By utilizing innovative technologies, some startups around the world are trying to solve worsening climate change issues through their businesses. How are they approaching these challenges? Are there any hints for creating new businesses that contribute to society? We received up-to-date information about climate change issues and the startups working in related fields from Sera Tsutsumi and Rian Ishikawa, who assist startups with environmental, social, and governance (ESG) management at Digital Garage’s Open Network Lab (Onlab).
Speaker
manager; Open Network Lab; Digital Garage, Inc.
Sera Tsutsumi
Worked in real estate development in the States and ASEAN, as well as business development in forestry and afforestation, at MITSUI & CO. Received her MBA from IE Business School (Spain) with a focus on sustainability and impact investment. Joined Digital Garage in 2021, where her job includes new ESG/sustainability business creation and ESG-focused startup support. Earned a Certificate in ESG Investing from the CFA Institute.
Open Network Lab; Digital Garage, Inc.
Rian Ishikawa
Graduated from the Design and Technology department at the Parsons School of Design and began working at Digital Garage in extended reality (xR) research and development, as well as product management for the web3 sector. Since 2021, her job at Open Network Lab includes startup support based on ESG management and sustainability.
More startups are also working to solve climate change
Our daily lives are threatened by climate change, which refers to issues such as droughts and floods caused by changes in temperature and weather. Global warming is exacerbated by greenhouse gases produced through human activities in particular.
The severity of climate change, a change that takes place over several decades, is difficult to realize in everyday life, but Tsutsumi said the planetary boundaries help us understand these effects. Planetary boundaries divide global environmental issues into nine categories with limits that must not be crossed. This is an intuitive way to understand the world’s limits by providing graphs that visualize how close we are approaching the limit.
The Kyoto Protocol, adopted in 1997, was a watershed moment when awareness of the need to solve climate change began to grow across the world. Although it only applied to advanced nations, it was the first effort to establish goals for reducing greenhouse gas emissions. The 2015 Paris Agreement established global long-term targets for greenhouse gas reductions beyond 2020. In the context of these global arrangements, the issue of climate change has gradually gained attention as an issue that the entire world should strive to solve.
This growing awareness has led to more diverse actors and methods for taking on climate change issues, including investments by national governments and corporations in activities to solve the problem, as well as daily habit improvement efforts by individual consumers. From 2006 to 2011 the era known as “Climate Tech 1.0” saw the emergence of renewable energy. “Climate Tech 2.0” commenced after the Paris Agreement.
Since around 2010, startups have been striving to solve climate change through innovative technologies. By utilizing climate tech, startups are fulfilling an important role in multifaceted approaches since the Paris Agreement.
Three methods for climate change solutions
Tsutsumi and Ishikawa said there are currently three main categories for methods to help fight climate change: conserving existing resources, reducing substances that cause climate change, and capturing substances that cause climate change. More technologies are being developed to remove greenhouse gases from the atmosphere. Tsutsumi and Ishikawa shared examples of startups that are tackling climate change in each of these categories.
1) Conserving existing resources
The careful use of existing resources is an easy and familiar way to incorporate into daily lives. Specific examples include resource recycling, upcycling unneeded items, and saving energy like electrical power and gas. We can consume fewer natural resources and create a more environmentally friendly society by effectively utilizing and conserving resources in many different fields.
komham’s “Smart compost”
komham is a startup that manufactures “Smart compost” powered by solar energy. Its proprietary microorganisms produce fertilizer by decomposing up to 98% of food scraps in as little as one day. Food waste volumes and decomposition status are uploaded to the cloud for remote viewing. “Smart compost” machines emit no CO2 while turning food scraps into natural fertilizer (a new resource), which creates a natural cycle.
2) Reducing substances that cause climate change
The issue of greenhouse gas emissions is directly linked to climate change. In recent years, the planet has been warming at an accelerated rate. In its Plan for Global Warming Countermeasures released in October 2021, the Ministry of the Environment stated that the average surface temperature could rise by more than 2°C compared to the period from 1850 to 1900 if no additional measures are taken to curb emissions by the end of this century (2081 to 2100). This has inspired the rapid development of technologies and services, like electric vehicles and renewable energy, which aim to reduce the use of less fossil fuel (which produce CO².)
Luup promotes electric micromobility
Luup is a startup that uses climate tech in its business. LUUP electric micromobility sharing service creates new ways for people to travel on electric scooters and electric-assist bicycles between its ports installed throughout towns. LUUP’s goal is to provide new, short-distance transit methods to users. Electric micromobility helps reduce greenhouse gas emissions.
3) Capturing substances that cause climate change
We cannot avoid producing greenhouse gases if we continue the current levels of human activities. If more technologies are developed to capture greenhouse gases, it may be possible to resolve climate change issues while maintaining the same human activities—two things that were previously regarded as incompatible.
Capturing CO2 produced from concrete manufacturing
CarbonCure Technologies offers CarbonCure, a technology that injects CO2 into concrete. Today’s concrete production processes emit a great deal of CO2. With CarbonCure, the CO2 is recycled and embedded in concrete to improve durability while reducing emissions. This technology is distinctive for its new perspective: instead of merely reducing emissions, it captures CO2 from concrete manufacturing.
Although more startups are taking on challenges related to global warming, trial-and-error efforts are still underway globally to capture substances that cause climate change. Existing technologies are only able to recover a small amount of current emissions, and there is a question as to whether this field is economically viable given the resources required to develop and operate the required technologies.
Conversely, the other two categories are constrained to current status. To advance towards an improved situation, it is essential to recover emitted climate change-causing substances. Although there is no clear breakthrough, future progress in this field may usher in a new phase of climate change solutions.
Actively supporting startups that aim for social contribution
Governments, funds, and other organizations support startups that are working to solve climate change and other social issues. The typical focus of investing in regular startups is sorely on profitability. According to Tsutsumi, investment trends are evolving to consider the impact that startups are making.
Ishikawa and Tsutsumi work at Open Network Lab (Onlab), one example of an organization that provides investment and assistance to startups. This accelerator program was launched in 2010 to incubate startups that can compete on the global stage. Despite its long history as an accelerator, Onlab is also forefront of recent trends, including initiatives related to ESG management and climate change. Startups that participate in the program are invited to ESG management workshops, and individual workshops are available for startups that want to further enhance their businesses as ESG companies.
Onlab’s support is unique because it assists startups in effectively manage their business, enabling them to contribute to society while achieving a profitable business outcome.Onlab also participates in the Open Network Lab & ESG I Investment Limited Partnership (“Earthshot Fund”), which invests in startups with a focus on what consumers truly need. In this way, Onlab has maintained its philosophy of investing in companies trying to solve social issues since 2010.
All companies and businesses can tackle social issues
The entire world is joining together to solve climate change and other social issues. Ishikawa said, “All companies and businesses can tackle social issues.” For example, building governance structures and operating healthy organizations can boost employee motivation and encourage economic growth.
Tsutsumi said these methods can also lead to new business opportunities. There may come a day when a company cannot operate great businesses—including the necessary environments and human resources—without considering how to solve social issues. As companies across the world face these risks, their efforts to solve social issues can lead to high evaluations and new opportunities.
However, it is not a good idea for companies to forcibly change their existing businesses to resolve these issues. Ishikawa said they should start by reflecting on “what the underlying purpose of our business is” They must explore what can be done without changing their goals, and create businesses that help solve social issues without making major changes to their business and values. It is hoped that companies will approach ESG management in a way that fits their unique circumstances while watching the startups that are taking on global-scale challenges.
In addition to Onlab’s accelerator program, startups can visit the Open Office Hour page to discuss business strategies, fundraising, and business ideas.
