Environmental Entrepreneurship – The Next Disruptor of the Global Economy

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Current landscape:

Today we add a staggering 80 million humans on the planet. Every year. The human population has passed 8 billion and is expected to reach 10 billion by the 2050s. Compare that to the fact that the world population in the 1950s was less than 3 billion and the numbers are starting to look alarming.

Despite the population growth rate slowing to 1.13% per year or thereabouts, the fact remains that we are living longer. Indeed, we are rushing towards an aging population that will produce less and consume more. The main drivers of this population growth are the countries of the Middle East. This impact of population growth on global resources will be further compounded by the fact that Asia’s contribution to the global middle class is projected to reach 64% by 2030. Simply put, this means we will live longer, consume more and be less productive over time (Source: UN).

Take for example plastic waste. The sheer volumes of gadgets and packaged goods we consume means that 8 million pieces of plastic end up in the oceans every day. And it’s a number that’s growing faster than we can handle it. What’s worse is that it’s plastic that promises to contaminate our planet for a few hundred years at best.

The cumulative result of this increased consumption will be to accelerate the harmful and often irreversible impact of climate change on the world. In other words, unless the economies drastically move up a gear towards sustainable development. The Brundtland definition of sustainable development states that we should consume the resources available today in a way that does not compromise the ability of future generations to enjoy those resources. Enough for everyone, today, tomorrow and forever.

Although this is easier said than done, thousands of entrepreneurs and businesses are looking in this direction.

Sustainability – Good for Business
Environmental entrepreneurship or ecopreneurship is entrepreneurship not only for profit but also for the benefit of the environment. Ecopreneurs are “entrepreneurs whose business endeavors are not only driven by profit, but also by concern for the environment” (Schuyler, 1998). The statement “not just for profit” is not necessarily true today.

With an increasingly conscious consumer, being pro-environment is actually good for business. And profits. This is amply demonstrated by the growing number of pro-sustainability companies and the increasing success they enjoy. But is it just a passing fad or will this trend snowball into the next disruptor in the global economy? Only time will tell, however, my money is on the latter.

For example, look at the hospitality industry. I have traveled the country far and wide during our road trips, from 2012 to today. Until a few years ago, rainwater harvesting or the use of solar energy for heating were only deployed by a handful of seaside resorts. Today, this is more the norm than the exception.

These are mostly owner-managed properties nestled in the Himalayas or the Nilgiris and not affiliated with any major chain of hotels or resorts. Given the enormous pressure that development places on the fragile mountain ecosystem, it makes perfect sense for these entrepreneurs to be as self-sufficient as possible. Rainwater harvesting and solar power solve two of the biggest problems they face: reliable sources of water and electricity! The icing on the cake, the savings are such that any investment they make in these technologies is amortized in a few years. From there, it is extremely profitable as a business proposition.

Then there is the FMCG sector, specifically packaged foods. The “Rainforest Alliance,” for example, certifies everything from bananas grown in South America to coffee and tea from Asia and chocolates made in Europe from cocoa from Africa. Consumers who purchase a product with their logo ease their awareness that the raw product and the manufacturing process follow sustainable agricultural and business processes. Sure, there are flaws in the nonprofit’s audit, but it’s still better than nothing. Interestingly, buyers are willing to pay a nominal premium for products certified as being produced using sustainable practices!

While today this is the exception, as awareness of climate change and the need for sustainable development grows, the day is not far off when it will be the norm. There are several Indian entrepreneurs like ‘Two Brothers Farms’, ‘Tiger N Woods Pench’ and ‘Parvada Bungalows’ near Mukteshwar who have embraced green entrepreneurship and turned it into a hugely profitable business model. A fact that has also been noticed by venture capital funds and banks. In a nutshell, pro-environment companies are a dream come true for marketers.

That’s not all. Every automaker worth its salt is focused on adding a fleet of electric vehicles to its stable. And that’s across the spectrum, not just the premium or sub-premium segment. As the supporting infrastructure grows and technology develops, like HFC batteries for example, the shift to electric vehicles will accelerate faster than a Bugatti on steroids.

The day is not far when we will prefer a T-shirt in organic cotton and colored with natural dyes. Or eat pulav prepared in a solar cooker using local strains of rice and organically grown vegetables that haven’t come within a mile of artificial fertilizers and pesticides. The best part is that the ecopreneurs who deliver this stuff to us will laugh all the way to the bank. In their E-SUV.


The author of this article is Mr.Abhishek Talwar, Co-Founder, Biplob World Pvt. ltd.

The views and opinions expressed are not those of IIFL Securities, indiainfoline.com

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