Ninety-three percent of CEOs believe sustainability to be important to their companies’ future success, according to a 2015 survey of more than 100 companies in 46 countries. From renewable energy innovations like road devices designed to collect and store kinetic energy from passing cars, to the implementation of organic materials in clothing and sustainable tourism, the range of products emerging from startups is expanding.
For many people, sustainable entrepreneurship is not well known or defined. James Bottom, director of the Blackstone Launchpad Startup Incubator at the University of Southern California, defines it as “anything [a startup] can do for either a process improvement or product to reduce environmental impact in some way shape or form.”
Essentially, it is any business with a vision of making society and the environment better tomorrow than it is today.
For Kevin Kassel, USC alum and founder of Aqus, a sustainable startup focused on universal access to clean water, the reason to engage in environmentally sustainable behavior was personal.
“Eight years ago, I traveled to Ecuador to teach English. One week, I found out that one of our students, a 7-year-old girl named Maria, had died of dysentery,” Kassel said. “Growing up, I was an Eagle Scout and we had a huge range of camping filters. I could not get it out of my head that $40 to buy a [water] filter could have saved the girl’s life.”
According to Earth Project, an environmental awareness blog, plenty of established corporations profess to take part in the movement of true sustainability but they are slow to change. Bottom says this is no longer the case.
“Most innovators are here to help,” he said. “They want to go around and make the world a better place and they are uniquely qualified as they see the word differently.”
In today’s global environment, there are many examples of startups that are moving in a sustainable direction. According to a study by Lund University in Sweden, the added value of the sustainable startup compared to traditional companies lies in its ability to have a positive effect on the community and its residents.
In Indonesia, local teenagers started Bye Bye Plastics, an environmental non-governmental organization, to help raise awareness of the enormous plastic problem in Bali. In 2014, to get the attention of authorities, they threatened to organize a hunger strike and within 24 hours were escorted to the office of the governor. The resulting meeting concluded with an agreement between the governor of Bali and Bye Bye Plastics to work together to get Bali residents to minimize plastic pollution.
Another example comes right from USC’s backyard. Kassel’s company, Aqus, aims to provide clean water solutions for households, governments and NGOs, through the distribution of reliable, affordable and efficient water filters. Kassel said, “Aqus is focused on solving the world’s water crisis through sustainable business models and creating micro-entrepreneurs.”
He explained how providing clean water filters also benefits the environment. Normally, in order to clean water, you have to boil it. Boiling water has several negative effects, like cutting down trees to produce the fuel required to boil water, and boiling the water itself, which produces carbon dioxide emissions.
For startups whose actions around the world have enabled sustainable practices and environmental protection, there are many benefits. According to Forbes, 81 percent of the millennial and Gen Z consumers prefer to spend their money on a brand that preaches social messages, exercises ethical business standards, and thinks about the community and the environment in its day-to-day operations.
While the trend of environmental sustainability is spreading, the journey is not without obstacles. For Kassel, one of the biggest challenges was distributing to clients.
“For consumer products, it’s easy to plug into Amazon as a launchpad for retailers,” he said. “Here, infrastructure is pretty far apart. It is insanely expensive to get stuff from one area to the next.”
Another problem is revenue. According to Greenbiz, a media organization dedicated to environmental news, banks may be reluctant to give loans to sustainable business as they consider a sustainability focus to be adding dangerous financial burdens, such as finding raw materials that have been specified to be 100 percent sustainable, forgoing the use of machinery that, while cheap, releases a lot of pollution in the environment and installing expensive sources of alternative energy like solar panels.
Regardless of the momentum sustainability has garnered, there are some who argue that startups are not interested in making themselves more green. Professor Raz Goldenik, co-director of the Masters in Strategic Design and Management program of the New School, said the majority of the startups presented to venture capitalists focused on providing better marketing tools, automated production and processes rather than focus on products and services with a sustainability angle.
Goldenik explains, “It’s not that they think these issues aren’t important or lack business viability –- they just don’t find them interesting problems to work on as entrepreneurs.” According to Goldenik, sustainability is perceived as an issue better addressed by large companies that have the resources, funding and manpower to make them better equipped to tackle big issues like California’s drought, food waste and ocean pollution.
A 2017 sustainability report by Nissan found that startups in Europe and the U.S. are more likely to rate sustainability high in terms of importance to their business, followed by economies in Asia and Latin America. At the bottom sits the Middle East, where a large portion of the economy centers around oil production, according to the World Economic Forum, and the underdeveloped regions of Africa. In these regions, according to the Guardian, there is a conflict for CEOs between knowing what they need to do for future success and knowing what they need to perform well in the market today.
The Global Commission on the Economy and Climate has projected that the next two to three years are a critical window for bold climate decisions. By 2030, the U.N. says, climate change will have reached the point of no return. Every startup founder has a vision of the future, but this future is unlikely to happen if the global climate crises gets worse.