How to harness the disruptive innovation of climate actionNigel Topping, former CEO of the We Mean Business coalition
Disruptive innovation can mean many different things to different people. To established business leaders, it can mean a threat to market share or an opportunity to adapt and retain a leading position into the future. To innovators and start-ups, it can be a ticket to creating new markets or re-writing the rules of an old one.
However, there’s one growing disruptive innovation trend that unites all companies, and can help unlock innovation and create the industries of the future. The need to act on climate change is the greatest potential cause of disruption faced by new and established businesses alike, and is also the greatest catalyst for innovation for those willing to harness it.
Sustainable business models have the potential to unlock $12 trillion in new market value, according to a report by the Business and Sustainable Development Commission.
Here are some examples of how companies are harnessing the power of disruptive innovation, as they grow new business opportunities and help to tackle climate change.
Harnessing the disruptive innovation of electric vehicles
The transition to electric vehicles (EVs) and zero-carbon fleets is a disruptive innovation that is accelerating rapidly.
Automakers have already announced more than $150 billion in investments to achieve collective production targets of over 13 million EVs annually by around 2025. Businesses that rely on cars and trucks for their operations are also responding, by embracing the shift to find new ways of creating value and driving demand for electric vehicles.
Deutsche Post DHL, one of the world’s largest mail and logistics companies, is harnessing the transition to EVs to unlock new growth potential, as well as achieving its bold target to cut logistics-related emissions to zero by the year 2050.
The company designed and created its own electric delivery van through its subsidiary StreetScooter, which is now a leading producer of electric delivery vehicles and supplies companies across Europe.
Birgit Hensel, Vice President of Shared Value at DPDHL, said: “We find that ambitious [climate] targets create opportunities and uncover new business models. Our climate activities are not so much to minimize risk but to gain value.”
Elsewhere, Enel subsidiary eMotorWerks is using its network of 6,000 EV chargers in the US to form a virtual distributed battery that can provide storage directly to the grid and compete with incumbent power producers.
By using the existing energy assets and connecting them via a software platform, the company is able to offset high demand on the grid, increase reliability and resiliency, and also pay EV drivers for participating in the scheme.
Val Miftakhov, CEO of eMotorWerks, said: “We realized about five years ago that the upcoming revolution in electric transport would bring a lot of battery capacity to the market; these are effectively batteries on wheels.”
LeasePlan, which is also an EV100 member and has some 1.8 million vehicles under management, is embracing the growth potential of electric vehicles to uncover new business models.
Last year LeasePlan launched an innovative pilot programme with the aim of making it as easy as possible for corporate customers to switch to low-emission vehicles and cut emissions, including providing charging infrastructure and carbon offsetting.
How disruptive innovation turns a problem into a solution
Other companies are finding innovative ways to tackle the emissions that cause climate change, while also unleashing new business opportunities.
Chemical company Lanzatech is tackling pollution from heavy industry and turning it into useful products. It’s developed a biological process that takes the waste emissions and makes ethanol, fuel and chemicals using bacteria.
At a plant in China, Lanzatech is working with one of the largest iron and steel producers in the country – Shougang Group – converting the emissions from the plant into ethanol, which can be used in engines.
Biotech company Novozymes is using enzymes to develop new and profitable partnerships. For example, Novozymes is now using biomass residues from its local facility to generate power, via a partnership with power utility Ørsted.
Alcoholic drinks company Diageo is using the spent grain, or “draff”, from its distilling and brewing processes to create renewable energy, with on-site bio-energy facilities via anaerobic digestion and biomass burning.
Embracing the clean energy revolution
One key approach that these companies have in common, as they navigate the disruption of climate change, is to approach the challenge as a potential opportunity. That has been the approach of Spain’s largest utility Iberdrola.
Iberdrola is committed to developing a business strategy fully aligned with its climate goals, with more than €32 billion of investments, from 2018 to 2022, focusing on renewable energies and networks.
The company is now one of the main investors in low-emission technologies, and a world leader in wind energy. For example, at its East Anglia One offshore wind farm in the UK, Iberdrola has integrated the biggest alternating current (AC) offshore substation ever built.
And Ørsted, the largest utility in Denmark formerly known as Dong Energy (short for Danish Oil and Natural Gas), has transformed its entire business model to become a clean energy company – shifting its supply from coal and oil to clean sources like wind. In Denmark alone, Ørsted now accounts for more than half of the entire country’s CO2 reduction since 2006 – helping the country to achieve its Paris climate commitments.
This complete transition has also resulted in strong earnings for the company, both compared to the power utility sector and the oil and gas sector the company left behind.
As a way to demonstrate their willingness to embrace the disruption of tackling climate change, more and more companies are setting science-based targets, including companies that have been around for hundreds of years, new disruptors, and those from heavy industry.
Constraint has always been a driver of disruptive innovation; and what clearer constraint could there be than the biophysical limits of our planetary system. It is truer now than ever that necessity is indeed the mother of invention.
- This article first appeared on WEF Agenda >
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