By now most of us understand what social entrepreneurship is all about: the combination of business ideas with positive social impact. Two examples might be:
- The Ugandan-based startup Wazi Vision carries out eye tests for kids for just one US dollar – with the help of a smartphone app and easily portable devices. This “mobile clinic” is transportable enough to reach kids even in remote, hard-to-access places. When the eyesight test is done, the app sends the prescription to the team’s designers, who make affordable frames from recycled plastics.
- Working with small farmers around the world, Conflictfood sells fairly-traded hand-picked grains and spices to help strengthen economies and create opportunities for local communities in crisis-hit regions.
So what about “ecopreneurship”? A combination of the words ‘eco’ and ‘entrepreneurship’, here the focus is on enterprises that combine business with environmental or climate impact.
The rise of digital technologies often plays a key role here, with ecopreneurs making use of the new tools available to implement their visions of a sustainable future. From cutting down on food waste, to protecting marine life and making smart use of renewable energies – as the following examples of ecopreneurship show, the solutions are just as diverse as the challenges they’re developed to tackle:
- The Finnish startup RePack has developed a deposit scheme for online retailers to help cut back on the packaging waste caused by the increasing boom of online shopping.
- The Banana Pinger is a small, simple-looking and affordable device that can be clipped onto fishing nets to warn dolphins and whales of the presence of large fishing nets and protect them from ending up as by-catch.
- A road surface that generates electricity from sunlight, absorbs noise, breaks down nitrogen oxides, defrosts ice in winter, provides valuable data and supplies electric vehicles with electricity – the German startup Solmove has installed its first ever “Voltstreet” just outside Cologne.
- Online energy market place Enyway wants to make the major energy companies a thing of the past. How? The Enyway platform decentralises the energy market by connecting green energy producers – both large and small – directly with consumers.
- The CityTree from Green City Solutions kills several birds with one stone: it filters CO2 from the air, provides environmental data via the IoT and lowers the temperature in the surrounding area. This rectangular-shaped piece of city furniture can be installed almost anywhere in the city and is covered with a certain type of moss that has the same pollution-fighting power as 275 trees.
- WEtell is Germany’s first all-round sustainable mobile network provider: climate-positive, secure, transparent and fair.
Ecopreneurship: What’s it all about?
What do all those examples have in common? First and foremost: Ecopreneurs aim to solve a specific environmental problem through sustainable business. Armed with innovative ideas, they search for gaps in the market and use creative solutions to realise their vision. At the centre of all of their entrpreneurial activities is the development and promotion of ecologically-oriented innovations.
Large companies often have a sustainability department or CSR strategy, but in those contexts environmental innovation is often limited to just reducing environmental costs. While those environmental measures (reducing resource use, switching to renewable energy, improving waste management, etc) often reduce the negative impact of their operations, environmental and climate impact is still far from being a core part of those companies’ missions.
The work of ecopreneurs is often grouped together with other “conscious” entrepreneurs, under the umbrella term of social entrepreneurship, but the term is slowly establishing itself in its own right. And a quick look at the statistics suggests that green enterprises are certainly deserving of their own name: According to a study by the Borderstep Institute into green startups in Germany (pdf), between 2006 and 2014 each year around 21,100 companies were founded that could be described as being part of the growing “green economy”, meaning an average of 14.7 per cent of startups had an ecological mission.
Traditionally, eco-friendly products and services have often been small scale in their reach – and therefore also in their impact. Believing in the idea that “small is beautiful” many have (intentionally and unintentionally) been pigeon-holed as “alternative” or “niche”, and often haven’t established themselves on the mainstream market.
In contrast, while sustainability is the key goal for ecopreneurs, they’re much more keen to “think big” and want their products and services to have the greatest possible impact on both the market and the planet. All entrepreneurs are focussed on growing their business after the startup phase – and it’s no different for ecopreneurs. They too are market-oriented and have ambitious profit, growth and productivity targets – because as their business grows, so does their positive climate and environmental impact.
Key to it all? The Circular Economy
When it comes to developing products with a positive climate impact, it’s crucial to examine which economic, ecological and social effects and costs arise in the entire process of creating, using and recycling that product. Systematic life cycle analyses are therefore a key tool of the trade for true ecopreneurs.
Within these life cycle analyses there are two concepts: eco-efficiency and eco-effectiveness. A product is eco-efficient if material and energy are saved and pollutants reduced thoughout the entire life cycle. Eco-effectiveness goes even further and aims to create circular resource flows. Eco-effective products are therefore those whose resources remain in the cycle for as long as possible. Fewer resources are needed as a result, which contributes to a long-term solution to ecological problems.
Can green businesses save the world?
Not everyone is convinced that entrepreneurship can come up with genuine solutions that protect the environment and the climate. How can the preservation of our planet be achieved using the same means that have triggered so many of the problems in the first place, i.e. our growth-oriented, capitalist economic model? And won’t ecopreneurship just further strengthen dominant economic patterns instead of breaking new ground in alternative ways?
Ecopreneurs take a different view: if they stay stuck in a niche or they don’t manage to establish themselves on the mainstream market, solutions to environmental and climate issues will only ever be able to have a limited influence. By contrast, working to shake up the market economy “from within” can have a significant positive impact – like if a company succeeds in making an environmentally-friendly service or product so successful that it asserts itself on the mass market.
However, not everyone who claims to be an ecopreneur really does follow truly sustainable goals. Many companies have adopted ideas of ecopreneurship and integrated them effectively into their market strategies and CSR concepts. However, they often don’t communicate their exact working methods and impact in a completely transparent manner.
Radical transparency in business is another key characteristic of the way that true ecopreneurs work. By communicating clearly about how their business works and constantly questioning its own structures and methods, it’s clear for everyone to see what exactly is that the company stands for. And at the same time, it ensures that the company itself doesn’t lose sight of its ethical goals or allow itself to be swallowed up by an economic system that is geared exclusively to maximum profits and growth at any price.
Challenges and Opportunities for Ecopreneurs
According to a research report from Unternehmensgrün (the German Federal association of green economy) into green startups in Europe, the biggest challenges facing founders are financial and bureacratic.
The Borderstep study came to a similar conclsion. While initial financing is a hurdle for all new startups, the financing requirements for green startups was estimated to be considerably higher (on average 200,000 EUR) than for non-green ones (on average 35,000 EUR), making it significantly more challenging for green startups to turn their idea into a successful company.
But while the environmental challenges constantly grow, and more and more environmental policy goals are set to tackle them, we need business models that address these challenges more than ever. In order to support ecopreneurs and what they do, we need:
- more committed and targeted startup funding for ecopreneurs and green startups
- more political support, both in terms of reducing regulatory and bureaucratic hurdles and raising capital.
In the EU, Climate KIC runs several different programmes from entrepreneurs with ideas for climate impact business ideas – offering funding, coaching and networking opportunities.
And RESET actively supports green founders too: We accompany ecopreneurs on their way to successful financing (seed, early stage, growth capital), providing practical assistance along the way and answering questions about sustainable business models and financing opportunities. Find out more in our Green Impact Finance section.
Author: Sarah-Indra Jungblut (RESET Editorial), with the collaboration of: Dr Paul Stadelhofer / February 2019