small tweaks to the rules, we could speed up our efforts to tackle both urban air pollution and climate change.”
Pawan Saunya, Cofounder, Zero Waste Club
On their journey to starting Zero Waste Club, Saunya found that while markets were changing, eco-friendly products were perceived as luxury goods and that many products sold under the ‘eco’ label were stretching the definition of sustainability. An integral part of Zero Waste Club’s business model is opening up their supply chain for everyone to see: “We are extreme on transparency. We say how the product was made, by whom, how much these people are paid, and the conditions under which the product was made. We also plant a tree to ensure that the carbon footprint is offset.”
Pawan thinks the government could improve how R&D funding works. He notes how Innovate UK grants are often bureaucratic and time-consuming, which makes it unappealing for many entrepreneurs to undertake. He thinks that an effective method to deal with this would be for Innovate UK specialists to visit and talk with innovators within the plastic recycling sector: “This would allow them to get to know their project and act as a capital allocator based on the operations, meeting with the team and not solely basing the application on paper.”
Alex Fisher, Founder & CEO, Saturn Bioponics
Saturn Bioponics is part of a potential agricultural revolution. Saturn Bioponics grows food vertically in 3D hydroponic towers. The towers increase planting density, meaning that farmers need only one-third of the space they would have required for traditional soil farming for certain crops. “We offer a solution which delivers sustainable intensification […] whilst simultaneously increasing productivity by up to four times and reducing production costs,” explains Fisher.
Fisher thinks the government should provide funding to support farmers in the adoption of innovative technology: “Farmers are often undercapitalised, making high levels of investment very difficult,” says Alex. In addition, relaxing the planning regulations (and costs) of constructing greenhouses could encourage more farmers to plant their crops in an environmentally conscious way. “In the U.K. particularly,” Alex says, “gaining planning permission to build a greenhouse can be tough.”
Magda Daniloaia & Ieva Balciute, Cofounders, Aequem
“Our unique proposition is that we aggregate the world’s best (truly) sustainable products,” says Daniloaia, “so everyone can shop for items they need with a significantly reduced impact, if any.”
Magda and Ieva’s platform ensures that garments come from organic sources – thus avoiding pesticides, and promoting soil health in the growing of fibres for clothing. They upcycle stock – with many products made from discarded materials or ‘dead stock’, which would otherwise have gone straight to landfill. They also seek out recycled materials – which promotes circularity in the economy and prevents the need for as many ‘new’ products to be made as possible. And they focus on new environmentally friendly tech in the industry – such as Tencel, a material made from responsibly sourced wood fibres.
Daniloaia says “we should invest in more conscious consumerism, invest in more sustainable sectors worldwide and have a Brexit deal that does not affect trade with the EU.”
And yet more good news: equity investment is flowing into green businesses. The report draws on data from Beauhurst, showing that between 2015 and 2019 equity investment into startups described as “sustainable” has more than trebled, while business described as “environmental” saw a 94% increase in equity raised.
But despite all the good news, we need to do more. The report aims to incentivise entrepreneurs to do the hard work innovating and has 20 recommendations for the Government to that effect, including simplifying carbon taxes, making the Annual Investment Allowance unlimited to encourage businesses to invest in as environmentally efficient equipment as possible, and assessing how government procurement rules could be amended to boost markets for environmental products in the public sector.
Eamonn Ives, author of the report, says: “To promote markets in sustainability, the Government must start both properly rewarding innovators, while clamping down on pollution and other forms of environmental degradation. Doing so would incentivise entrepreneurial activity in green solutions, and give British entrepreneurs a head start in the global race to succeed in the growth sectors of tomorrow.”
And as Helen Booth, Chief Executive Officer of the Enterprise Trust, which partnered on the report, says: “The Government should be unrelenting in trying to harness the ingenuity of the U.K.’s environmentally-minded entrepreneurial community. The reality is, that it is only through the development of newer and better technologies that society will be able to overcome these pressing problems.”
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