From lab-created foie gras to disposable plastic substitutes made from peas, to CO2 footprint calculators, innovations that help people live more sustainably have attracted investors and captured significant investments across Europe over the past year. But non-environmental startups should also take stock of their sustainability status as even small steps towards sustainability can become an advantage today.
Eco-friendly startups helping to tackle the challenges of climate change or waste emissions raised almost €9 billion in 2021 in Europe alone. This is double the amount for 2020 (€4.7 billion), according to the annual State of European Tech report. Lina Žemaitytė-Kirkman, CEO of ROCKIT, a centre for financial technology and sustainable innovation, notes that standing out among the startups that attracted the most investment in Europe were those that developed solutions related to renewable energy.
"Green vehicles, green energy and the storage of that energy, i.e. batteries, were the three areas that attracted the most investment last year. And the largest number of sustainable startups have been launched in Germany, the Netherlands and the Scandinavian countries, especially in Sweden and Stockholm", Ms Žemaitytė-Kirkman said.
She is pleased that Lithuania also has ambitions to make its mark on the start-up map. For example, PVcase, a Lithuanian solar energy software developer, raised €20 million in Phase A last year. From food to CO2
A number of startup solutions have sprung up in the food sector. Innovative young businesses are increasingly trying to use non-animal proteins to help reduce global meat consumption. One interesting project is a foie gras pâté based on proteins grown in a French startup's laboratory – as a replacement for the traditional product made from duck liver, which has come under criticism on animal welfare grounds. A number of startups have developed more sustainable solutions in the fashion, waste recovery and transport sectors. Another area where innovative solutions have increased dramatically last year is the calculation of the CO2 footprint. For example, Plan A, launched in Berlin, has not only attracted investment but already offers a solution for companies such as BMW and Société Générale to calculate their CO2 footprint and track ESG (environmental, social, governance) indicators.
The search for accurate CO2 footprint calculations is likely to have been prompted by the European Union's classification system (taxonomy), under which major banks are expected to start differentiating as early as this year which part of their loan portfolio meets their environmental objectives and can be considered "green" as opposed to "brown" (i.e. issued to businesses that are not environmentally sustainable). "This requirement has opened up the space for development, because businesses have a lot of questions: how do we measure greenness, how do we collect data, how do we compare them? Startups can propose their own solutions and help businesses address these issues," says the CEO of ROCKIT.
Last year, Rockit Impact, the first-ever sustainable innovation accelerator organised by Rockit and the sustainable innovation fund Katalista Ventures, also featured one pilot project involving such a solution. Project participant Swedbank, together with Swedish start-up Earthbanc, joined the accelerator in the search of ways to measure the CO2 emissions of the bank's customers based on various financial transaction data.
By the way, Rockit also self-assessed its CO2 footprint last year, offsetting it and becoming a climate-neutral organisation. According to Ms Žemaitytė-Kirkman, the next step is to become climate positive, i.e. to neutralise more CO2 than is emitted by the activity and to set an example for the whole fintech ecosystem.
New business lines
Lithuania has also been active in the area of sustainability innovation. Lithuania's first unicorn, Vinted, which offers a platform for swapping and selling clothes, carries a very important message of sustainability. Another strong example is CityBee, which is based on the concept of a sustainable sharing economy. However, Ms Žemaitytė-Kirkman said that, in order to contribute to sustainability, it is not necessary to develop solutions exclusively for the environment. Even traditional businesses are finding ways to turn things around, and doing so with increasing vigour.
"Any business, whether long-established or a start-up, can turn itself towards sustainability, even if it has not focused directly on the environment so far. In financial technology, there is even a new subcategory – climate fintech. There are many ways to adapt a business; for example, one fintech company in the US offers its customers to round up their card payments and donate the difference to a fund that helps plant trees. Other examples include insurance companies that specialise in insuring specifically against climate change-related disasters, or that offer more attractive insurance deals to sustainable clients. And there are many examples like this," says Ms Žemaitytė-Kirkman.
She notes that sustainability is still mostly understood only in environmental terms, although it also includes social and economic solutions: a focus on workers, their diversity, equality, public inclusion, education, and the pursuit of efficiency and non-monetary profits. So, sustainability is important in all these directions.
Self-assessment is a good start
To understand how to turn a business around, it is important to first take stock of how sustainable the business already is. Last year, ROCKIT, together with Katalista Ventures, measured the sustainability of the fintech startup community in Lithuania and evaluated 29 local startups whose products do not directly address environmental or social issues. The results showed that each of them had already taken some steps towards meeting at least some of the 17 Sustainable Development Goal targets defined by the United Nations. The evaluation also highlighted the potential of each start-up, where it can improve and work more sustainably. "When you look at how you run your business on a day-to-day basis, you can see a lot of important steps that are already being taken. This sustainability assessment alone sometimes shows how much competitive advantage can already be leveraged when looking for employees or trying to attract investors," according to the ROCKIT CEO.
Sustainability in itself is good for business, she says, and companies no longer need a separate sustainability strategy: the principles of sustainability should be embedded in their daily operations and strategy because it is useful, cost-effective and efficient. Many start-ups in various fields, even if they do not develop environmental solutions, can and do act sustainably in their own right.
Call for acceleration
This year, Rockit invites startups with solutions that help us live more sustainably to join the sustainability accelerator. According to a Verslo Žinios report, that last year, the first sustainability accelerator Rockit Impact developed five pilot projects, which were implemented by Swedbank, Telia, Linas Agro, Elektrum Lithuania and Telesoftas in collaboration with startups from Switzerland, Sweden, Poland and Lithuania which offered potential solutions to their challenges. In total, more than 200 startups applied for the accelerator programme. The carefully selected teams specialised in renewable and green energy, smart cities, ecology, sustainable finance and agriculture.
Ms Žemaitytė-Kirkman said that the project enabled the large companies to assess the practical benefits of a potential innovative solution in a very focused way and over a short period of time. For the startups, meanwhile, it has become a real stepping stone, not only to gain experience and test their solutions, but also to set up a lot of useful contacts. Three out of the five start-ups have already attracted their seed capital after the accelerator. After the first accelerator, the Rockit community has been joined by sustainable innovation start-ups such as Datahood, a data and urban insights platform, Cogastro, which develops an operating system for beetle farms, or Lectrium, a home charging platform for electric vehicles.
"Sustainability is becoming an integral part of all businesses. We try to present sustainability in a practical, business-friendly way. That is precisely how Rockit Impact came about. We are already signing up major partners for this year's accelerator, and we can also feel high interest among startups, so it looks like we will have some exciting new pilot projects," Ms Žemaitytė-Kirkman said.
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