Climate action through innovation: how startups & SMEs can be catalysts for change

Startups and Small and Medium Enterprises (SMEs) have an essential role to play in achieving global climate goals due to their agility, innovation, and potential to drive change in various sectors. As COP28 approaches, they must receive the support they need to thrive, argues Gabi Matic, Co-Founder and Director of Metta.

Startups must collaborate with stakeholders from other sectors to develop, deploy, and scale climate mitigation and adaptation solutions.

At COP21 in 2015, the world agreed to limit global warming to 1.5°C by 2050. To achieve this, the current science tells us that carbon and greenhouse gas (GHG) emissions must be halved by 2030.

However, as the results of a recent UN report show, we are off-track, and fears are mounting that the window of opportunity for climate action is closing rapidly. We are already witnessing the impacts of unchecked climate change with worsening heatwaves, floods, wildfires, and storms compounded by water and food security threats. In this context,  this year’s UN climate change conference, COP28, is a pivotal opportunity to correct course and accelerate action to tackle the climate crisis.

The science is clear: to preserve a livable climate, the production of coal, oil, and gas must rapidly decline, and global renewable power capacity needs to triple by 2030. At the same time, financing for adaptation and investments in climate resilience need a quantum leap. Without urgent, global action, these threats will force us into greater levels of poverty, migration, conflict, war, and strife.

The need for collaboration

One of the report's key findings is an urgent need for collaboration and investment in the rapid deployment of existing clean technologies and the accelerated innovation, development and transfer of new technologies to reduce emissions and address the impacts of climate change. This will require the concerted cooperation and support of government, financial institutions, academia, private sector, and civil society.

In recent years, startups and Small and Medium Enterprises (SMEs) have played a key role in developing and delivering climate tech solutions, addressing issues ranging from carbon capture to water management. However, sufficient support is lacking to enable them to deploy and scale their solutions quickly.

Startups and SMEs can help achieve climate action goals. Still, they will need support to rapidly develop and deliver solutions required for us to mitigate and adapt to adverse climate change impacts.

Startups and SMEs: vehicles for climate action

Startups and SMEs can be crucial in achieving global climate goals due to their agility, innovation, and potential to drive cross-sector change. Their innovative solutions, flexibility, and adaptability can contribute significantly to environmental sustainability.

For one, startups and SMEs often bring fresh, innovative ideas and technologies. They have helped to develop and implement cutting-edge solutions that promote renewable energy, resource efficiency, sustainable agriculture, waste reduction, and carbon footprint reduction.

For example, Scotland-based female-founded startup Reath offers insights and end-to-end traceability for circular packaging systems trusted by brands like Marks and Spencer and Unilever.

The early-stage startup Uncut Stems is also tackling the immense carbon footprint caused by the reliance on imported overseas stems by supplying their subscribers with beautiful UK-grown flowers.

Secondly, because of their size, startups and SMEs are often more agile, making it easier to pivot and adopt eco-friendly practices and technologies quickly. This adaptability can facilitate faster transitions towards sustainable practices, particularly in high-impact industries like waste management, aviation, and shipping.

For example, the world generates 2.24 billion tonnes of domestic waste annually, which the World Bank predicts will grow to nearly 3.88 billion tonnes by 2050. With current inefficient recycling processes, less than 10% is recycled. Innovative startups like Danu Robotics are developing advanced robotic and AI systems for existing recycling and waste management facilities to improve recycling efficiency significantly, reduce waste, and provide savings on operational costs.

Likewise, startups like NABLA Mobility and Signol are utilising innovative AI, machine learning and data analytic solutions to help flight and shipping operators make better-informed decisions that improve operational efficiency and support decarbonisation without implementing expensive and disruptive changes to existing systems and infrastructure.

Lastly, small businesses have a broad reach and significant impact on the global economy. They comprise 90% of businesses worldwide and provide over 50% of jobs – in the UK, this number is even more impressive, with SMEs accounting for 99.9% of the business population. Small businesses in Africa, Asia, and Latin America are particularly vital in underserved and rural areas. These businesses are a critical source of essential goods and services.

Supporting small businesses contributes to broader global goals of alleviating poverty and providing equal opportunity and employment, interlinked with climate action goals to achieve a more sustainable future for all.

Tech startup HiiROC, for example, is producing affordable, zero-emission hydrogen globally and has created over a hundred jobs in the past year, supporting the UK and continuing to grow rapidly with £26 million in investment secured so far. Another good example is Ocean Bottle, a B Corp-certified reusable bottle startup that has prevented over 10.7 million kilograms (and counting!) of ocean-bound plastic from reaching our oceans since it was established in 2019. Switch2Zero is another startup working towards sustainability as it aims to accelerate the global transition to net-zero carbon emissions for people and businesses everywhere.

Accelerating climate tech innovation through Startups & SMEs

While startups and SMEs can play a crucial role in developing and delivering climate tech solutions, they require support from both public and private sector stakeholders and the wider society.

For one, they require access to funding, grants, and investment opportunities. Whilst climate tech investment has grown over the years, particularly from venture capital and private equity, the funding required to mitigate carbon and GHG emissions alone is in the trillions. This will necessitate funding from governments and financial institutions through incentives, tax breaks, or subsidies rewarding climate-friendly practices and technologies, making it easier for smaller businesses to invest in sustainable solutions.

Secondly, collaboration is at the heart of the impact created by climate tech startups. By partnering with established businesses, governments, and research institutions, startups can scale their solutions and bring them to the mainstream. This collaboration fosters the adoption of sustainable practices and accelerates the deployment of climate-friendly technologies on a global scale.

Lastly, as individual consumers, we can further encourage the growth of climate-smart startups and SMEs by embracing products and services that support sustainable initiatives and drive a significant shift towards sustainability. The collective effort to back these startups is a crucial step towards our planet's more sustainable and resilient future.

The fight ahead

Climate tech startups and SMEs embody innovation, resilience, and determination in the fight against climate change. Their role is not just in shaping industries but also in redefining our relationship with the environment. Supporting and fostering the growth of these startups is an investment in a better, more sustainable world for generations to come and a critical step towards addressing the challenges climate change presents.