Environmental entrepreneurship — The next disruptor of the world economy

21 Feb 2022 , 11:08 AM

Current Landscape:
Today, we add a staggering 80 million humans on the planet. Every year. Human population has grown to above 8 billion and expected to get to 10 billion by the decade of 2050. Compare this to the fact that the global population in 1950’s was under 3 billion and the numbers start looking alarming.

Despite population growth rate slowing down to 1.13% per annum or thereabouts, the fact remains that we are living longer. Effectively, we are hurtling towards an ageing population that will produce less and consume more. The prime drivers of this population growth are the middle — eastern countries. This impact of population growth on global resources will be further aggravated by the fact that the contribution of Asia to the global middle — class is expected to get to 64% by 2030. Simply put, this means that we will live longer, consume more and be less productive as time goes by (Source: UN).

Take for instance plastic waste. The sheer volumes of gadgets and packaged goods we consume mean a staggering 8 million pieces of plastic make it to the oceans every single day. And that is a number that’s growing faster than we can deal with it. What’s worse is that this is 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. That is, unless economies make a drastic gear shift to Sustainable development. The Brundtland definition of sustainable development states that we should consume the resources available today such that it doesn’t compromise the ability of future generations to avail of these resources. Enough for all, today, tomorrow and forever.

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

Sustainability — Good for Business
Environmental entrepreneurship or ecopreneurship  is entrepreneurship not just for profit but also to benefit the environment. Ecopreneurs are “entrepreneurs whose business efforts are not only driven by profit, but also by a concern for the environment” (Schuyler, 1998). The ‘not just for profit’ statement doesn’t necessarily hold true today.

With an increasingly aware consumer, being pro — environment is actually good for business. And profits. This is a fact amply demonstrated by the increasing number of pro — sustainability businesses and the growing success they’re enjoying. But is this just a passing fad or will this trend snowball into the next disrupter of the world economy? Only time will tell, however, my money is on the latter.

For instance, look at the hospitality sector. I’ve travelled across the length and breadth of the country during our road trips, from 2012 to date. Until a couple of years back, rainwater harvesting or using solar power for heating were deployed by but a handful of resorts. Today, this is more the norm than the exception.

These are mostly owner — run properties nestled in the Himalayas or Nilgiris and not affiliated to any large hotel or resort chain. What with the tremendous pressure on the fragile mountain eco — system that development puts, it makes eminent business sense for these entrepreneurs to be as self — sufficient as possible. Rainwater harvesting and solar power take care of two of the largest problems they face — reliable sources of water and electricity! An icing on the cake is that the economies are such that any investment they make in these technologies are paid back in a few short years. From thereon, it is immensely profitable as a business proposition.

Then there is the FMCG sector, more specifically, packaged foods. The ‘Rainforest Alliance’ for instance, certifies everything from bananas grown in South America to coffee and tea from Asia and chocolates manufactured in Europe using cocoa from Africa. Consumers buying a product with their logo assuage their conscience with their fact that the raw produce and manufacturing process follow sustainable farming and business processes. Sure, there are gaps in the audit conducted by the not — for — profit organization but it still is way better than nothing. Interestingly, buyers are willing to pay a nominal premium for products that are certified as being manufactured using sustainable practices!

While today this is the exception, as awareness of Climate Change and the need for Sustainable Development grows, the day isn’t far when this will be the norm. There are several Indian entrepreneurs like ‘Two Brothers Farms’, ‘Tiger N Woods Pench’ and ‘Parvada Bungalows’ near Mukteshwar that have embraced eco preneurship and turned it into an immensely profitable business model. A fact that has come to the notice of VC funds and banks too. In a nutshell, pro — environment businesses are a marketeers dream come true.

This is not all. Every car manufacturer worth its salt is focussing on adding a fleet of EV’s to their stable. And this is across the spectrum, not just the premium or sub — premium segment. As support infrastructure grows and technology develops, like HFC batteries for instance, the shift to EV’s will accelerate faster than a Bugatti on steroids.

The day isn’t far off when we will prefer a T shirt made with organic cotton and coloured with natural dyes. Or eat pulav prepared in a solar cooker using organically grown local strains of rice and vegetables that haven’t come within a mile of artificial fertilizers and pesticides. The best part — Ecopreneurs getting this stuff to us will be laughing all the way to the bank. In their E — SUV’s.

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

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com