Digital tools like blockchain, sensors and drones can revolutionize sustainability, entrepreneurs say. But it all starts with the business model.
Technology has revolutionized many aspects of our lives. Can it provide the same acceleration to sustainability efforts?
Entrepreneurs are tackling sustainability challenges with diverse digital tools, from blockchain to machine learning to sensors, satellites and drones (see article end for description of these technologies).
NBS spoke with three global entrepreneurs, one of whom is also a professor, who have deep experience in this arena. They described how their businesses use digital tools, why digital sustainability is taking off, what obstacles it faces, and where aspiring entrepreneurs should focus.
Simon Schillebeeckx is a faculty member at Singapore Management University and cofounded the Global Mangrove Trust, which uses blockchain to track funding for forestry projects. Schillebeeckx recently co-authored Digital sustainability and entrepreneurship, an overview of the field.
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Highlights are below.
How three businesses use digital tools to advance sustainability
Simon Schillebeeckx, Global Mangrove Trust: The Global Mangrove Trust connects SMEs and retail investors and individuals to markets for reforestation and carbon offsetting. Right now, these markets are largely dominated by multinational corporations that, at the end of the year, invest in carbon emissions certificates that enable them to say “my business operations are carbon neutral because I’ve offset the negative impacts.”
But these markets are not really accessible by individuals and by SMEs. So we’ve created a platform, the Global Mangrove Trust, and a technology that enable peer-to-peer funding of reforestation projects. You, as an individual who wants to contribute to offsetting your own negative impacts, can do this directly without any need for an intermediary.
On our platform, you can buy trees immediately and see, thanks to blockchain technology, how your money is being used. You will see how much money is going to the Trust, how much money will be paid in fees to banks, and how much is ending up in the hands of the individual planter.
Sara Bell, Ample: At Ample, we use digital in two parts, in our product and in the business model underpinning.
We use machine learning to predict, on a rolling 24-hour basis, the renewable power output in a particular market. We then use machine learning to predict a building’s ability to be flexible to change its consumption patterns. We do that by pulling a lot of data from the building using sensor technology.
So we put those two predictions together, and we ensure that that building uses the cleanest possible power. We connect into the building management system and we physically change the consumption pattern, using the controls that are already there in the building management system.
But in order to motivate the building owner or operator to do this, we are building a social media platform of conscious consumers who are actually going to choose those companies that are doing this.
In everything I’ve done, I’ve become more convinced that we can most rely on the power of humanity to band together. I think digital technology has an extraordinary use in driving that community.
Diego Saez-Gil, Pachama: Pachama is a technology startup that harnesses the latest in remote sensing, including satellite images and LIDAR scans of the forest. We then use artificial intelligence, specifically deep learning algorithms, to be able to estimate the carbon storage of forests. Then we can monitor the progress of a forest, detecting automatically for disturbances such as fires, illegal deforestation or any change on the canopy cover.
We use those tools to validate and monitor existing forest projects that have received carbon credits in the traditional carbon markets, that are either conserving or restoring forests. Our objective is to bring more transparency, more accountability and more trust to these projects. In the future, we hope that these technologies can be used to certify new projects faster, cheaper and in a more reliable way.
In addition to doing this validation and monitoring, we also help connect the parties — forestry projects in South America and then companies in North America and Europe that participate in the carbon market.
Organizations use digital tools for “sensing,” “structuring,” and “sculpting”
Simon: Our research identifies three main ways organizations are using technology to advance the sustainable development goals. These are:
Sensing: Measuring and observing the natural world. Pachama, Diego’s company, is a fantastic example of how this is happening.
Structuring: Changing economic exchange, so that parties are not only interested in price. Blockchain and other software applications allow us to embed significantly more information in economic transactions: for example, about fair trade and social practices.
Sculpting: Using new data and often structuring to create new networks of exchange. These are really new business models connecting different players. I think my own organization, the Global Mangrove Trust, is a pretty good example of this.
Digital sustainability is powered by better, cheaper technology
Diego: All the technologies [we are discussing] are improving exponentially, driven by other industries. For example, machine learning has been around for a long time, but only recently do we have enough computing power for this technology to be very powerful. Companies such as Google and Facebook and Apple and Amazon are investing millions of dollars and a lot of engineering brainpower to improve these tools. Sensors and cloud computing are also being driven forward by other industries.
Now small startups like us can harness this technology, democratizing access to these technologies.
Sara: The cost reductions in these technologies make a massive difference. A few years ago, when we were trying to connect buildings for their electricity consumption to become flexible, we would have to physically install a control unit and sensors. That meant that the number of buildings that we were able to suggest this to was dramatically reduced.
We can now do a remote installation. We don’t even need to go to the building: everything is done through a software route into their building management systems. Companies have introduced far more temperature sensors around their buildings, because those sensors are now affordable enough.
Simon: As organizations have tackled sustainable development, the implicit logic has always been one of cost benefit analysis: “Yes, this is going to cost us a little bit more, but we hope that we will extract benefits from this.” And what we see in this area of digital sustainability is actually that this trade-off is disappearing.
Companies like Diego’s and Sara’s create a massive amount of public value. Pachama is making it much easier to observe the forest and create all these instruments that are actually public goods. Ample is creating benefits for the planet. But Sara and Diego manage to appropriate sufficient private value, sufficient profit to make the business sustainable.
Existing institutions prevent needed change
Simon: For over a decade, we have had all the technology to create green electricity worldwide. We could do this if we have the political will, if we have the institutions willing to be flexible. The problem is not really related to technology. It’s typically related to institutionalized power.
For example, in the carbon markets, you have a variety of organizations that are controlling the market, like Verra and Gold Standard and CORSIA now. Those companies are trusted intermediaries between carbon offset purchasers and reforestation projects. They ensure environmental and social quality of the supported projects which is very important, but they do so in a very manual, labor-intensive way, and this logically comes at a high cost — paid by the purchasers, thus increasing the price of carbon offsets and decreasing demand. Removing the middleman (as the Global Mangrove Trust does) and technological verification (like Pachama’s) can reduce these costs.
As digital entrepreneurs, there is a tension between working within the existing system while also saying: “Look, the way you’re doing forest verification, or demand flexibility, is a 20th century approach.”
Diego: Absolutely. I think a lot of ideas that have been implemented in the world of sustainability in the last few decades haven’t achieved their full potential, because of lack of modern tools.
Pachama took the approach of working within the existing system, putting the new technologies at the service of layering on top of the existing system. Another approach is to just build a parallel system altogether, which I think is also valid.
I think in many cases, having a digital twin or a parallel system can demonstrate the trust and the reliability of these new technologies. I think it’s a matter also of educating people — machine learning, for example, is something that most people don’t know the ins and outs of.
At the same time, the stakes are so high. We don’t have time to take too much time to modernize and use the latest technologies to solve climate change.
Sara: I’m just going to read the words of Buckminster Fuller, who I now am completely an advocate of. “You never change things by fighting the existing reality. To change something, build a new model.” And having spent years and years trying to fight electricity regulation, I am definitely of that mindset.
In 2018, we won a four-year legal challenge that stopped a £5.6 billion fossil fuel subsidy in the UK. The following year, it was reinstated unlawfully. I could try and challenge that, but in the end, I concluded that we simply need to build a new model. You use a lot of energy fighting something. All that energy can be spent building something new.
Entrepreneurs should consult broadly and focus on the business model
Diego: This is actually my first time building something in the sustainability world. I come from building other technology companies. So it was super important to take some time to talk to a wide variety of experts, from scientists at universities to technologists at Silicon Valley companies, to policymakers that had been working on carbon markets for a long time, to friends of mine who are known for having innovative ideas. By talking to this very wide variety, I was able to come up with what I believe is the right idea in this market.
Sara: In many tech companies, I still see too much focus on the tech and not enough focus on the business model. My overriding advice to anyone would be to start with the business model and think of tech as a way of applying technology to the problem. What’s in it for the customer? What actually will make them adopt these technologies? I think that gives a good platform for really trying to accelerate the uptake.
Simon: I agree with Diego and Sara. Specifically in the space of sustainability, ask three very simple questions:
Why is demand for this service so small? Because, in an efficient market, supply and demand should balance. But for sustainability services, demand tends to be very small. Why is this? And is there a way we can address this?
Why is supply insufficient? You could ask this for green energy or for forestry services: why is it that there is not enough supply?
Why are the transaction and the intermediary players in this market costing so much?
And so business models that are either solving one, two or three of these questions while asking, “How do we solve fundamental issues around sustainability?” — I think they can be very successful.
Artificial intelligence and machine learning: Artificial intelligence is giving a machine the ability replicate or simulate human intelligence when it comes to rational decision making. Machine learning is an application of artificial intelligence where machines are given data and trained to learn from it themselves by distinguishing patterns (builtin, MIT Technology Review, Expert System).
Mobile technology and applications: A mobile technology or device is one that can travel with the user. A mobile application is a piece of software designed to run or operate on a mobile device (IBM).
Sensors and other Internet of Things devices: A sensor is a device that detects events or changes in its environment and send the information to other electronics. Internet of Things devices work by connecting devices in autonomous communication and enables them to act without input from the user (Wikipedia).
Information transmission [telemetry] tools such as satellites and drones: Tools that transmit data from inaccessible sources to an IT system for monitoring and analysis (Stackify).
George, G., Merrill, R. K., & Schillebeeckx, S. J. D. 2020. Digital sustainability and entrepreneurship: How digital innovations are helping tackle climate change and sustainable development. Entrepreneurship Theory and Practice.