{"id":10660,"date":"2023-10-12T17:19:40","date_gmt":"2023-10-12T15:19:40","guid":{"rendered":"https:\/\/escp.eu\/thechoice\/?p=10660"},"modified":"2023-10-20T16:38:16","modified_gmt":"2023-10-20T14:38:16","slug":"how-sustainable-innovation-is-reshaping-industry","status":"publish","type":"post","link":"https:\/\/escp.eu\/thechoice\/tomorrow-choices\/how-sustainable-innovation-is-reshaping-industry\/","title":{"rendered":"How sustainable innovation is reshaping industry"},"content":{"rendered":"\n

Circul\u2019Egg, a visionary French start-up, is rewriting the rules of industrial production \u2014 with sustainability at its core. Rather than sourcing calcium carbonate from environmentally harmful mining and refining processes, Circul\u2019Egg offers a more sustainable solution that leverages circular economy principles. It uses discarded eggshells to create high-quality industrial-grade calcium carbonate (CaCO3). <\/p>\n\n\n\n

The company exemplifies the power of sustainable innovation to reshape industries and, ultimately, protect the planet. <\/strong>It represents a paradigm shift in how businesses approach product development and process improvement. To delve deeper into this concept, we turned to <\/strong>Robert Sheldon<\/a>, a professor of entrepreneurship and the academic director of ESCP’s MSc in Sustainability Entrepreneurship and Innovation.<\/p>\n\n\n\n

Redefining innovation<\/h2>\n\n\n\n

Sheldon begins by stressing the importance of understanding traditional innovation. \u201cIt is defined as the commercial application of a new idea. This typically involves bringing a novel product, service, production process or source of supply to the market,\u201d our expert says. <\/p>\n\n\n\n

Sustainable innovation also involves the commercial application of new ideas, but it focuses on those that result in socially and environmentally positive outcomes.<\/strong> \u201cSustainable innovation aims to introduce novel ideas that not only benefit businesses and consumers but also contribute positively to the planet and society as a whole,\u201d Sheldon says. <\/p>\n\n\n\n

To be more precise, he says sustainable innovation can manifest in two primary ways<\/strong>. The first approach involves making improvements in operational sustainability<\/strong>, where companies innovate to maximise social and environmental responsibility within their value chains. A notable example is Patagonia, the American outdoor clothing retailer. Patagonia has undertaken significant efforts to optimise its operational practices for sustainability. In the 1980s, when Yves Chouinard, the company\u2019s founder, recognised the need to transition to using only organic cotton in products, he encountered challenges in securing enough supply. <\/p>\n\n\n\n

\u201cIn economics, when the market fails to provide what we need, we call this market failure,\u201d Sheldon says. \u201cChouinard\u2019s solution was to help the fledgling organic cotton farming operations build production capacity, effectively introducing a new supply source to the market.\u201d <\/p>\n\n\n\n

More recently, Patagonia sought to reduce the environmental impact of garment waste by helping its customers in repairing and reselling their used Patagonia apparel. \u201cSince no existing upcycling company could provide this service, Patagonia took the initiative to establish its own internal startup called Worn Wear,\u201d our expert says. <\/p>\n\n\n\n

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Sustainable innovation aims to introduce novel ideas that not only benefit businesses and consumers but also contribute positively to the planet and society as a whole.<\/p>\n<\/blockquote>\n<\/div>\n\n\n\n

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\"Photo<\/figure>\n<\/div>\n<\/div>\n\n\n\n

The second approach to sustainable innovation revolves around introducing novel products and services to the market that yield positive social and\/or environmental outcomes<\/strong>. Examples of the second category of sustainable innovation can be found in companies like Tesla, the electric vehicle maker, and Impossible Foods, which develops plant-based substitutes for meat products. These firms may not have optimised their value chains for sustainability to the same degree as Patagonia, Sheldon says, but their products deliver a substantial net positive impact when purchased and utilised. <\/p>\n\n\n\n

\u201cWhen a Tesla replaces an internal combustion vehicle, its use over one year significantly reduces greenhouse gas emissions,\u201d he adds. \u201cThe same holds true for every beef burger that is substituted with an Impossible burger. These innovations have a substantial positive environmental impact, arguably outweighing the negative effects associated with their respective production processes.\u201d <\/p>\n\n\n\n

\u201cCompanies that are committed to social and environmental responsibility will encounter obstacles such as market failures or exorbitant costs. When they do, instead of adhering to conventional business practices, they should perceive these challenges as opportunities for innovation.\u201d <\/strong><\/p>\n\n\n\n

When and how should firms measure sustainability impact?<\/h2>\n\n\n\n

Measuring the impact of these sustainable innovations is crucial. It will not only help you track your organisation\u2019s progress but also demonstrate its commitment to environmental and social responsibility. <\/p>\n\n\n\n

When it comes to assessing sustainable innovations, Sheldon says it is typically a wise investment to identify metrics and quantify their effects<\/strong>. This holds especially true when the impact of an innovation is of utmost importance, as is the case with companies like Tesla, Impossible, and Circul\u2019Egg.<\/p>\n\n\n\n

\u201cTracking the reduction in sales of the less sustainable alternatives that sustainable innovations replace, such as combustion engine vehicles, meat products, and mined CaCO3, is essential for understanding sustainability impact,\u201d he explains. <\/p>\n\n\n\n

\u201cThese companies primarily focus on reducing greenhouse gas emissions, although they also have positive effects on biodiversity and pollution. While measurement is possible for various aspects, identifying and tracking metrics is expensive, so companies should prioritise mission-critical impact measurement to avoid excessive resource and opportunity costs<\/strong>.\u201d <\/p>\n\n\n\n

Understanding the impact of operational innovations is also crucial, he adds, as they can lead to new sustainability ventures or spin-offs. \u201cFor example, Patagonia\u2019s Worn Wear could provide upcycling services to other textile firms,\u201d Sheldon says. \u201cAnother real-world example is EverGrain, a startup from beer giant AB InBev, which turns brewing by-products into valuable ingredients for any brewing company to reduce environmental impact and generate revenue.\u201d <\/p>\n\n\n\n

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It\u2019s the same with sustainability: management needs to make [sustainable innovation] a priority and allocate resources to making the firm\u2019s operations more socially and environmentally responsible. If these two ingredients are in place, innovations happen.<\/p>\n<\/blockquote>\n\n\n\n

The right mindset for sustainable innovation<\/h2>\n\n\n\n

But sustainable innovation isn\u2019t just about metrics; it requires a particular mindset and approach. Sheldon says senior management must prioritise innovation in general and grant employees the flexibility and incentives required to explore and pursue novel opportunities<\/strong>. <\/p>\n\n\n\n

\u201cIt\u2019s the same with sustainability: management needs to make it a priority and allocate resources to making the firm\u2019s operations more socially and environmentally responsible. If these two ingredients are in place, innovations happen,\u201d he says. <\/p>\n\n\n\n

\u201cBut they will often happen at the margin when barriers like market failure and high costs stymie sustainable solutions. So it\u2019s crucial that managers be alert to these barriers when they arise, and that they view them not as excuses to maintain business as usual, but rather as opportunities for sustainable innovation<\/strong>.\u201d <\/p>\n\n\n\n

Ultimately, when senior management prioritises it, allocates resources to it, and sees barriers as opportunities for positive change, this approach fosters meaningful transformation towards a more sustainable future. <\/p>\n","protected":false},"excerpt":{"rendered":"

To delve deeper into sustainable innovation, we turned to Robert Sheldon, a professor of entrepreneurship at ESCP.<\/p>\n","protected":false},"author":1,"featured_media":10662,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[14],"tags":[62,16],"class_list":["post-10660","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tomorrow-choices","tag-innovation","tag-strategy","category-14","description-off"],"acf":[],"yoast_head":"\nHow sustainable innovation is reshaping industry - The Choice by ESCP<\/title>\n<meta name=\"description\" content=\"To delve deeper into sustainable innovation, we turned to Robert Sheldon, a professor of entrepreneurship at ESCP.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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