There are calls across Australia to tackle climate risk by piggybacking on the wave of innovation triggered by the coronavirus pandemic.

“If we’ve learnt anything at all from COVID-19, it’s that businesses have a lot of innovative tools at hand,” said Dr Louise Fitzgerald, Coordinator of the Responsible Business Program at UNSW Sydney.

Dr Fitzgerald led a UNSW Business School panel discussion about how technology and innovation could address climate risk. The panel brought together a global group of business leaders, advisers and researchers, including:

Despite technology being the root of many environmental and social problems, it is also key to addressing environmental degradation, climate change, food scarcity, waste management, and other pressing global challenges, Dr Fitzgerald said.

For innovation to happen, Prof. Anseel encouraged bridging the gap between academics and the industry to exchange information and perspectives. He envisioned an open platform – a community environment enabling a fruitful exchange of ideas to tackle current issues.

David Gram saw “the biggest challenge with business model innovation as the existing business model itself”.

“Innovation is required to constantly adapt to change, whether it's caused by disruptions such as climate risk, consumer behaviour, new regulations or a pandemic,” he said.

What are the key requirements for digital innovation?

Mr Gram observed that coming up with ideas is the easy part of the process.

“The biggest challenge lies in commercialising the idea – how to launch and scale an idea that is entirely new without using your existing business model.

“And this is where you need to think in a different way because to work in a different way, you need to structure your organisation in a different way.”

Mr Gram advised businesses looking to innovate to switch to an ambidextrous organisation and leadership style.

That could mean working at different levels of innovation: from keeping with the existing model while innovating, to using technology to digitise business processes to adopting completely new models that will transform the business.

“Only the fewest companies are able to achieve [the latter] level. We have seen big tech companies really driving this type of change,” Mr Gram said.

Google is the perfect example of an ambidextrous organisation. By creating Alphabet as an umbrella organisation, Google was able to run things more independently and expand into domains outside of internet search.

“In my experience, there needs to be a separate organisation co-existing alongside the mothership to be innovative. If not, the immune system of that existing business will try to kill off the new business,” Mr Gram said.

A man dressed in corporate attire looking at sustainable development icons on a touchscreen.

To achieve innovation, companies in the future will be structured as multiple entities rather than one major entity full of silos that are trying to execute multiple businesses, said innovation expert David Gram. Image: Shutterstock

How can innovation and technology drive sustainability?

The panel provided examples of businesses doing just this. Gordon Renouf discussed Good On You, a mission-driven-for-profit company that has been successful in encouraging fashion brands worldwide to innovate in sustainable ways.

The Good On You app and website use technology to enable consumers to “wear the change they want to see”. By rating more than 2,500 fashion brands on their ethical and sustainability practices, Good On You enables consumers to choose responsible fashion brands and make a more informed purchase decision.

Rainbow Cheung also spoke about the global sustainability strategy and initiatives at Salesforce – the world’s largest CRM company. Salesforce sees the environment as a key stakeholder and has made the United Nation’s Sustainable Development Goals (SDG) a goal of their own through their sustainability initiatives.

Ms Cheung described COVID-19 as bringing us all face-to-face with three major crises: climate, economic and health crises. Salesforce’s goal is to bring together all three issues and serve both internal and external clients and our shared environment. Their ‘sustainability cloud’ product is a carbon accounting solution that aims to provide an efficient and accessible means of measuring complex variables that is available to their partners and stakeholders.

Ms Cheung also shared how Salesforce used technology to rapidly and flexibly respond to the pandemic. They recognised the need to be transparent with their employees and the need to be innovative with their software to provide a package that emergency healthcare response teams could use to triage problems as they arose.

Salesforce has since joined a World Economic Forum initiative called Uplink which shares information and strategies to solve global problems, with partnering institutions.

Advice for business leaders to better manage climate risk

Dr Fitzgerald advised certain actions would be required by all sectors of the economy to fully address climate risk.

“Investing in environmentally friendly technologies, supporting industry to innovate, rolling up cleaner, cheaper and healthier forms of private and public transport, decarbonising the energy sector and ensuring more efficient working with international partners will be required to improve global environmental standards,” she said.

Mr Gram recommended diversifying one’s portfolio to include climate change as a future investment.

“The world will probably go greener, so you need to start investing into this future to be part of it. That’s the model I would advise companies and leaders to adopt when looking at climate risk,” Mr Gram said.

As to how to motivate businesses to stand up for climate change action, Prof. Anseel said businesses need to be convinced that sustainability is a viable and profitable investment.

“Business leaders will change their practices as soon as they are aware that sustainability is a sensible investment and there’s a whole economy behind it. To get businesses onboard, we need to learn how to frame the whole climate change debate in those terms,” Prof. Anseel said.

How can business schools help in addressing climate risk?

While there is a certain degree of risk when an organisation tries to innovate, Prof. Anseel said it is worth a try as the Business School is ready for change. The new challenge for business schools around the world is how to harness our best ideas to tackle pressing issues such as climate change.

“At UNSW Business School, we have many brilliant researchers interested in working on issues like the economics of climate change or the psychology of climate change. My idea is to build knowledge hubs within the Business School and across faculties that are completely dedicated to challenges such as climate change.

“Within these hubs, the best knowledge and research come together with the best ideas and insights from business and the result is a fruitful exchange of ideas to tackle the serious problems we face.”

Responsible business research and education has a role to play in motivating businesses to stand up for climate action.

“There's a movement called responsible research happening in various business schools worldwide. Under this new agenda, we will be able to gather all our investments, efforts and research to meet our sustainable development goals,” Prof. Anseel said.