The climate crisis is not just a looming disaster—it’s also the next big business and tech opportunity. A study of over 100,000 businesses found that those that invest in environmental, social, and governance (ESG) activities are associated with greater revenue growth and EBITDA margins.
Moreover, a recent report by McKinsey reveals financially successful businesses incorporating ESG activities into their growth strategies surpass their competitors, as long as they also excel in fundamental performance.
In the same way, businesses that stayed committed to innovation during the 2009 financial crisis came out stronger, surpassing the market average by over 30% and achieving rapid growth in the following three to five years.
Just as the financial crash led to groundbreaking innovations in fintech, the climate crisis is set to spur a wave of technological advancements that will drive growth and create new market leaders for those businesses that adopt them.
Advanced technologies such as AI, automation, and data analytics are more than just tools to meet carbon regulations and energy efficiency standards—they are the keys to unlocking unprecedented business opportunities. Let’s dive into why this is the case, drawing lessons from past crises and showcasing how companies today are already capitalising on this trend.
Learning from past crises
The financial meltdown of 2008 was a time of chaos and uncertainty, but it also sparked a digital revolution in the financial sector. Fintech companies like Square and Stripe emerged, transforming how we handle payments. Robinhood democratised investing, making it accessible to the masses. And let’s not forget Bitcoin, born out of a desire for a decentralised financial system.
These innovations didn’t just fill gaps—they created entirely new industries.
Regulatory changes post-crisis also played a crucial role. New regulations spurred the growth of regtech, helping financial institutions navigate the complex landscape more efficiently. Peer-to-peer lending platforms like Lending Club emerged, providing alternatives to traditional banks, while robo-advisors like Betterment and Wealthfront offered low-cost investment management. The financial crisis was a crucible of innovation, proving that adversity can be a powerful driver of progress.
Fast forward to the Covid-19 pandemic, another period of significant upheaval. The need for remote work and social distancing accelerated digital transformation across industries. Businesses had to adapt quickly, integrating new technologies to survive and thrive. This period saw an explosion in the use of remote work tools and digital collaboration platforms, fundamentally changing how we work and interact.
A frontier for innovation
Now, we face the climate crisis—a challenge of unprecedented scale. But just like past crises, it presents a unique opportunity for innovation and growth.
New climate regulations are creating market demand for advanced technologies and innovative business models that not only ensure compliance but also drive efficiencies and reduce costs for the businesses using them.
AI is a game-changer. It can optimise energy usage, predict maintenance needs, and improve supply chain efficiencies. Software powered by AI can improve energy efficiency and reduce carbon emissions across various industries. Using machine learning, such software can monitor and analyse vast amounts of production data, identifying inefficiencies and providing real-time optimisation recommendations.
Research indicates that these technologies have the potential to cut energy consumption by up to 73%, leading to up to 44% in energy cost savings. Companies that harness AI will not only comply with regulations but also enhance their operational efficiency and profitability.
Automation is another powerful tool. By automating manufacturing processes, businesses can reduce waste, increase efficiency and become a more sustainable operation. Energy management platforms are leading innovation in the climate tech sector through leveraging automation and data analytics. These platforms can gather real-time data from smart meters and IoT devices to analyse energy consumption and identify inefficiencies. This then enables the optimisation of energy use, reduction of costs, and lowering of carbon footprints.
Data analytics also enhance supply chain transparency and sustainability. With the right data, companies can track and manage their supply chains’ climate impacts, integrating sustainable sourcing practices and improving visibility. This transparency is not just about compliance—it’s about building trust with consumers and stakeholders.
Carbon accounting software uses data analytics to enable businesses to reduce their carbon footprint, cut costs, and gain a competitive edge. Such technology can illuminate entire supply chains, providing detailed insights into inefficiencies and areas for improvement. This is particularly the case when granular emissions data is used to track and analyse each activity a business is involved in—rather than just their spending data, which is less precise. Businesses can then use these insights in action-based planning to unlock greater value across their operations, improving profitability and sustainability at the same time.
Competitive advantage
The parallels between past crises and the current climate challenge are clear: they present significant opportunities for business growth through technological innovation. And the potential for innovation in response to the climate crisis is enormous.
AI, automation, and data analytics are not just sustainability compliance tools; they are pathways to enhanced performance and competitive advantage. Companies that embrace these technologies will meet regulatory challenges and position themselves as industry leaders, demonstrating their commitment to sustainability and innovation.
In turn, they become more attractive to clients, prospects, and investors. The climate crisis, far from being a mere obstacle, is a gateway to a sustainable and prosperous future.
Matt Farrar is head of strategy at Notch.
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