6 minute read
CLAUDIA CAVALLUZZO
GENUINE NET ZERO IMPACT
AT SPEED
The growing mantra for Scotland’s new generation of spinouts and startups. By Claudia Cavalluzzo
One of the great joys of what I do is
working shoulder-to-shoulder with talented, aspirational and ambitious entrepreneurs in a hurry to make their dreams become commercial reality. It really provides daily inspiration to me and the Converge team.
But those who participate in our programme certainly aren’t seeking instant success, nor success that can cost the planet.
Over the past four years, something I have noted is a striking shift in the direction of business concepts by many of those aspiring academic entrepreneurs.
I have seen a tracked change toward an ever-growing common desire to make a positive difference on the Net Zero agenda and sustainability. In fact, those principles are now so firmly entrenched in the psyche of entrepreneurs, it’s an exception not to find some element of their plans focused squarely on climate, or finding the most commercially sound ways of reducing the damage to it. In many ways, this should not come as a surprise.
By 2030 the Scottish Government aims to generate half the country’s overall energy consumption from renewable sources, and by 2045, to have decarbonised the energy system completely. Currently, however, around 85% of Scottish households still rely on fossil fuels to keep warm.
Scotland has recently soared into the international offshore wind big league thanks to its huge-scale ScotWind leasing tender, along with moves to help its oil and gas industry manage its own energy transition.
But we cannot simply wait until the likes of the ScotWind projects kick-in towards the end of the decade, to see enough meaningful action taken. We are
now quite literally in a do-or-die rush to hit our climate change goals.
Even as late as 2018, only a trickle of applications to our programme featured environmentally-focused new business ideas.
A decade ago, many students and researchers could quite rightly have been accused of too much ‘spray and pray’ when it came to new business ideas. Nowadays, the dominant principle is ‘target and tailor’, with Net Zero foremost in the minds of almost 30% of the total number of prospects we manage annually.
Reflecting the growing urgency to create a more reliable research-based flow of market-ready technologies, last year we launched a standalone ‘Net Zero’ one-off prize, sponsored by UK energy giant SSE. This year we added our first dedicated ‘Net Zero Challenge’ category, to springboard the projects which offer the most promise in addressing the climate crisis.
The convergence of recent economic dark clouds such as the pandemic, rising living costs, and severe weather events have intensified demand to deliver genuine, green solutions for business, society, and the planet.
The good news for investors is ‘profit’ is no longer a dirty word - it’s being knitted into the fabric of what genuinely constitutes making the right kind of ‘impact’.
The bad news, of course, is the era of cheap money most likely over, making the need for targeted, efficient green investment all the more complicated, and time pressured.
In Scotland, as illustrated by ScotWind, we have a fantastic opportunity to be a world leader in fostering growth in a green economy. It will depend on far greater collaboration between government and the key sectors - such as transport, energy, and waste, and of course research - to work.
A well-guided pipeline of commercially viable, green business ideas, supported by years of research and talented individuals, must be at its heart. But without more money, any national green industrial revolution is still a pipedream.
Business, academia, and society must come together behind the most innovative solutions, to ensure they reach their full potential, at pace and with scale.
Spinouts and startups – whose innovation and agility are so often just too good an advantage to ignore - can make an instant and visible difference.
A look at some recent numbers confirms how the change in our own mix of entrants is being mirrored globally.
When given a choice, for instance, The Global Sustainability Study 2021 - conducted among more than 10,000 people across 17 countries by strategy consultancy Simon-Kucher & Partners - revealed a third of millennial consumers would choose a sustainable option over a non-sustainable one, while half of companies said sustainability has an impact on their recruiting and retention.
Investors are starting to understand the shift. Paying attention to environmental, social, and governance (ESG) issues has become increasingly critical across all industries, according to a latest McKinsey Global Survey, which showed a resounding 83% of executives and investment professionals believe ESG programs will generate more shareholder value in five years’ time than they do today.
We have had our own fantastic Net Zero-focused successes over the years. Kenoteq, for instance, is the inventor of a brick made from more than 90% construction waste material and a spin-out from Heriot-Watt University set up in 2019 after more than a decade of research into sustainable building materials and practices.
This year it is the only Scottish firm, and one of just 15 companies shortlisted for a 2022 Dezeen Sustainability Award, which attracted more than 5,400 entries from 90 countries.
Another name to watch is SolarisKit, again spun out from Heriot-Watt University, with the world’s first flat-packable, solar thermal collector which converts sunlight directly into hot water to meet the needs of most homes and businesses, while reducing energy costs by up to 70%.
It recently joined the new accelerator programme at the Michelin Scotland Innovation Parc (MSIP) in Dundee as it begins to roll out an ambitious programme to provide affordable clean energy to the world’s most challenging environments in sub-Saharan Africa, North Africa, Central America, and SE Asia.
WaterWhelm, a company founded by Edinburgh University researcher Ali Abbassi Monjezi,has found a way to use lowgrade thermal energy to make almost any type of water drinkable. This could help the one in three people without proper access to clean and regularly available water for drinking and sanitation.
Some companies are making urgent moves to transition towards Net Zero, but raising money to accelerate to the pace needed, remains difficult. It is therefore paramount that more hard cash is poured in to help new businesses translate their brilliant academic evidence into practical, profitable, earth-changing solutions.
In recent weeks, UK business founder groups have warned access to funding is
drying up, as potential investors become more risk-averse with the escalating cost of living crisis, driven by the highest rate of inflation for 40 years.
There have even been warnings of a ‘lost generation’ of startups, as soaring gas and electricity prices begin to hammer firms of all sizes.
There has always been fantastic sustainability research going on at Scottish universities, but perhaps not sufficient effort in creating enterprises and then funding them.
The stage at which the enterprise element is introduced, must be earlier and stronger. We need great ideas from our universities to get to the masses and expand quicker. These types of ideas are not as niche as they once were. But more big backers should understand, nowadays it is likely smaller firms hold the keys to the greenest solutions.
According to the Office for National Statistics, still only 23% of UK firms with 250-plus employees have a climate-change strategy in place. I argue strongly, UK investors would do very well to focus more of their attention on nurturing the brightest ideas, from their very beginnings – and their source is most often, our universities.
British consumers are increasingly looking to companies to embody society’s own changing values.
More urgent work needs done to ensure organisations automatically realise - as spinouts and startups appear to appreciate already, including those we work with at Converge - becoming more sustainable just makes better business sense. c Claudia Cavalluzzo is Executive Director of Converge, a programme and network that brings together Scottish academic entrepreneurs to equip them to start and grow their own businesses.
