Three steps to prevent the environmental “hockey stick”
by Felix Staeritz and Sven Jungmann
Following every large crisis since 1900, there is a significant drop in carbon emissions. Unfortunately, the improvement after each crisis is then rebounded by an even more rapid increase. This rebound effect further contributes to the sudden and alarming global warming trend in the twentieth century illustrated by the popularized “hockey stick” graph. The Spanish Flu, the Great Depression, the 1970s energy crisis, the 2008 financial crash, and now, COVID-19.
In the wake of the ongoing pandemic, we are experiencing the largest drop in carbon emissions ever recorded.
This is our moment to disrupt the pattern, preventing or mitigating a rebound in carbon emissions. Alternatively, if the pattern repeats uninterrupted, we will likely face the daunting consequences of a more accelerated increase in emissions.
Time is of the essence.
As we transition out of the COVID-19 crisis and companies begin to grow again, we have an opportunity and a responsibility to ensure we do not passively follow this pattern. We can take steps now to become climate neutral, prioritizing sustainability and capitalizing on this current drop in emissions.
What are the three steps to climate neutrality, to straightening out this “hockey stick”?
Step One: Platform and Digital Business Models
“We must turn the circular economy promise into a reality by closing and improving the loop and capturing value from the loop for all stakeholders. Effective new business models strike the right balance and integrate the digital, physical and human world,” explains Dr Carsten Linz, Group Digital Officer at BASF.
Platforms and new digital business models are key to transitioning toward a circular economy, which promises a regenerative system that benefits businesses, society and the environment alike. Platform business models already offer enhanced capacities to locate supply and demand, which reduces inefficiencies. As we build on these, companies must continue to develop new digital business models that provide more reliable data in more manageable formats so that we can better optimize resource functionality post-lockdown.
Step Two: Incentive Structures
In addition to working with political incentive structures and regulations that emphasize quarterly or yearly benchmarks, companies must create their own structures that continually propel and maintain progress. As Anna Alex, co-founder of Planetly, describes it:
“It is to a certain extent translation work — from the moral system to the business system.”
Companies such as Planetly, TIDAL Impact or GITA enable their partners to place sustainability at the core of what they do, rather than treat it as a side note.
This step involves more accurately measuring impact and factoring accountability into the equation. From there, companies can more effectively implement personalized, short-term incentive structures that are woven into the everyday work. This shifts the focus to integrating climate neutrality into a profitable and lasting business strategy, and it eliminates earth-polluting, short-term profit models as viable or attractive options.
Step Three: Effective Collaboration through Corporate Venture Building
The third step to flattening carbon emissions concerns collaboration. We must drastically reinvent the way we do business to become climate neutral. This is where the ingenuity of entrepreneurs, those who are unafraid to try new paths, factors in. Lack of access to enough resources (financial, scientific, political), however, makes it impossible for entrepreneurs to tackle this massive problem alone. That is why we need strategic collaboration, not only between politicians, NGOs and for-profit companies but specifically between corporate and entrepreneurial entities.
Large corporations have the ability to act on a great scale but lack the flexibility to keep up with modern innovation. Startups, on the other hand, have the ideas and drive to execute environmental initiatives quickly, but often fall short on resources to deliver at scale.
Corporate venture building is how we bridge the gap. To take advantage of this moment and temper the environmental rebound effect, we must combine the best of corporate resources and structure and of entrepreneurial ingenuity for new digital business models, and we must start immediately.
Bringing these components together successfully, however, requires skill, negotiation, and experience. At FoundersLane, we empower corporate businesses to help their digital business models achieve true impact at the scale that this crisis demands. Drawing on our entrepreneurial mindset and our deep understanding of corporate realities from partnerships with companies like Vattenfall, Allianz or Gothaer, we identify opportunities to build and scale new models that both guarantee profits and protect the Earth.
If you want to learn more about corporate venture building, circular economy or sustainability, get in touch, read our book FightBack Now or subscribe to our Newsletter about Business, Innovation and Entrepreneurship.
Felix Staeritz is a serial entrepreneur, investor, founder and CEO of the corporate venture builder FoundersLane, member of the Board of Digital Leaders of the World Economic Forum and book author and is one of the internationally recognised experts on entrepreneurship and digital transformation. Driven by the firm conviction to sustainably improve the world through digital innovations, he has been in close dialogue with the global business and scientific elite in relevant international bodies for around 20 years.
Dr Sven Jungmann is a doctor-turned-entrepreneur. He is a partner at FoundersLane and an advisor to health start-ups and investors. Handelsblatt listed him among Germany’s smartest innovators. Sven has consulted Wellster Healthtech, the D2C health success case in Germany and continues doing so via an advisory board role. Wellster Healthtech has been promoting D2C in health early on.
FoundersLane, the leading Corporate Venture Builder for climate and health, was founded in 2016 by Felix Staeritz, Andreas von Oettingen, and Michael Stephanblome. The team develops digital business models in the health and climate sector by combining the agility and the mindset of technology entrepreneurs with the strength of corporations. FoundersLane draws on more than 20 years of experience by the founders in building up new companies.
FoundersLane creates new, fast-growing digital companies in categories that are highly topical and current. FoundersLane counts more than 100 founders, experts and entrepreneurs with great expertise in the fields of medicine, health, climate, disruptive technologies such as IoT connectivity, AI, and machine learning. Clients and partners include SMEs and corporations as well as more than 30 Forbes listed companies, such as Trumpf, Vattenfall, Henkel and Baloise. FoundersLane is active in Europe, MENA and Asia with offices in Berlin, Cologne, Vienna and London.
