Human capital: Why low-carbon innovations must grow hand-in-hand with new sustainability skills
Companies that are driving the global low-carbon transition do so through the effective use of clean technology and a willingness to embrace new businesses models, but are the next generation of green businesses leaders primed with the right skills to push the sustainability agenda even further?
Business leaders taking bold climate action are doing so selflessly, fully aware that others will be at the helm when the most severe impacts of global warming hit. The case for mitigating climate change couldn’t be stronger – or indeed more enabling – with the Paris Agreement and the Sustainable Development Goals (SDGs) together creating a solid platform upon which businesses can look to to futureproof themselves and drive the low-carbon transition.
Countries and companies alike have established incremental climate targets, with 2050 acting as a temporary finishing line for dedicated sustainability action. But many CSR management teams and sustainable business leaders are unlikely to be steering the ships when those long-term targets appear closer on the horizon, and some are becoming increasingly concerned that the next generation isn’t being equipped with the necessary skills to turn these sustainability targets and ambitions into reality.
Amidst anxieties that corporate responsibility is in danger of becoming another elitist profession, some institutions are attempting to arm the next generation of sustainability leaders with the hard and soft skills required to drive green business at a time when climate change will likely be more severe than today.
Businesses can at least be buoyed by the fact that the appetite and market is there. The Institute of Environmental Management & Assessment (IEMA), which represents more than 15,000 environment and sustainability professionals, has previously revealed that those looking to enter employment are more selective about their employer's approach to sustainability.
Despite the hunger, issues arise when actually implementing the teachings. New business models that are needed to drive the low-carbon transition are just that - they’re new. Some are yet to cement themselves into industry let alone find a place on national curriculums.
Many higher education facilities are still wrangled up in fossil fuel divestment issues – although some institutions like Cranfield University are now shining a light on new business methods. With this in mind, companies are having to search the minefields of innovation and start-ups to find the required sharp young minds. As a result, this is creating a gap between the end of education and the beginning of responsible corporate development for graduates.
One organisation attempting to facilitate and ultimately reduce the gap between graduates and the incumbents is InnoEnergy. Established in 2010, InnoEnergy acts as the innovation hub for the European energy market.
Since its inception, InnoEnergy has reached out to more than 250 associates and project partners in an attempt to match hungry innovators with businesses large and small. So far, InnoEnergy has received 11,200 applicants to its Masters School, with 93% of the 500 graduates finding a job within six months of graduating. It has supported 140 PhD students, helped 162 early-stage start-ups reach markets and created 80 new companies. From these companies, three manufacturing facilities have been constructed, 77 patents have been filed and 24 solutions to energy market issues have been used by industries.
For InnoEnergy’s innovation director Elena Bou, bringing start-ups together with businesses is a sure-fire way to bring needed disruption to a market that must integrate new business models in order to deliver a low-carbon energy transition.
“We want to enable collaborative innovation projects, where we place big companies with research centres so they can work together in the collaborative environment and launch products onto the market,” Bou tells edie. “If we want an energy transition, the human-side of it is crucial, its why we pay a lot of attention to creating talent and that is what our educational programmes aim to do. We want to create the game changers, that in the future, will be working in the big companies and ones that are better prepared to carry out the energy transition.”
For Bou, the rise of this transition will be catalysed through new ways of doing business. However, challenging the status quo and getting incumbents to switch up models can be challenge. Trends such as digitalisation may force the hands of some companies in this regard, but some companies may be tempted to drag their heels and wait for regulation to enforce itself on them.
Some companies are fortunate enough to have forward-thinking individuals and teams within their sustainability make-up who are willing to drive the agenda without external forces pressuring them. That is why Bou believes that softer skills revolving around confidence and leadership are essential traits for the new generation.
“We have seen new business models introduced that have brought the need for new skills and personnel in the established companies,” Bou says. “These new business models are aimed at empowering the end user and consumer, but the most different aspects – which need introducing – have to do with the softer skills. We need to create gamechangers with a different mindset.
“Leadership and systemic confidence are crucial skills in this new market. A person that is able to analyse the effects of innovations and concepts on value chains and the business. We are looking for people who are willing to challenge the status quo and are not content with what we have today, they are always looking at new ways of doing things in order to improve the standards.
“New business models will change the roles of the different actors within the energy value chain. Established companies need to think about new business models and need to change to accommodate the new actors and trends and they can benefit from the risk takers. As the scenario develops, newer skills are needed, new business models are needed and we need to have the confidence to adopt them.”
Navigating the European sphere can be complex. Under the umbrella of the European Union lies many nations with differing energy and climate policies and aspirations. Technical skills may prove critical in driving the low-carbon revolution, but embedding it will take a much different mindset.
Hard and soft
November’s Climate Innovation Summit in Frankfurt discussed the need to develop appropriate “human capital”, with an array of experts generally agreeing that while the educational process was strong in developing technical skills, there was a lack of interaction with incumbent businesses to placing budding young sustainability experts into the business sphere.
Katherine Krogh Anderson is the dean of research and senior vice-president of the Technical University of Denmark (DTU) and was amongst the panel at the Summit. Anderson's University specialises in scientific research and boasts facilities examining chemical engineering, wind turbines and marine vessels.
For Anderson, the development of these technical skills will be essential to generate the next batch of business professionals. But she admits that softer skills need to be integrated into programmes to compliment current practices; but these would only be valuable if they are integrated through interactions with businesses and society.
“We educate based on technology,” Anderson says. “But we don’t necessarily know the technologies that will be around in the next 20 years. At the moment, they will have to be developed based on general skills.
“We need to educate the students to be flexible, and develop basic skills to act and take chances in areas where they wouldn’t envision themselves and interact with society. We have well educated people, but the interaction isn’t as strong as it ought to be.
DTU is taking steps to remedy this. The University has established Skylab – an innovation hub aimed at accelerating student innovations by connecting them with local companies. Through this environment, 54 new start-up businesses focusing on technical innovations were introduced in 2015 alone – 23 of which were created by students.
While DTU is creating a flourishing environment to bring new concepts, such as 3D printing and the ongoing evolution of digitalisation, into situations where they can interact with businesses, there is still a gap in attempting to bring these concepts - and the skilled workers who can man them - into the big corporations.
Adapt and adopt
Joining Anderson on the panel at the Frankfurt Summit were representatives from automotive firm Rolls Royce and German financial giant Allianz. Both companies operate with huge financial sums, but this hasn’t meant they can act more relaxed when embedding new skills and systems into current operations.
In 2015, Rolls Royce invested around $1bn into Research and Development (R&D), 70% of which was spent to enhance the environmental performance of products ranging from aero engines to grid propulsions. The FTSE-100 company, which employs more than 55,000 people across 45 countries, has ring-fenced around £11m to invest in energy and carbon reduction initiatives this year, with LED lighting and solar PV topping the list of priorities. For the company’s head of low-carbon technologies Adam Morton, Rolls Royce is still “heavily reliant” on the strong engineering skills that institutions like InnoEnergy and DTU are currently providing.
However, the rise of digitalisation has introduced an array of new skills and technologies that are changing the relationships between value chains, producers and even the consumers. For Morton, workers that can operate at both product and service levels will be key to ensuring that big businesses can embed essential new operating models such as the circular economy.
“We are heavily reliant on very strong engineering skills,” Morton says. “In many respects we need the same skills we always did, but over the last 10 years a whole load of new skills have been super imposed on top. With the rise of digital it is going to be increasingly important that the people we employ can operate at both the product and service level.
“Research is about turning money into ideas and it’s an essential part of business, but going forward we need innovation, and innovation is turning ideas into money. In terms of skills, I’m absolutely convinced that data will be a low-carbon technology.
“The ability to analyse data, to deliver efficiency improvements, and then mobilising and leveraging that can have a big impact. Going forwards, being able to understand hardware and software will create entirely new business models and if we want to survive as companies, then these are the kind of skills we need.”
Morton and Rolls Royce aren’t hedging their bets on fledgling innovations, focusing instead on more mainstream concepts such as LED, solar and data management. While this introduces the need for new types of thinking and skills to maximise energy performance, they are relatively inexpensive to implement. That is where a lot of innovative ideates, and the minds behind them, tend to fall short. The gap between business and the “grassroots” isn’t just stifling the introduction of these newer generations and skills, but also potentially hindering the growth of start-ups.
Finance and investment is usually the answer, but as Allianz’s managing director of climate solutions Karsten Loffler will admit, even the finance sector is in need of new skills in order to funnel investment into low-carbon companies. At last year’s COP21 climate conference, Allianz joined the Portfolio Decarbonization Coalition (PDC), a group of investors committed to supporting the fight against climate change. The firm, which has annual revenues of €122bn, also announced it will no longer invest in mining companies and utilities that generate more than 30% of their sales or energy creation from coal.
Despite moving money towards cleaner companies, Loffler notes that investing in this area is still a new aspect for many financial firms. With this in mind, he believes the education sector can help Allianz embed a strategy that aligns its portfolios towards targets set as part of the Paris Agreement. “Investment into climate change is something relatively new,” Loffler says. “Therefore, the process – despite the need – takes time. We try to educate ourselves, but in the long-term we need people coming in with the right mindset so that the process can be woven in and we aren’t starting from scratch.
“The education sector can help us in aligning investment portfolios towards the Paris goals. It’s about strategy, but we need analysts and we see one of the biggest challenges for our staff is actually educating them on science and climate relations.”
Fortunately for the finance sector, climate disclosure and transparency is being driven by organisations such as CDP, which calls on major firms to provide annual updates in regards to climate risks. CDP also publishes an A-list, which details the companies that are thriving when introducing sustainability measures and new business models. This will hopefully create the spotlight that investors need to ensure that money can be funnelled into fit for purpose companies.
For the rest, building the relationship between educational institutions may be key to embedding the new models and technologies needed to reach a carbon-neutral future.
edie's sustainability skills month and workshop
The month of November sees edie shift the editorial spotlight from green building to sustainability skills, ahead of the edie Skills Workshop on 30 November in London (find out more and register to attend here).
From presentation skills and building the business case to the power of influence and persuasion, this month of exclusive videos, features and podcasts will pro-actively address the sustainability skills gaps and lay the foundations for businesses to take the next steps in their sustainability journey.