Innovating For Impact: Lessons From Sustainable Climate-Tech Startups
Discover how a new generation of entrepreneurs is turning environmental urgency into game-changing innovations and why all leaders should take notice
This article covers:
- Key strategies these companies use to innovate quickly and scale their impact
- The power of purpose-driven business models in attracting top talent and investment
- Ways established companies can collaborate with or emulate climate-tech innovators
In boardrooms worldwide, a seismic shift is underway. Climate change, once viewed primarily as a distant threat or PR challenge, is rapidly becoming a catalyst for innovation and a defining element of business strategy.
The urgency of this transformation is more evident than ever, driven by a powerful confluence of consumer demand, economic realities, and environmental imperatives.
For forward-thinking business leaders, this convergence represents both a challenge and an unprecedented opportunity for innovation. Today's business landscape demands leaders who are bold in their approach to sustainability and innovative in their solutions to environmental challenges.
Boldness and innovation are two of The Art of Smart's four pillars for smarter decision-making. Growth and diversity are the other two, which businesses will achieve if they can balance the planet and its people with profit.
Indeed, ClimatePartner research from 2022, spanning 10 countries, shows a striking 75 percent of consumers now consider climate change very important or a top priority, with 80 percent believing companies must take responsibility for climate action.
The same study indicates that this sentiment directly influences purchasing decisions, with 60 percent of consumers finding carbon-neutral or climate-friendly labels important, and over half (51 percent) saying such labels influence their buying choices.
Business leaders are taking note: TravelPerk data from 2024 shows 61 percent believe climate change will have a high or very high impact on their business strategy and operations over the next three years.
Meanwhile, the economic opportunity is substantial, with industries worldwide poised to save US$437 billion per year by 2030 through improved energy efficiency alone, according to the travel management company's research.
New purpose-driven business models
For business leaders across industries, the rise of climate-tech startups offers both inspiration and a playbook for innovation. These companies are not just developing new technologies; they're reimagining entire systems, attracting top talent with purpose-driven missions, and demonstrating that environmental stewardship and economic success can be powerfully aligned.
By understanding and applying these insights, business leaders can position their organizations to thrive in a future where environmental stewardship and economic success are inextricably linked. The time for bold, innovative action on sustainability is now.
The urgency of the climate crisis has sparked a wave of entrepreneurial innovation across the globe. From bustling tech hubs to unexpected corners of the developing world, climate-tech startups are emerging with solutions that promise to reshape industries and redefine our relationship with the planet.
Lessons from Pakistan
Despite formidable obstacles including funding gaps, regulatory uncertainty, and infrastructure limitations, Pakistan's startups demonstrate remarkable resilience and ingenuity.
Maryam Khan, Founder of Climate News Pakistan, observes that these entrepreneurs are "adopting a bottom-up approach to innovation, focusing on very relevant solutions which can be rapidly tested and iterated." This grassroots approach yields solutions tailored to local needs but with global potential.
One standout example is Farmdar, an agritech venture using artificial intelligence (AI) and satellite technology to empower farmers and increase agricultural productivity. What initially seemed like a challenge—Pakistan's predominantly small land holdings—became a unique testing ground for their technology.
Muzaffar Manghi, Farmdar's Co-Founder, explains: "Applying AI and space technology to small land holdings and deriving accurate, reliable data here has allowed us to refine our technology. This experience has made adapting our solutions to countries with larger land holdings easier."
As a result, Farmdar has gained substantial traction beyond Pakistan, finding success in countries like Brazil, Vietnam, Indonesia, and Thailand. This demonstrates how local constraints can drive innovations with global applicability.
Another innovative Pakistani startup, Davaam, is tackling plastic waste through an ingenious refill system for household products. When faced with the challenge of importing suitable refill machines, the company turned adversity into opportunity.
Omer Ghaznavi, Davaam's Co-Founder, recounts their solution. "We realized: OK, let's just do it locally. Let's try and make this machine here," he says. By building the machines in Pakistan, Davaam created a solution that met local requirements and simplified maintenance and servicing.
These startups operate in a context where immediate economic concerns often overshadow environmental issues. As a result, they've had to ensure their solutions are not just environmentally beneficial but also economically viable. "In a country like Pakistan, nobody's paying a premium to save the environment," Ghaznavi admits. "We have to lead with the economic benefits. Our approach is to show how our solution saves money, with environmental impact as a bonus."
The mindset of these founders is perhaps best encapsulated by the Urdu word "Dheet", which Ghaznavi explains as capturing "the stubbornness, the pain, and the relentless determination required to push through adversity." This resilience in the face of challenges is a hallmark of successful climate-tech innovators worldwide.
In a country like Pakistan, nobody's paying a premium to save the environment. We have to lead with the economic benefits. Our approach is to show how our solution saves money, with environmental impact as a bonus.
Omer Ghaznavi
Co-Founder
Davaam
Africa's green frontier
Africa also boasts one of the world's fastest-growing carbon markets and is positioned for building lucrative, sustainable tourism, agriculture, and energy industries.
Jumoke Olowookere—who goes by the name "OlowoWaste"—is an "ecopreneur" and Founder of the Nigerian Waste Museum. She sees boundless opportunities for creative entrepreneurs in this space. "[Africa has] some of the most promising solutions around sustainability," she says. This optimism is backed by data:a 2024 study by Shortlist and FSDAfrica projects that the sustainability sector can generate around 3.3 million jobs on the continent, with over 60 percent likely to be white-collar roles.
OlowoWaste's venture, the Nigerian Waste Museum, exemplifies the innovative approaches being taken to sustainability challenges in Africa. The museum generates revenue through various channels, including sustainability grants, equity funding for product development, tourism ticketing, and training fees. They're also considering entering the carbon credit market, demonstrating the multi-faceted business models emerging in this space.
To further expand the sector, OlowoWaste believes growing entrepreneurs need to work hand-in-hand with governments and big corporations looking to eliminate or offset their environmental footprint. This collaborative approach could catalyze exponential growth in Africa's climate-tech ecosystem.
Europe's tech-driven sustainability solutions
The idea flourished during Startup Weekend Macedonia in 2018, but a partnership with a local business in 2020 provided crucial insight. Stefan Aleksikj, Challenger's Co-Founder, recalls: "That's when the lightbulb came on that businesses needed some kind of tool to inspire and motivate their employees to do something good."
This pivot towards business partnerships has been central to Challenger's growth. The app has since been used by various organizations, including a fundraising campaign with SOS Children's Villages. "Companies were joining Challenger as part of the initiative, and for each kilometer tracked in the app, they were also donating to SOS Children's Villages," Aleksikj continues.
Since launching, Challenger.mk has had over 15,000 users across Southeast Europe and has helped reduce CO2 emissions by 189 tonnes. The company's success underscores a vital lesson for climate-tech innovators: sometimes, the most impactful solutions are those that make it easy for individuals and businesses to take small, consistent actions for sustainability.
Strategies for climate-tech success
- Purpose-driven innovation
At the heart of successful climate-tech startups is a clear sense of purpose. These companies are not just developing products or services but are on a mission to solve specific environmental challenges. This purpose-driven approach guides innovation and helps attract talent and investment.
Tomás O'Leary, CEO and Founder of Dublin-headquartered Origina, a company that extends the lifecycle of software to reduce e-waste, emphasizes the importance of genuine commitment to sustainability. "The way things are going globally, a company's focus on climate, carbon, and the circular economy can't be simply for the sake of marketing," he says. "It must be willing to put skin in the game at the highest levels and make a real commitment to making a difference."
This commitment is evident in Origina's approach to sustainability. O'Leary explains: "Our environmental focus has become a bigger part of our overall activity as we've grown. For example, we have founded a European & North American non-profit called Free ICT that tackles e-waste and supports initiatives that promote sustainability. We have, likewise, become the lead corporate sponsor of an innovative climate think tank known as This Spaceship Earth and work to help grow their message and support their climate-first agenda."
- Aligning economic and environmental benefits
Successful climate-tech startups recognize that their solutions must offer clear economic and environmental benefits to achieve widespread adoption. As shown with the examples from Pakistan, leading with cost savings or efficiency gains can be a powerful way to drive the adoption of sustainable technologies.
Paris-based Julia Reinaud, Senior Director at Breakthrough Energy, highlights the importance of this approach. "You need to start with the science and the technology," she says. "What are the key technologies and solutions we're addressing? As we progress through our innovation cycle, how do we ensure that we're supporting R&D, enhancing company capitalization, and aiding project development while focusing on technologies that will have the most significant impact at each stage?"
Breakthrough Energy, founded by Bill Gates in 2015, exemplifies this approach. Reinaud explains the organization's focus. "Our challenge is twofold," she states. "First, how do we make green energy as affordable as fossil fuels? We aim to achieve this at a scale that reduces CO2 emissions by half a gigaton. Second, how do we minimize the 'green premium'—the cost difference between sustainable options and their conventional alternatives?"
- Leveraging partnerships and ecosystems
Many climate-tech startups are finding success through strategic partnerships with larger corporations, governments, and other stakeholders. These collaborations provide access to resources, expertise, and markets that are difficult for startups to reach independently.
Breakthrough Energy's approach exemplifies this strategy.
Reinaud explains: "We have a program called Fellows that supports first-time entrepreneurs and researchers. We not only provide financial backing until they reach specific technology milestones, but we also fund business fellows. These business fellows play a crucial role in helping our innovation fellows find partnerships, connect with the right corporations, and test their modeling and data assumptions. Beyond that, we guide them on how to grow a company effectively."
This collaborative approach extends to partnerships with the public sector as well. Reinaud notes, "For Breakthrough Energy in Europe, partnerships with the public sector have been crucial. Our Catalyst program has established a partnership with the European Commission and the European Investment Bank (EIB). Similarly, for Breakthrough Energy Ventures Europe, we've created a joint venture with the European Commission, facilitated by the EIB. This venture comprises a €100 million fund, with €50 million contributed by each party, dedicated to investing in innovative European companies."
- Focusing on scalable solutions
The most successful climate-tech startups develop solutions that can be scaled up to make a significant impact. This often involves leveraging technologies like AI, data analytics, and IoT to create solutions that can be deployed widely and efficiently.
Karl Matthiasson, CEO and Co-Founder of DTE, a company that uses AI and laser technology to analyze molten metals in real time, illustrates this approach. "We are giving the best of both worlds," he says, stressing that sustainability with profit is now possible. "We maximize throughput while still comfortably staying within specifications at all times. This quality throughput trade-off is not a trade-off anymore. We bring you both."
DTE's technology improves efficiency and quality in metal production and has significant environmental benefits. Matthiasson explains: "All these millions of tons are being produced every year, and they're all at some point being batched in these big furnaces. And you're maintaining a temperature there of 800 degrees Celsius for maybe way too long while you're getting things right. And if you can streamline that, do that in the shortest possible time, you save immense amounts of energy."
- Embracing circular economy principles
Many climate-tech startups are going beyond simply reducing environmental impact to reimagining entire systems based on circular economy principles. This involves designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.
DTE's work in the aluminum industry exemplifies this approach. "Being able to utilize recycled content and the fly scrap as much as possible is so valuable," says Matthiasson.
Origina's business model is another example of circular economy principles in action. O'Leary describes their approach. "Origina's core mission from day one has been to help customers get more life and longer use out of their current IBM, VMware, and HCL software," he says. "As a result, our customers get to keep using their existing hardware—such as mainframes, servers, and endpoint devices—for as long as they want instead of being forced to throw it away and buy something newer every time the software vendor says it's time for an upgrade."
The way things are going globally, a company's focus on climate, carbon, and the circular economy can't be simply for the sake of marketing. It must be willing to put skin in the game at the highest levels and make a real commitment to making a difference. Our environmental focus has become a bigger part of our overall activity as we've grown. For example, we have founded a European & North American non-profit called Free ICT that tackles e-waste and supports initiatives that promote sustainability. We have, likewise, become the lead corporate sponsor of an innovative climate think tank known as This Spaceship Earth and work to help grow their message and support their climate-first agenda.
Tomás O'Leary
CEO and Founder
Origina
I am perpetually optimistic. I firmly believe that game-changing technologies will play a crucial role in addressing our challenges. While behavioral changes and gradual improvements are important—and we should all be mindful of their impact—the revolutionary developments will truly make a difference. However, these breakthroughs won't happen on their own. We must actively work to bring them about. We cannot afford to be complacent; our commitment and effort are essential to driving this technological progress.
Karl Matthiasson
CEO and Co-Founder
DTE
Learnings for established businesses
Below are some core lessons from climate-tech startups that larger organizations can apply.
- Foster a culture of innovation
Create internal structures that allow for speedy experimentation and iteration, similar to how startups operate. This could involve setting up innovation labs, running internal hackathons, or establishing "intrapreneurship" programs that allow employees to develop new ideas.
- Collaborate with startups
Instead of viewing climate-tech startups solely as competitors, look for opportunities to collaborate. This could involve partnerships, investments, or even acquisitions. Breakthrough Energy's model of connecting startups with corporates offers a template for how these collaborations can work.
- Align sustainability with core business strategy
Integrate sustainability into your core business strategy rather than treating it as a separate initiative. This involves looking for ways that sustainability can drive efficiency, open new markets, or enhance your customer value proposition.
- Invest in long-term solutions
Climate change is a long-term challenge that requires long-term thinking. Be willing to invest in solutions that may not show immediate returns but have the potential for significant impact over time. As Reinaud from Breakthrough Energy notes: "You need to align with these deep tech capital cycles."
- Leverage your scale
While startups have agility, established businesses often have scale. Look for ways to use your existing infrastructure, customer base, and supply chains to scale up promising climate solutions at speed.
You need to start with the science and the technology. What are the key technologies and solutions we're addressing? As we progress through our innovation cycle, how do we ensure that we're supporting R&D, enhancing company capitalization, and aiding project development while focusing on technologies that will have the most significant impact at each stage?
Julia Reinaud
Senior Director
Breakthrough Energy
Commitment to progress
The message for business leaders across all sectors is clear: sustainability is no longer a nice-to-have but a critical driver of innovation, competitiveness, and long-term success. Whether you're leading a startup or a multinational corporation, the climate-tech sector's approach to innovation, partnerships, and purpose-driven business offers valuable lessons.
As we face the monumental task of transitioning to a sustainable global economy, every business has a role to play. By embracing the spirit of innovation and collaboration exemplified by climate-tech startups, organizations can contribute to solving the climate crisis and position themselves for success in a rapidly changing business landscape.
The question for every business leader is no longer whether to engage with sustainability, but how to do so in a way that drives innovation, attracts talent, and creates value for all stakeholders.
Matthiasson of DTE offers a positive perspective on the road ahead. "I am perpetually optimistic," he grins. "I firmly believe that game-changing technologies will play a crucial role in addressing our challenges."
He adds: "While behavioral changes and gradual improvements are important—and we should all be mindful of their impact—the revolutionary developments will truly make a difference. However, these breakthroughs won't happen on their own. We must actively work to bring them about. We cannot afford to be complacent; our commitment and effort are essential to driving this technological progress."
While the route to a sustainable future is complex and challenging, the innovations emerging from the climate-tech sector offer hope and inspiration. By learning from these startups and embracing their spirit of purpose-driven innovation, business leaders can play a crucial role in shaping a more sustainable and prosperous future for all.
Key takeaway questions
- How can your organization foster a culture of sustainability-driven innovation?
- What opportunities exist for your business to collaborate with climate-tech startups or other partners in your sustainability efforts?
- How might adopting circular economy principles create new value streams or efficiencies in your operations?
- What skills and talents will your organization need to succeed in a more sustainability-focused business environment?
- How can you align your sustainability efforts with your core business strategy to create both environmental and economic value?
