Addressing the Primary Challenge in Climate Innovation Adoption

This research was inspired by Duamentes partnership with Innovation Zero – the largest Climate Tech conference, attracting audiences from EU, US and other regions. While discussing the key challenges in the industry, Nastasya Savina, Director of Innovation Zero Awards, highlighted their mission as follows:

The gap between climate innovators and corporate buyers is the biggest obstacle to adopting innovations. We aim to overcome these barriers and foster the implementation of climate tech innovations.

Nastasya Savina, Director of Innovation Zero Awards & Showcase.

Duamentes experts took a deep dive into this topic, which evolved into a complex study covering over 100 ESG corporate experts and Climate Tech startups. We gathered insights through in-depth interviews and questionnaires. Let’s explore what we’ve learned during this journey.

The study examines how corporations are implementing climate innovations in response to regulatory requirements and societal expectations, identifies key motivators and barriers, and explores how to foster cooperation between Corporate Buyers and Climate Tech innovators and implement effectively climate innovations within the global corporate landscape.

Significant Increase in Corporate Climate Tech Focus

85% of corporates agree that there is a significant increase in focus on corporate Climate Tech, driven by enhanced government regulations, growing social pressure, and the rise of internal Climate Tech KPIs within corporations. Over 92% of corporates believe this focus on sustainability will continue to grow over the next 3 years.

Startups are Not Default Suppliers for Corporates

This growing focus has the potential to attract more climate tech innovators to the market, yet the extent to which these innovations are adopted depends on corporate readiness for implementation. The study revealed that startups are not the default suppliers for corporates in Climate Tech. Some corporations prefer to wait until a startup becomes more mature, while others have additional, more complex requirements for startup suppliers compared to mature companies (54%). The study also found that over half of the corporations have only a 5% share of startups among all sustainable suppliers.

Until the need for these technologies becomes more urgent, corporations are likely to play it safe. There’s an abundance of caution.

Buffy Price, Co-founder, Carbon Re, UK

Why Corporates are Turning to Startups

Currently, the primary reason corporations collaborate with startups is to pioneer innovations (42%). Other top motivations for engaging with climate tech startups include cost-effectiveness and the ability to address gaps mature companies cannot fill (27%).

Startups are well-placed to respond quickly to market opportunities. In some of the areas where we collaborate with startups, it is more cost-effective.

Alex Louden, Senior Ventures and Open Innovation Specialist, Ørsted

Experts state that external factors and pressures also play a significant role.

Government policies can serve as a significant driver for big corporates to collaborate with startups

Buffy Price, Co-founder of Carbon Re, UK

Long and Laborious Journey in Finding ‘Right Startup’

The study revealed that corporations’ main barrier is identifying the ‘right startups.’ Experts point out that working with startups involves a considered risk—corporates can massively enable the success of startups by sharing risks and rewards. Among top barriers, the primary challenge for corporations is identifying the ‘right startups.’

The biggest barrier is how to identify which startups are the best to work with.

Alex Louden, Senior Ventures and Open Innovation Specialist at Ørsted

Experts note that assessing each idea individually is challenging, as they receive hundreds of applications from innovators. This process requires considerable time and effort from the team to narrow down the options.

We review over 500 innovative startups each year, and we’re looking for strategically relevant innovators. That’s a big barrier. It takes a lot of time and there isn’t one place to do all of that.

Nicola Tongue, Coca-Cola Europacific Partners

Startups Are Dying on the Way to Corporate Clients

Research indicates that from the initial search for startups to the first connection, there can be up to 18 attempts and a timeline extending up to 2 years. Experts share that some startups are dying on their journey to secure corporate clients, with 60% of startup respondents feeling that corporates are reluctant to cooperate with them.

Buyers and Innovators Resort to Networking to Find Each Other

While networking is considered the most efficient method for connection, it remains an unclear and unstructured process.

We look at different VC portfolios, accelerator programs, recent deals—over 50% of the startups we see probably come from our network.

Nicola Tongue of Coca-Cola Europacific Partners

Among other popular communication channels used to search for startups are web search, open calls, industry events, and LinkedIn. However, even though 64% of corporates use networking and find it effective, concerns about efficiency persist.

The key ecosystem players often rely on risky, inefficient, and unsustainable communication and sales channels, such as networking, to secure deals.

Nastasya Savina, Director of Innovation Zero Awards & Showcase.

Corporates Have Long Decision-Making Chains

Startups report that corporates often have lengthy and bureaucratic decision-making processes (77%).

It is very hard to find out who is responsible for a particular thing in a particular organisation. You’ve got to tick all the boxes for the organisation before you get to speak to the right people.

Keith Stark of the UK startup Hiyacar

One of the main pain points is the lack of a standardised procurement process within corporations, where there can be various entry points such as ESG/Sustainability departments, Innovation, Corporate Venture, R&D, Procurement, or even a line manager. Additionally, 40% of startups believe that the requirements from different departments sometimes contradict each other.

If a corporation has an open innovation group or an open innovation manager, this significantly simplifies the establishment of commercial relationships.

Alessandro Pastore PhD, MBA, Co-founder at Camfridge

Language Gap Between Innovators and Corporate Buyers

The study unveiled a significant language gap between innovators and corporate buyers, with 96% of corporates stating that it is essential to speak the same language to avoid disconnects. This often occurs when startups develop solutions without fully understanding the specific problems corporations need to solve.

Innovation opportunities should focus on the business need, with swift decision making, and robust legal support. Through rapid adaptation and agile learning on the pilots, we’re able to foster the collaborations we need to provide solutions for our operations, whilst cultivating a forward-thinking approach.

Dr Davidson Lütkenhaus, Global Sustainability & Innovation Director at Diageo

Discovery Platform Bridges the Gap Between Climate Innovators and Corporate Buyers

It is more efficient to provide verified innovations that meet corporate requirements for finding and engaging with the latest Climate Tech solutions within standardised discovery platform.

There are so many smart ideas, a thousand of them, but I haven’t seen an externally standardised structure for categorising solutions—it can be really hard to match what corporates need with what startups can offer.

Mike Barber, Partner at ESG Advisory, Deloitte

The study highlighted that 88% of corporates believe that a discovery platform would aid in uncovering the latest sustainable solutions, while 80% of startups are eager to cooperate with corporations more efficiently and promote Climate Tech innovations through such a platform. 

About the Research

The research was divided into two parts: 10 in-depth interviews with ESG leaders from corporations and startup founders in the climate tech sector, and a survey of corporate ESG and procurement officers, as well as climate tech startups, involving over 100 participants in March-April 2024.

The research “Addressing the Primary Challenge in Climate Innovation Adoption” conducted by Innovation Zero Awards and Duamentes Global Alliance explored how corporations adopt climate innovations to meet regulations and societal expectations. The study identified factors that encourage or obstruct climate innovation adoption, offering insights to boost its implementation across the global corporate landscape.

About Innovation Zero Awards: Aimed to bridge climate innovators, investors, and corporations, the Innovation Zero Award spotlights innovative, low carbon technologies developed in the past six years to address climate change. 

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