Innovation. Broadly.

Drivers of innovation

Innovation usually happens in response to problems, constraints or opportunities. While the word “innovation” is often associated with technological innovation, it encompasses a much wider range of contexts, including systems, processes, behaviours and institutions. In many cases, innovation in these contexts depend on each other. In fact, the UK Committee on Climate Change (2020) asserts that achieving the stated net zero targets will require not just innovations in energy systems, land use or carbon capture technologies, but also significant changes in consumer and business behaviours.

On a fundamental level, innovation could be described as:

The process of turning new ideas into value, in the form of new products, services, or ways of doing things. […] It is now widely accepted that innovation fuels the majority of the world’s long-term productivity and economic growth, and that innovative firms significantly outperform non-innovators.

(D’Orville, 2020)

In other words, innovation is the process of creating value by applying novel solutions to existing problems or future opportunities. This means innovation involves much more than simply coming up with a good idea. To create value for the economy, society, the natural environment or other stakeholders, an innovation needs to be implemented, tested and made workable in a relevant and practical context (Bessant & Tidd, 2013). It should therefore not be confused with creativity or invention, which, although fundamental building blocks of innovation, need to be complemented by meaningful action to have an innovative impact.

This section explores four of the main drivers of innovation, namely technological, social, regulatory and financial.

Technological drivers

An important driver and enabler of innovation is technology (Bessant & Tidd, 2013). Ground-breaking technological innovation such as the steam engine, the light bulb and the smart phone have radically changed the way we live, work and communicate.

In the last few decades, the speed of technological innovation has increased exponentially. Businesses across all sectors are now benefitting from technological developments that have the potential to drive the net zero transition, such as big data and artificial intelligence (AI), novel communication technologies and virtual working, the development of low-cost renewable energy solutions, and the use of drones and robots. Some observers estimate that AI technology used for environmental applications could add around US$5.2 trillion to the global economy in 2030, outperforming business as usual by over 4% (PwC, 2019).

Moreover, smart meters are being introduced in many countries to reduce electricity costs and usage, improve operational and energy efficiencies, stabilise electricity grids and enable behaviour change. In India, the central government plans to install smart electricity meters for all residential customers by 2025, totalling around 250 million smart meters (Spencer Jones, 2021), and the global smart meters market is expected to increase to over US$55 billion by 2028 (Gupta & Dimri, 2022).

Organisations are using AI in a range of ways to address global challenges and improve business resilience. For example, Microsoft’s AI for Earth initiative supports various projects that use AI to solve global challenges, from air pollution to climate change. One such project is FarmBeats, where AI is used in agriculture to provide data-driven insights to farmers to help them manage their land sustainably.

Social drivers

Shifting societal norms and expectations have become an increasingly relevant driver of innovative net zero approaches. These changing social values are driving novel consumer behaviours, shifting investor and stakeholder expectations, and prompting businesses and governments to foster and fund innovation.

Environmental and climate movements have grown and gained attention across many parts of the world. Climate activists and global environmental campaigns, such as Fridays for Future and the Sunrise Movement have raised public awareness of the climate crisis and put pressure on businesses and policymakers to take action (Dryzek, Norgaard & Schlosberg, 2011). Long-established environmental campaign groups, such as Greenpeace and the grassroots movement 350.org, have been joined by a plethora of local pressure groups in their drive to influence global leaders and rouse support from the general public.

Social enterprise incubators, such as Fashion for Good and Impact Hub, are prompting businesses to collaborate and innovate to address both the risks of climate change and other sustainability-related issues, such as inequality and social injustice.

Pressure groups championing climate action include The Climate Reality Project, which is a non-profit organisation focused on education and advocacy, and Plan B, a small network of environmental lawyers dedicated to supporting legal action against those responsible for greenhouse gas (GHG) emissions.

The UN has published five ways to encourage climate-friendly action using behavioural science.