4. Objectives
1. To appreciate the role of entrepreneurship in challenging and urgent times
2. To classify the types of climate change effects on entrepreneurs as well as
the opportunities hat arise within the Asia–Pacific context
3. To review important concepts in climate change economics that impact
entrepreneurial activity
4. To appreciate the various emerging frameworks in entrepreneurial ecology
5. But first
What “on Earth” does climate change possibly
have to do with entrepreneurship?
“We can't solve problems by using the same
kind of thinking we used when we created
them”
• Albert Einstein
?
6. Entrepreneurship
as if the planet mattered
There’s no avoiding it. Our planet is
suffering climate change
Increase in greenhouse gases
Fluorocarbons depleting the ozone
layer
Acid rain and air pollutants
Shortages of freshwater resources
Overfishing, habitat destruction and
pollution in the marine environment
Crop loss and grazing depletion due
to desertification and erosion
Rapid population growth and migration,
burgeoning mega-cities, and ecological
refugees
Cutting down the world’s tropical
forests, leading to erosion and flooding
Mass extinction of species and the
associated loss of genetic resources
Threats to human health from
exposures to chemicals in production
processes, products and
Consumption activities
Melting sea ice
in the Arctic
7.
8. Why does the earth matter
to entrepreneurs?
For centuries, entrepreneurs have been
free to exploit the environment with
impunity without thought of
sustainability
• Rainforests are cut down and
burned off by small- and
large-scale entrepreneurs.
• Asian cities choke for weeks
during Indonesia’s burning
season.
• Thousands of Indonesians
are employed and many
entrepreneurial families are
coming out of poverty
because of the enterprise.
9. Entrepreneurs contribute
to the planetary crisis
Negative Entrepreneurs are continuously disturbing the
Earth’s balance.
It is no exaggeration to say that
entrepreneur like Henry Ford (l) and
Thomas Edison (r) played major roles
in contributing to our current
dilemma and an entrepreneur
(perhaps one who commercialises
hydrogen autos) can help ease the
problem.
10. Entrepreneurs in times of crisis
• Innovative ideas emerge during times of crisis.
• Recessions ‘clean the slate through creative destruction and
create lasting, positive change’.
• 50% of the fast-growing and largest companies of today were
founded during times of crisis.
• Launching a new company does not actually put companies
at a disadvantage as many may suspect.
• The rate of entrepreneurship actually went up during the GFC.
• Crises act as a good ‘cold shower for the economic system’,
releasing capital and labour from dying sectors and allowing
newcomers to recombine them in imaginative new ways.
In the Chinese
language, the word
"crisis" is composed of
two characters,
one representing
danger and the other,
opportunity.
11. Now we are engaged in a great climate war
• Entrepreneurs take share of the responsibility for global
warming, but they are also agents of change who may help to
turn the situation around.
• Climate change is the greatest and widest-ranging market
failure ever seen.
• ‘Fixing climate now (2007) would cost about 1 per cent of
Gross Domestic Product (GDP) per year. Doing nothing, say
many economic models, would cost the world the loss of 5 per
cent GDP per year – now and forever’, says the report.
• Business logic is music to our ears: ‘The benefits of strong,
early action on climate change outweigh the costs’.
– Economics of Climate Change 2007 (Stern Report)
Sir Nicholas Stern, The Economics
of Climate Change 2007
12. Stern update: Better Growth,
Better Climate (2014)
• There is no need to choose between
fighting climate change or growing the
world’s economy.
• Business can create growth and
reduce their carbon emissions.
• Innovation and investment make it
possible to tackle climate change at the
same time as improving economic
performance.
19. Population and
entrepreneurship
• World population
today is 7.3
billion
• Each year we
add population
the size of
Egypt!
• At the dawn of agriculture, about 8000 B.C., only 10,000 years ago, the population of the world
was approximately 5 million, about the size of today’s metropolitan Sydney.
20. Population opportunities for entrepreneurs
Ageing
• dental care, hearing
aids
• orthopaedics and
cardiology.
• nostalgia products
• food preparation
labour-saving
technologies
• regenerative
medicine
• age-related drugs
Youth
• recruitment
• fashion
• cheap cars
• environmental
products
• media and gaming
• creative and
education
• communications
devices
• Overpopulation
• drinking water
• waste management
• air and water
pollution
• fighting infectious
diseases
• improving food
varieties
• renewable energy
• family planning
21. • Planet faces a severe water crisis.
• Though water is scarce, the crisis is actually one of
water governance – caused by the ways in which we
mismanage water – rather than supply.
• Impacts
– Waterborne disease
– Polluted environment
– Sanitation
– Industry and irrigation.
• Engineering entrepreneurs developed aqueducts and
artificial lakes
• Agri-preneurs have created high-yielding crops and
animals that consumed astonishing amounts of water,
called embodied water.
– 15 500 litres of water to make 1 kg of beef
Water and
entrepreneurship
22. Opportunities for
hydro-preneurs—not!
• Business opportunities exist in:
–drinking water and sanitation
–water ‘embedded’ in production
–collection, storage and transportation
–Desalination
–toilets
–conservation (reduction in use).
• (Avoid bottled water!)
25. • Major changes in where and when food is produced on the
planet's surface.
• Agriculture is responsible for nearly one-third of global
greenhouse gas (GHG) emissions.
• Wheat in Northern Europe; Wine in Norway
• Wealthy countries like the UK, Germany and Canada may
well have warmer, wetter growing conditions, while other
regions (such as developing countries in the tropics) are
likely to suffer droughts and floods.
Food and
entrepreneurship
27. Australia’s food
security in doubt
• Temperatures have
become so extreme that
BOM added incandescent
purple for temperatures
over 50 degrees
• Australians are the highest
emitters of CO2.
28. Entrepreneurs and fossil fuels
• Think about the entrepreneurial inventions
that depend on fossil fuels.
–airplanes, cars, electrical power plants, paper,
plastic, rockets, steam engines, steel and
electric lights.
• 85% of energy met by fossil fuels.
• 23 tonnes of plants to produce each litre of
petrol you pump into your ute.
29. Climate change economics
for entrepreneurs
• Entrepreneurs need to know some basic
principles of climate change economics
• The field looks at how economic activity (
including entrepreneurial activity) that
affects the environment.
• Climate change economics seeks
–economic solutions to minimise harm to the
environment
–allowing maximum economic benefit
Example: Pollution as
market failure.
30. Climate change economics --
Tragedy of the commons
• Examples: Resource-based problems over-
irrigation, habitat destruction, over-fishing and
traffic congestion.
• Each shepherd wants to put as many sheep as
possible onto common land even if the land is
damaged as a result.
• Where there is potential for individual profit,
activity must be regulated.
31. Climate change economics --
Incentives
• Sometimes entrepreneurs are
unable to act sustainably
• Why should they take costly
sustainable actions when the
competitors do not?
• Entrepreneurial sustainability may
be punished rather than rewarded.
32. Climate change economics --
Prisoner’s Dilemma
• Two suspects are arrested by the
police, who have weak cases
against both of them.
• They hold the suspects in
separate cells and tell each that if
they inform on the other, they will
get leniency.
• If not, they are told, they will get
harsh prison terms.
33. Climate change economics --
Peak resource theory
• A ‘peak curve’ applies to any
resource that can be
harvested faster than it can be
replaced.
–2012: Peak oil
–2025: Peak water
–2025: Peak coal
–2020: Peak gas
–2035: Peak uranium
34. • Entrepreneurs must evaluate economic impact of their
activities.
• Physical risks: Weather-related events
• Reputation risks: Threats to a company's brand value.
• Competition risks: If companies do not take measures
to reduce climate risks they are competitively
disadvantaged.
• Regulatory risks: Climate change seen as serious
market failure
• Litigation risks: Greater regulation leads to more
litigation.
Climate change economics --
Risk analysis
35. • A 50-year-old Bangladeshi grandmother on
the coastline, with a life expectancy of 37,
has a slender chance of living to 2050. But
the sea is rising.
• She is more likely to ignore risks of the sea
rise.
• But her 10-year-old granddaughter today
has a life expectancy of 61 years.
Climate change economics --
Social discount rate
36. • The Brundtland Report (1987)
–Sustainability defined as ‘Meeting the needs
of the present generation without
compromising the ability of future
generations to meet their needs’.
–Markets are both the cause and the potential
solution to the sustainability puzzle
–For the entrepreneur, opportunities are
inherent in market failure.
Entrepreneurial ecology:
Sustainability defined
37. Entrepreneurial ecology:
Sustainable entrepreneurship
Industrial entrepreneurship (IE)
• Extraction of scarce resources with little
regard to their replenishment
• Global distribution without regard to
distance
• Rampant construction without regard to
environmental consequences
• No concern for net improvement in the
physical and social universes.
• Waste was not a design consideration.
Sustainable entrepreneurship (SE)
• Think ecologically about the biosphere
• Consider the waste embodied in products
• Take into account the living dimension of
the products and services that we produce.
• Business opportunities to end poverty and
hunger, improve health and education,
make cities more sustainable, combat
climate change, and protect oceans and
forests.
38. Entrepreneurial ecology:
Theoretical frameworks
• Natural capitalism
• Cradle-to-cradle design
• Economic gardening
• The Natural Step
• Industrial metabolism
• Natural advantage of nations
• Lean manufacturing
• Ecology of commerce
• Triple Helix
• University-based
entrepreneurship ecosystem
• A framework helps us identify
relationships.
• Field of sustainable
entrepreneurship is just
developing.
• Candidate frameworks that bring
entrepreneurship into the realm
of climate change theory.
40. Biosphere
Sociosphere
Econosphere
• Planet
• Climate & energy
• Water, soil, flora & fauna
• Atmosphere & topography
• People
• Human enterprise
• Knowledge, labour & capital
• Opportunity and value
• Profit
• Entrepreneurs operate here
• Business environment
• Entrepreneurial factor
conditions
(+)
Negative
entrepre-
neurship
Positive
entrepre-
neurship
(0)
(-)
How are
entrepreneurs
connected to
Earth, people
and the
economy
connected?
41. Increasing demand
Demand for resources and eco-system
services
Declining supply
Resources and ecosystem services
Sustainable supply
Sustainable demand
Sustainable
future
Margin for action
is narrowing
The present The future
Entrepreneurs
must help us
travel
through
the ‘funnel’
Entrepreneurial ecology:
Sustainable future
42. Key concepts
(close your books)
1. How can entrepreneurs turn
climate change into an
opportunity?
2. What does ‘sustainable
entrepreneurship’ mean?
?
43. Key concepts
• Entrepreneurship and crisis
–Entrepreneurs help us into crisis, and are the key to addressing the crisis.
• Entrepreneurship and climate change
–Potential for positive and negative impacts
–A key role in addressing population, water, biodiversity, food and energy.
• Entrepreneurial ecology
–Improvement through sustainable entrepreneurship.
