The B2B Sustainability Startup Landscape
Which startups enable corporates to drive their sustainability agenda? In this article, Techfounders, Digital+ Partners, and UVC Partners are introducing a map of ~150 European startups working in areas we expect to unfold dynamically in the near future.
As legislation, consumer activism, and corporate activity on sustainability are significantly picking up speed, it is clear that existing solutions are not enough to achieve what is needed to avoid a climate disaster and restore a healthy balance between people, profit, and planet.
In the past years, startups have started to jump into the void with innovative solutions to mitigate climate change, disrupt capitalist models, and drive systemic change. While startups are highly active in a variety of sustainability categories, we need much more innovation in the years to come.
So TechFounders, Digital+ Partners, and UVC Partners joined forces to present startups that enable corporates to drive their sustainability agenda. We identified four categories that we expect to unfold dynamically in the near future: emissions management, supply chain transparency, circular economy, and sustainability reporting.
Why?
To gain deeper insights on corporate’s biggest sustainability challenges, UVC Partners conducted interviews with corporates who had invested in their fund. Here is a summary of the main findings:
1️⃣ While all corporates publish sustainability reports covering environmental, social, and governance aspects, environmental topics are by and large the most dynamic and the biggest pain point.
2️⃣ While most sustainability goals are qualitative, most have set a quantitative goal for their carbon emissions, e.g. “we will become net zero by 20XX”. This includes scope 1, 2 and 3 emissions. Some even have the ambition to reach this goal without carbon offsetting.
3️⃣ The level of startup collaboration is low. External service providers, if any, are consulting firms or IT software agencies which develop customized solutions. If the corporate does work with a startup, projects are usually still in the pilot phase. Why?
➡ High complexity of internal systems and high implementation effort
➡ Internal resistance aka “not invented here syndrome”
➡ Sustainability is not at the core of the organization yet, as business units are not driven by sustainability-related KPIs
💡 However, some topics emerged that were frequently mentioned. These are areas where the corporates are actively seeking solutions as the problems are difficult to solve internally.
Emissions management
Gaining full emissions transparency is vital to reach net zero goals and implementing effective reduction strategies. However, this step is the most difficult as collecting, verifying, and analyzing data from distributed sources and calculating emissions from them is a huge challenge for large organizations. While scope 1 and 2 are manageable, scope 3 emissions are a black box for many, as the data needs to be provided from external parties along the value chain.
Supply chain transparency
A large part of sustainability extends towards the value chain, i.e. the suppliers. Corporates must soon audit their suppliers for compliance with minimum social and environmental standards (“Lieferkettengesetz”), and consumers increasingly demand to know that the raw materials used in their products are of an ethical origin. The high complexity due to the vast amount of suppliers and information asymmetry are a big hurdle.
Circular economy
A great amount of negative environmental impact can be avoided by simply producing less from new materials. For our corporates, circular economy was particularly interesting as circular economy solutions can be attached to current processes without changing existing ones, i.e. by converting waste into a resource or extending the life of a product.
Reporting
In the future we can expect strict non-financial reporting requirements similar to financial reporting. Traditional non-financial reporting software is based on outdated software, so CSR departments usually spend a lot of time on navigating through a pile of Excel sheets.
What’s next?
In the coming weeks, Techfounders, Digital+, and UVC will present deep dives on these topics sharing insights from our conversations with founders on this map and an assessment of the maturity of the space.
➡ Deep Dive on Supply Chain Transparency
➡ Deep Dive on Carbon Accounting
For the next ones …. Stay tuned!
✨ Questions, comments, feedback? Or just would like to talk? Find me on LinkedIn or shoot me a message at liu@uvcpartners.com.
