It’s time to act.
Climate change requires less discussion and more action. And corporates are increasingly interested in pursuing sustainability initiatives.
The good news is that they can drive growth while tackling the world’s biggest problems through green venture building. However, many struggle to effectively execute on their green venturing endeavors.
How can corporates overcome the challenges of green venture building? What are the common sticking points they need to address?
We recently interviewed Chris Lindener, Board Member in Residence and Co-Managing Partner EMEA at Mach49, to gain insights on these topics. Here’s a summary of what he shared.
What Is Green Venturing?
The current state of emergency the world is facing has intensified the need for corporates to shift towards sustainability and develop solutions to tackle climate change. The urgency to find effective solutions that mitigate or even reverse this emergency is paramount. Since only global businesses have the scale, reach, and resources to solve the world’s most pressing problems, corporates have a unique opportunity to build green ventures that create impact.
Green ventures combine the "venturing" and "green" worlds, focusing on new and innovative markets, customers, and needs that align with environmentally conscious goals. These goals range from energy, food, and water management to social and economic justice. Essentially, a green venture is a new business that positively impacts the environment, society, and economy by offering sustainable products or services whilst building a profitable business that generates financial returns.
“To truly make a difference in the world, a Green Venture should aim for more than ‘just’ achieving net-zero emissions or following ESG practices. Its objective should be to create a nature-positive impact”.
Chris recommends adopting a nature-positive mindset in corporate venture building activities. While a net-zero mindset and ESG (Environmental, Social, and Governance) practices are important, they only address part of the environmental challenges we face today. A net-zero approach aims to balance the emissions a company produces with those it removes, without necessarily restoring degraded natural systems. ESG is a framework for measuring a company's performance in various environmental, social, and governance areas, but it doesn’t necessarily require or imply a nature-positive approach. On the other hand, a nature-positive approach goes beyond simply reducing negative impacts and involves actively contributing to the restoration and regeneration of natural systems.
Although venture building is becoming more common in many organizations, these growth initiatives can still be challenging to navigate. And, of course, the additional focus on sustainability and climate change only adds to this complexity. How to get started with this?
How To Succeed At Green Venturing?
Venture building is a challenging endeavor for several reasons. Firstly, it can take a long time to see results due to a lack of necessary resources and streamlined processes. Secondly, established corporate cultures can resist change, making fostering the innovative mindset required for successful venture building, challenging. Thirdly, bureaucratic layers within organizations can slow down decision-making and hinder progress. Finally, there’s a risk of ventures being seen as distractions or side projects, leading to underinvestment and lack of support.
However, despite these challenges, many corporations are succeeding in their green venture efforts. What sets them apart? According to Chris, it all boils down to having commitment and sponsorship from leaders and the right people onboard. With the right mindset, resources, and support, corporates can successfully build and scale green ventures that positively impact the environment while generating financial returns.
Building Leadership Support
Leadership support is crucial for corporate innovation and venture building. However, it becomes even more critical in the context of green venturing. Green ventures usually require a long-term commitment and investment, with results often not seen for several years. Without leadership support, venture teams may struggle to secure funding, resources, and commitment for these long-term projects. Additionally, green venturing often requires a significant shift in corporate mindset and culture. And leaders who don't fully understand the importance of sustainability may be hesitant to support green ventures, even if they have the potential for significant impact and financial returns.
Green venturing also requires collaboration across different business units and stakeholders, both internal and external, which can be challenging if there are different goals and priorities at play. Strong leadership can help align diverse teams and stakeholders around common objectives, driving successful collaboration.
“Leaders who promote sustainability and green venturing can inspire and motivate employees to adopt these values and think innovatively about sustainability challenges and opportunities”.
Corporate venture builders are crucial in securing leadership buy-in and active support for green ventures to thrive. According to Chris, the key here is tying green venture building to the overall business agenda to increase leadership support and investment. “The ‘new’ shouldn't be too outside of the core. At the end of the day, you need to rely on your corporate’s assets to make your venture succeed. And if you build something that is too far from the core, it's not going to survive because it will not get access to those crucial assets”, he adds.
To increase your venture's success odds, it’s also important to team up with leaders and make them a part of your “success story” from the very beginning. And when the core business and the green venture are closely linked, it becomes easier to bring leaders on board and engage them early in the green venturing process.
However, leaders may be unfamiliar with building green ventures. Again, educating them on the potential benefits of sustainability-focused ventures is up to you as an innovation leader. This includes demonstrating the financial returns of successful green ventures, highlighting the reputational benefits of sustainable business practices, and emphasizing the importance of option value over present value in such investments and projects.
In green venturing, the potential for innovation and new technological breakthroughs is high, and the future impact of these innovations on the environment and society is difficult to predict. Hence, the value of a green venture in the future can be much greater than its current value. Moreover, green ventures often require longer time horizons and larger initial investments, making the present value less significant than the potential option value in the long term. Ultimately, leaders who focus on option value can prioritize sustainability and long-term potential over short-term profits in their decision-making process.
"Corporates that fail to change now may struggle to ensure long-term business success”.
And so, in the context of green venturing, effective communication within the organization is crucial. It’s important to demonstrate the urgency of exploring new opportunities and adapting to changing consumer behaviors in order to avoid rapid business decline. Early action is necessary, as shown by the failures of companies like Nokia and Kodak that did not seek new opportunities. By way of example, premium automotive brands like Volkswagen and BMW are currently facing similar struggles and are under pressure to take action from their customers. In general, failure to address these challenges may result in a loss of customer base. As Chris concludes, “it’s important to take action before it’s too late”.
Recruiting and Retaining the Right Talent
You also need to have the right talent onboard and know how to retain them to succeed at green venture building. Chris believes that purpose weighs more than money, and today's entrepreneurs are looking for companies that align with their values and purpose. As such, simply offering big contracts is not enough. Green venturing programs provide a unique opportunity to combine purpose with financial returns, making your corporate attractive to talent passionate about sustainability and environmental issues. However, it's important to demonstrate your commitment to sustainability and align your business practices with these values.
While there is typically a talent shortage when it comes to venture building, the current job market presents an opportunity for corporates to attract top talent. With the recent layoffs in the technology industry, many qualified professionals are actively seeking new opportunities. This has created a large pool of talent for corporations to tap into, as long as they can offer a meaningful opportunity.
Final Remarks
Corporates that adapt on time to this changing world and strategically and heavily invest in building sustainable solutions will outpace the market. As Ayrton Senna, the famous Formula One driver, once said, “You cannot overtake 15 cars in sunny weather, but you can when it’s raining”. This quote suggests that difficult and challenging situations often present opportunities for success that would not exist otherwise. And this applies to building green ventures too: the urgency of addressing climate change can spark creativity and innovation in developing sustainable solutions and create opportunities that would not have been pursued otherwise.
In other words, instead of being deterred by the obstacles of sustainability, companies should view them as opportunities for growth and innovation. By embracing these challenges, corporates can develop green ventures that have a positive impact on the environment while generating financial returns.
Beyond simply achieving net-zero emissions or following ESG practices, green ventures aim to actively contribute to the restoration and regeneration of natural systems, creating a nature-positive impact. To ensure the success of green ventures, it’s essential to have leadership support and the right talent on board. Corporate innovators can accomplish this by tying green ventures’ goals to the overall business agenda, engaging leaders early in the green venturing process, and hiring and retaining the right people.
