Sustainability challenges are urgent. Can solutions come quickly? The answer depends on the reach and radicalness of the innovation.
Businesses are increasingly asked to find solutions to big sustainability issues like poverty, climate change, and biodiversity loss. This often requires businesses to innovate new products, services, processes, or even business models.
This is “innovation for sustainable development.” It involves providing long-term social and environmental benefits while creating economic profits.
“Most businesses innovate for market share,” said Tima Bansal, professor at Ivey Business School, “but focusing on sustainable development offers many more benefits.” This kind of innovation is good for society and the planet, and provides a longer-term stream of income for companies. By considering social and environmental issues, companies become more stable and resilient.
Looking for innovation that’s rapid – and beneficial
Sustainability challenges are huge and increasingly urgent. Global temperatures, for example, already exceed safe limits.1 And so many ask: How can we meet these significant challenges in the short time frame we have? An NBS reader posed the question: “How can we accelerate the [innovation] learning curve and implementation process?”
To answer this question, NBS convened experts on innovation for sustainable development. We spoke with Bansal and her colleagues Sylvia Grewatsch, assistant professor at Brock University, and Bradley Wamboldt, principal associate at Hawk and Squirrel Innovation.
They told us that the positive impact of an innovation doesn’t just depend on its speed. You also need to think about:
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how transformative the innovation is. Is it radical — for example, changing value chains — or more incremental?
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the reach or scale of the innovation. Is the change widespread — for example, adopted by large companies — or more locally focused?
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unintended consequences. Especially with fast, large-scale innovations, there’s always a risk of negative impacts you didn’t foresee.
In this article, our experts describe:
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Different types of innovation for sustainable development
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Why big companies are more likely to pursue incremental change – and why that might reduce risk
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Why small companies can find more transformative solutions and often move faster
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Tips for pursuing innovation for sustainable development
The Basics: Different Types of Innovation for Sustainable Development
Innovation for sustainable development can refer to different types of change, from incremental steps to radical transformations. The image below shows these options, described by researcher Richard Adams and colleagues in the NBS report “Innovating for Sustainability.”
On the left, “Operational optimization” represents mostly technical changes, like increased efficiency. More radical options (“Organizational transformation” and “Systems building”) look at new business models and value chains.
For oil and gas companies, “Operational optimization” could mean greater safety measures and using less water and energy to produce fuel. “Organizational transformation” or “Societal change” would involve different business models and value chains, like a shift to renewable energy.
Throughout this article, we use the energy sector as a case study because our experts all have experience in the industry. Wamboldt, Bansal and Grewatsch collaborated on a project aimed at helping Canada’s oil sands, a major polluter, accelerate innovations for sustainable development. Wamboldt has also been an engineer and general manager at oil companies Suncor and Shell. Innovation lessons and dynamics tend to carry across sectors, however, they said.
Let’s explore how these changes happen in large and small companies. That’s significant for the reach or scale of a change – how widespread it becomes.
Large companies pursue incremental change
Large companies find it difficult to achieve transformational innovations for sustainable development, our experts said. These companies also often move slowly. For fast action, said Wamboldt, an issue “has to be understood as truly existential, right? That you’re either going to do this or you’d be out of business.”
In Canada’s oil sector, large companies aren’t making the radical shift to new value chains and systems. Oil and gas companies could get involved in emerging, more sustainable areas like hydrogen facilities, renewable liquid fuels, or even small modular nuclear reactors, said Wamboldt. But for the most part, they haven’t. They hold back for multiple reasons, including:
- Their investment strategy. Investors in energy companies invest for dividends, said Wamboldt.“They want a safe, reliable source of income. If an oil sands company starts to act like an innovative growth company, they start to mess up that investment thesis.”
- Their knowledge base. Companies are hesitant to develop the skills necessary for disruptive innovation and new technologies. They’d rather work with their employees’ existing expertise.
- Lack of leadership – or collaboration. “I’d like to see some people step up to be the emerging adopters, to say ‘I’m gonna take that chance and that risk,’” said Wamboldt. Instead, “we seem to have lost our initiative to innovate.” Canada’s large energy companies are also failing to collaborate, said Grewatsch: “There’s no shared vision any longer.”
- Costs of change. Implementing new energy systems requires big investments. “The challenge is that last yard of actual deployment, really getting that steel on the ground,” said Wamboldt. “You’re talking about putting hundreds of millions of dollars into [new] facility, and it’s hard to get people to do that.”
Large companies are more likely to make incremental technical changes, or “Operational optimization.” Oil and gas companies have made their internal operations more sustainable: for example, reducing their emissions, tailings and water use. But “they’re doing it in support of their current business,” said Wamboldt. “They’re not looking at new value chains and new energy systems.”
Even these incremental changes happen slowly, unless there’s major pressure. Here’s an example of more rapid action due to government leadership:
The case of tailings waste in Canada's oil sands
In the early 2000’s, oil sands companies faced a threat to their existence. Government regulations forbid them to build new ponds for mining waste (“tailings”). “We were going to be out of tailings [storage] in about ten years,” recalled Wamboldt. “It was a huge driving force: if we can't figure this out, we’re shutting down the mine essentially.” In response, his employer, Suncor, developed a new way to stabilize the waste, quickly. “Within two years, we took it from an idea with very small pilots to being a commercial linchpin,” said Wamboldt. Government mandates and the threat of going out of business drove the innovation; they were on a “war footing” in terms of urgently finding solutions.
“It’s possible that governments could even drive more transformative solutions,” noted Grewatsch. “But that kind of large-scale change also risks unintended consequences.”
Big changes are risky
There’s a real risk with innovations that are large, fast, and transformative, our experts said. “The unintended consequences of large scale is too high. and then we end up creating a lot more harm than sometimes we do good,” said Bansal. For example, “solar engineering” aims to put particles into the atmosphere to cool down the planet — but it could result in crop failures and change precipitation patterns.2
Yet, sustainability pressures are stark. Where can we look for solutions?
Local efforts can be more radical and move quickly – and have collective reach
Where should we look for new value chains and systems (or “Organizational transformation” and “Systems building,” as described by Adams and colleagues)?
Look to small companies and local communities, said Bansal. That’s where transformative change can occur more easily and quickly. Small companies can be more flexible and move more quickly, though the scale or reach of their individual impact won’t be as large.
SMEs, or small and medium enterprises, “have the creativity and can really move toward new business models,” said Bansal. They don’t face the barriers that large companies do. They can attract different investors: some focused on growth and others on social and environmental impacts. SMEs are more agile because they have fewer projects, fewer employees, and fewer investments in physical assets.
Community involvement should be built into the innovation, said Bansal. Local, community-based solutions often work out better than far-away top-down approaches. Local leaders can get input, build trust, and adapt, while community members have more control over how technology is used. An example is small-scale energy generation, like home geothermal or solar. Individuals can see how much energy they generate and use and can choose to give extra energy back to the grid.
“That scale is very different from the massive development of Canada’s oil sands,” noted Bansal. The huge size of the oil sands led to big impact in terms of energy production and economic development. But it also created unintended social and environmental consequences because it was developed in a top-down way, without being locally sensitive.
Many small-scale solutions can lead to better outcomes
Given the complexity of sustainability issues, moving slowly or trying out small experiments is likely to be the best approach. “If the trade-off is betting on small, radical solutions or on large innovations with unintended consequences, I’d rather pick the former,” said Bansal. “Lots of small, locally adapted solutions could be incredibly transformative and resilient at a global scale.” For example: The move to renewable energies has been catalyzed by a huge ecosystem of small innovators, said Bansal.3
Local food movements have been similarly spurred by many small businesses.
Tips for those interested in innovation for sustainable development
Talking to our experts for this article, we realized how complex innovation for sustainable development is. The goal isn’t just to “speed up innovation.” You have to think about how radical the innovation is, how great its reach is, and how fast it can or should move.
Luckily, many people — including our experts — are trying to understand this process and help others through it. Already, helpful guidance and tools exist. And, you shouldn’t go it alone.
Draw on partners
Partnership is an essential part of innovation for sustainable development, our experts said. Many individuals and organizations need to be involved in coming up with solutions. “So as long as we don’t engage with the whole system, we won’t be able to speed up innovations for technology,” said Grewatsch. “We know how to do innovation for sustainable development, but we don’t have the right support system yet.” That means government, academics, non-profits and companies – large and small.
Resources from Innovation North
Resources on innovation for sustainable development are available at Innovation North, a lab based at Ivey Business School that helps companies navigate through the complexity of sustainability challenges.
Innovation North offers a tool called the “Compass” that guides companies through a process of identifying a North Star, looking at problems and their causes, and working through ideas and actions (Learn more about the compass). Freely-available resources include worksheets, videos, and case studies.
Innovation for sustainable development isn’t simple. But it’s a goal for many, and shared learnings can show the way to a shared “North Star.”
Why We Wrote this Article
A survey of NBS readers found business leaders keen to understand how to achieve sustainable innovation. They asked how to use different levers for change and integrate sustainable innovation across the company. They also asked about speed of change. Given the urgency of sustainability challenges, readers want to know: How can sustainable innovation happen faster? This article aims to address this topic.
More Resources
Schupfer, H. (2024). Oil Industry Climate Goals: Lots of Talk, Little Action. Network for Business Sustainability.
Hill, H. (2023). How to Implement Sustainable Innovation. Network for Business Sustainability.
Lee, J.Y. (2023). Systems Thinking – The New Approach for Sustainable and Profitable Businesses. Network for Business Sustainability.
Fischhoff, M. (2018). How to Be Radical: Three Ways to Accelerate Sustainability. Network for Business Sustainability.
Fischhoff, M. (2018). How to Benefit from a Sustainability Transition. Network for Business Sustainability.
References
1 Poynting, M. (2024). World’s first year-long breach of key 1.5C warming limit. BBC News.
2 Copage, M. (2022). As the planet warms, risks of geoengineering the climate mount. The Strategist. Australian Strategic Policy Institute.
3 BLab. (2024). Payoff for people and planet: B Corps help with the transition to renewable energy. BLab U.S. & Canada.
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