The needs of the global sustainable development agenda are both broad and urgent, and innovation models are central to addressing them in a timely, efficient, and scalable manner, from promoting inclusive growth to ensuring the longevity of natural resources to addressing issues across the state of the human condition.
Inclusive businesses—including large multinational corporations (MNCs), social enterprises, and impact investors—recognize that the private sector will increasingly play a lead role in solving problems and closing global sustainability gaps. Such endeavors can cost USD 3-5 trillion annually, according to some estimates, although the value that businesses can unlock while in the process is estimated to be in the range of USD 12-15 trillion per year. Ideally, thus, this suggests a macro-level business case for trying to do good while doing well.
While the macro-level business case provides a tremendous amount of evidence on the private sector’s role in addressing sustainable development challenges, a bottom-up perspective is also crucial to understanding how much technology can be a force for inclusion, or against it. To this end, researchers at Digital Planet placed a group of private enterprises that leverage digital technology to solve sustainable development challenges under a microscope, building a case study for each of them from a bottom-up perspective.
Through this case study approach, we hope to allow our audience to immerse themselves in an enterprise’s journey, answering the question of how companies in different parts of the world are taking on sustainable development challenges and closing inclusion gaps. In addition, in each case study, we employ “The Nine A’s Framework” to analyze an enterprise’s business model. This original framework is designed to provide an outside-in evaluation of a given company’s strengths and weaknesses, as well as to highlight the opportunities and challenges it faced at the time of the writing. Lastly, this compendium allows for a comparison of the enterprises’ business models, revealing several common themes and learnings that business leaders and entrepreneurs should consider for future actions.
In this third edition of the Beyond Access case compendium series, we cover three companies working to achieve a more sustainable future. These companies are working to help address the following United Nations Sustainable Development Goals (SDGs): SDG 1, no poverty; SDG 3, good health and wellbeing; SDG 4, quality education; SDG 6, clean water and sanitation; SDG 7, affordable and clean energy; SDG 8, decent work and economic growth; SDG 9, industry, innovation, and infrastructure; SDG 10, reduced inequalities; SDG 11, sustainable cities and communities; SDG 12, responsible consumption and production; and SDG 13, climate action.
Below is an overview of the three enterprises in the compendium:
Husk Power Systems is an energy provider established in 2008 to serve rural communities across India and Africa. The company’s mission is to provide decentralized, reliable electricity by installing mini-grids that utilize a mix of sustainable energy sources.
Nexsis seeks to alleviate global poverty by providing access to potable water, hot sanitation water, electricity, and financial institutions to those who need it via its solar-powered Smart Panel technology. Through partnerships with governments, NGOs, and other businesses, Nexsis aims to distribute its Smart Panels to communities around the globe, with operations currently in Cambodia, Morocco, Singapore, Australia, and early stages in India and Brazil. The innovative Smart Panels allow Nexsis to offer a multi-pronged digital solution to customers with an affordable pay-as-you-go pricing model whilst providing verifiable carbon credits.
ThredUp is a US-based secondhand e-commerce consignment business that facilitates the sale of high-quality clothing by providing the digital platform and logistical expertise to eliminate friction and maximize convenience for both buyers and sellers. Sustainable values are deeply rooted within the company’s DNA and are visible in ThredUp’s environmental impact, as ThredUp creates a circular economy, limiting carbon emissions as well as energy and water waste.
Emerging Insights and Implications for Action
Looking across the three cases, some insights and learnings which emerged are:
- Pay-as-you-go pricing makes dramatic quality-of-life improvements accessible to all, while encouraging sustainability
Pay-as-you-go pricing is a game changer for low-income households. It allows people to only spend resources on the items they need, helping consumers save money. By not locking consumers into contracts, it also helps people avoid burdensome debt. Pay-as-you-go models encourage responsible use of resources, which can reduce waste and increase conservation. This style of pricing can promote economic development by making it easier for people to start businesses and access markets. For instance, in the cases of Husk and Nexsis, offering access to power and clean water not only helps households but can lay the foundations for microenterprises in rural and underserved regions. Finally, as seen with Nexsis, and with the right partners, introducing pay-as-you-go pricing along with the product can lead to increased financial inclusion. - Digital technologies are a force multiplier for climate-conscious businesses
Digital technologies can act as a force multiplier for businesses focusing on sustainability. They accomplish this in several ways. First, through resource efficiency. Digital technologies enable businesses to monitor and manage their resources more efficiently. For instance, smart sensors and automation systems can optimize energy consumption in buildings and industrial processes. In the case of ThredUp, digital technologies bring order to an otherwise chaotic secondhand apparel market, extending the lifetime of clothing. Second, those same monitoring capabilities can be harnessed to track metrics in real-time on environmental impact, bring transparency to supply chains, and be used as a benchmarking tool for companies. Third, digital technologies can be harnessed to create circular economies, by facilitating the reuse and recycling of materials, as seen by the use of rice husks and solar by Husk Power Systems. - Regenerative technologies have the potential to address longstanding gender gaps
Women bear the brunt of energy and resource poverty. They are more likely to be responsible for collecting firewood and water. By removing some of this drudgery, women have more free time to study or engage in paid work. Regenerative technologies, like Nexsis’ solar-powered Smart Panel, offer clean water and improved sanitation, improving the well-being of women and girls. Cleaner fuel sources also can improve the health of the entire household, with outsized impacts on women. At the same time, many sustainable energy projects fail to deliver the intended benefits to women, as women still lack decision-making power in households. Companies seeking to improve women’s lives, must think beyond simply delivering power and water. For example, Husk offers village women training and job opportunities (making incense sticks out of the rice husk char), empowering them economically. Clean power and water are a necessary, but not sufficient condition for both sustainable development and closing gender gaps. - Government collaboration is key to ensuring the success of renewable energy startups
Investors in the renewable energy sector are concerned about the long-term friendliness of governments towards the industry. Governments that lack national plans for rural electrification and renewable energy policies may discourage private companies like Husk and Nexsis from entering the market, hindering the electrification of rural dwellers. To create a healthy market foundation, governments are collaborating with the renewable energy sector to understand what is most conducive to its growth. Some key elements include:• Prioritizing Sustainability: Many governments have set renewable energy targets, but few have articulated policies that facilitate the implementation of such energy by private actors. Recognizing the role that the private sector can play in meeting energy targets can foster quicker, sustainable electrification for rural households.
• Main-grid Arrival: The arrival of the centralized grid to off-grid communities is a looming threat to the long-term profitability of mini-grids. Governments should outline how electricity distribution rights will be apportioned if such a scenario arises to ease mini-grid investors’ minds and promote rural electrification. Despite the importance of this assurance, around half of governments surveyed by Climatescope do not have any specific guidelines concerning grid arrival to a rural community.
• Government Subsidies: Governments can invest in the renewable energy industry through results-based funding (RBF), which rewards mini-grid companies’ projects upon verification of a legitimate electric connection to a pre-established number of households. RBF is a low-risk option for governments interested in investing in rural electrification without blindly committing money to external entities.
• Tariff Setting and Taxation: Governments need clear guidelines around acceptable tariff practices. Accepting alternatives to fixed-rate tariffs, such as Husk’s algorithm-based pricing model, can promote electricity use and increase demand for services.
To ensure the successful implementation of electrification programs in emerging economies, governments should establish stable and transparent policies and regulations that promote investment and ensure a level playing field for all stakeholders. Clear licensing rules, streamlined solicitation procedures, environmental and social impact assessments, and guidelines that regulate, and foster market growth are crucial for sustainable electrification.
- Creating and maintaining consumer demand is necessary for the long-term viability of sustainable businesses
Increasing affinity for large-scale sustainable solutions to human consumption is a victory for environmentally conscious businesses. As the interest in climate consciousness increases, sustainable businesses need to establish a plan to cement demand for their products and maintain their popularity in mainstream consumption.A principal challenge faced by the renewable energy sector when penetrating rural, un-electrified markets is the lack of demand for electricity. To entice and retain customers, companies in the renewable energy sector must think of innovative ways to create demand for their products and services.
Nexsis’ CEO, Robert Pyman emphasizes the importance of ‘consumer product waterfalls,’ where electricity suppliers provide energy and electric appliances simultaneously to generate both the demand and supply of their own products. Hybrid-grid industry players, like Husk, employ KeyMaker economic models to create demand for their service. This involves enlarging the local economy by buying local raw products and using their own energy to process and package them, and then selling them in areas with higher demand. Such an approach increases demand for electricity, enhances the local economy, and diversifies the community’s income by hiring local employees.
Lastly, ThredUp’s demand has incrementally increased as the online retailer continues to gain popularity. To maintain its relevance, ThredUp has penetrated the traditional retail market and contracted in-vogue celebrities to represent the ThredUp brand. These efforts have reframed secondhand clothing, making it contemporary, imbued with meaning, and environmentally conscious.