Sustainability Round Table: “I Would Ban the Ubers of This World”
Which technologies actually contribute to more sustainable value chains and business models? Which are hyped or even ambiguous? Our Singularity Think Tank experts came together to exchange their views on the state of innovation in sustainability.
Twice a year during our Think Tank Weeks, we intensify the exchange with our experts and discuss their respective technology domains individually and in interdisciplinary round table conversations. During our first round table on Sustainability & Innovation, our Director of Research Shiko Ben Menahem gathered Agnès Petit Markowski, Andres Gujan, André Hugentubler, Joern Hoppmann, James Khedari, and Johannes Meuer to an exchange of their views on the latest technological innovations and hindrances affecting corporate sustainability objectives today. Taking a broad view on the topic, our experts discussed technologies affecting the environmental limits within which humankind can safely operate.
Asked about which technologies excite our Think Tank Experts when it comes to sustainable development, Jörn Hoppmann notes he sees quite some potential in pyrolysis. Pyrolysis is the thermal decomposition of materials in an inert atmosphere — or in other words: the process of burning without oxygen. “Especially biochar, the decomposition of plant-based materials into coal and ultimately products like fertilizers or animal feed, seems like a meaningful application to bind CO2 for a prolonged time.” James Khedari agrees: “The pyrolysis of low grade plastics and agricultural briquetting to produce ethanol or methanol or other carrier gasses look really promising already.”
André Hugentobler adds: “Catalysts play an important role in chemical recycling and could be an attractive growth area. Furthermore, LanzaTech developed a fermentation process to transform carbon-rich waste gases into chemical building blocks. CO2 is increasingly becoming a feedstock itself.” Andres Gujan sees developments in the field of biofuels and renewable diesel, which he classifies along three generations of feedstock: “The first generation uses inputs such as crops for animal feed. This is happening already and is competing with the food industry, which makes it less interesting. The second generation focuses on plant-based inputs and is more compelling, but where it becomes really exciting is the third generation that utilizes new biomass like algae.” Companies like DSM and Croda are leading in algae technology. “Algae doesn’t infringe on the food feedstock market. All you need is salt water. No land, no fresh water. And that’s why this highly innovative process carries a huge potential and why renewable diesel from algae could be the fuel of the future.”
Khedari notes that the current gas price rally is accelerating innovation and making alternative gas and energy projects highly attractive: “In the current market environment, investors are more eager than ever to help drive an energy transition.”
Context and pragmatism
To which extent context and viability matter becomes apparent when Angès Petit shares her insights on Carbon Capture (CCU), a technology that has gained quite some public attention recently. In her field of expertise — construction — CCU is anything but a sustainability catalyst: “Paying credits for CCU in concrete is a wrong bet because it strengthens the vicious circle in which the construction industry is caught up. It even hinders change.” (Find out more on the subject in this article). Change is urgently needed considering that 40% of carbon emissions stem from construction and about 8% from cement alone. She urges the industry to focus on harnessing innovative technologies that already create positive impact: “Automation and robotics, for example, help avoid excessive material use in the industry. Applications like these are really moving the needle.”
Investors seek broad brush solutions, but real impact needs initial focus: A general notion in the debate was that the way in which innovations matter for sustainability boils down to the details: to reach climate and sustainability goals, or even circularity, every aspect of the value chain needs to be aligned and updated. But how can this be achieved? “Before pursuing the wide adoption of a new technology, it is best to focus on a specific area of application, specialize, and grow and only later seek to apply that technology elsewhere and disrupt entire value chains,” says Petit Markowski. In construction, embedding automation and robotics into underground tunneling and mining operations can significantly reduce energy consumption and concrete waste. “Take the use of excavation material for building materials. The sorting of the waste uses a combination of computer vision, machine learning, and process control technologies to sort the fraction. Some fractions can be reused for insulation products. These technologies have huge potential to increase the circular economy and prevent usage of high-carbon footprint materials. It takes time for the market to adopt such solutions, especially in a traditional industry such as construction.”
Petit Markowski also points out that rebuilding houses potentially leads to better long-term efficiency than renovating them. The use of recycled materials (e.g. in Zurich 25% of concrete in buildings has to contain recycled components), or advanced insulation technologies are key here. Johannes Meuer supports this call for a pragmatic approach. “Take smart building technologies. Trials with digital infrastructures where sensors are used in every room of a building have shown that data overload is a real obstacle to efficiency gains. I’ve seen cases where it would have been easier to ask the facility manager of a building to point out critical energy leaks than introducing a complex automation system.”
The ambiguity of some technologies
Asked about innovative technologies with negative sustainability impact, Meuer shares his dislike of online platforms that enable the exploitation of human and natural resources: “If it was up to me, I would ban the Ubers and electric scooter platforms of this world. Both replace walks and public transport and rely on cheap labor. Rent-a-Scooter vehicles need to be redistributed and recharged every night, and you’d be surprised by the number of scooters and e-bikes that end up rusting away in lakes, rivers, and canals.” In his view, technology bias sometimes creates further problems. Moreover, he points out that automation may breed global injustice: “When planning to digitalize the world, we tend to forget that some people don’t even have access to a smartphone or laptop.” Holistic sustainability strategies take these regional disbalances into account and avoid “one fits all”-approaches.
Gujan supports both Petit Markowski’s and Meuer’s cautious stance to avoid short term actionism, calling for a and look at the full picture: “We need to keep an eye on what I call ambiguous technologies. Take for example Expanded Polystyrene (EPS) panels. These make for excellent insulation materials. They’re light, cheap, and have all the properties you need to save heating or cooling energy. When you look at their carbon footprint, that’s usually positive. The problem is that they contain flame retardants that are not biodegradable. So that should curb your enthusiasm about such products.”
Industry needs to make short term moves without losing focus on the long term plan. On this note, Hugentobler adds an example from packaging: Plastic remains the material of choice in many packaging applications. Therefore, reducing material consumption, waste, and increasing recycling rates is an ongoing priority, while the industry in parallel puts a lot of effort into increasing the recycled feedstocks’ quality for closed loop recycling. Additionally, novel cellulose-based packaging materials are being developed to achieve some of the inherent plastics property benefits while taking advantage of the renewable material source and the already very high recycling rate of paper and board materials.
“Green as a Service” and the Planetary Boundaries Framework
The Think Tank experts see a trend toward “Green-as-a-Service.” “Take the example of global transport and logistics companies offering greener transportation services, which they ‘sell’ to customers interested in reducing the carbon footprint of their supply chain. Soon, they can buy capacity on container ships that have been re-equipped to run on CO2-free fuels,” Meuer highlights and mentions an announcement by Maersk to run its first cargo ship on bio-methanol from 2023 on. “There’s a high demand for such CO2 neutral applications.” When it comes to value chain transparency and fulfilling the growing legal requirements for CO2 accounting, software providers are increasingly harnessing the potential of AI and blockchain technology. Meuer explains: “In these cases, operating on the blockchain allows companies to only share specific pieces of information and to perform a three-point validation. For example, to ensure fair wages being paid to workers, the employer, the employee, and the bank could individually confirm whether a wage transaction was executed using blockchain technology, such that a regulator or end user can validate fair labor practices.” Companies like Seedtrace already offer blockchain-based solutions to make value chains more transparent.
As we navigate our own way through innovations in sustainability, our round table also touched upon the Planetary Boundaries Framework (PBF), which aims to quantify and monitor the planet’s natural resource limitations, with a strong focus on the E in ESG. “ESG only considers whether the environment has an impact on a company and not whether the company has an impact on the environment, and that’s where typical ESG scores fall short,” says Hoppmann. Gujan adds: “For a more comprehensive approach, it makes sense to look at the origin of materials because companies use and waste a lot of resources. Where do materials come from? Are they being reused and what is their biological origin?” Our experts agree that one of the major challenges of any ESG framework is finding the right metrics and making them applicable for companies. “The current ESG related measures are far away from the reality of some industries,” adds Khedari. Meurer concluded: “When talking about sustainability, it doesn’t help too much to work with and invest in ‘green’ companies only. Helping ‘dirty’ businesses become clean and channeling money towards them is where the real potential lies.”
About The Singularity Group (TSG)
The Singularity Group makes applied innovation investable in listed equities. TSG is the initiator of the Singularity Index™ (Bloomberg ticker: NQ2045), a global, all-sector benchmark and gold standard for applied innovation. The Singularity Strategies include The Singularity Fund (UCITS Lux) and the Singularity Small&Mid (UBS AMC). The Swiss investment boutique works closely with the Singularity Think Tank, a network of entrepreneurs and academics with deep insight to innovation value chains. Their input forms the foundation of TSG’s proprietary innovation scoring system that quantifies the engagement of companies within a set of curated Singularity Sectors worldwide across all market capitalizations and industries. The Singularity Score defines how much value listed companies are generating through applied innovation.
For more information on how our Think Tank’s insights fuel our strategy, please visit www.singularity-group.com.
