What does the business landscape look like in a healthier world? 

The European Central Bank noted that while governments and public institutions are taking “extraordinary steps” to minimise the impact of the crisis on individuals, businesses and society, we cannot address this issue without also tackling the climate crisis. And it’s right. 

“It is essential that both short-term and long-term measures implemented by the ECB now are designed to both minimise the economic impacts of the coronavirus pandemic, and to achieve the EU’s climate commitments,” it said.

According to the ECB, in order for this to happen, there must be a structural realignment of the financial sector with the challenges and risks posed by climate change. 

What will this green recovery look like for bioeconomy businesses? We should see increased access to investment from both public and private sources, which would translate into more private funding for companies innovating in the bioeconomy. 

The initial signs are positive. Many high profile, high net worth individuals were already investing in sustainable companies before the pandemic hit – this trend is only going to snowball. Within family offices, there is a growing understanding of the economic rationale for investing in safeguarding the planet for future generations. Overall, capital is becoming more patient and looking at the longer term opportunity rather than just short terms wins. 

The Bill & Melinda Gates Foundation, for example, has the overarching aim of reducing inequality. One of its focuses is to invest in sustainable agricultural productivity in Saharan Africa and South Asia. 

There’s also the EU’s €750 billion Recovery Fund. While this fund is not specifically allocated to bioeconomy businesses, it will grant funding to companies in this space. 

Looking to the US, we see growing momentum. As investment from public and private sources grows, policy will likely follow due to increasing economic rationale and voter awareness around green issues. Given the size and influence of the US, this would be a significant win for movement towards a healthier world.

What we can learn from the failings of the bioeconomy industry

Around ten years ago, innovators in the bioeconomy became excited about a slew of biotech projects that were gaining ground – many of them in the biofuel sector. A few years on, many of these innovative biotech 1.0 companies have disappeared. 

There was New Hampshire biofuel company Mascoma Corporation which produced cellulosic ethanol made from wood and switchgrass, which was bought out in 2014. From Canada came sustainable chemicals business BioAmber, which went under in 2018. UK bio-based chemical firm Green Biologics wound down operations in 2019. Many other innovative organizations went the same way. 

As we re-focus on sustainability in the food supply chain, there are many learnings to be taken from the journeys of these pioneering companies to ensure today’s mission-driven businesses don’t meet the same unfortunate fate. 

Leaders of these companies typically over promised and under delivered to investors. They failed to find a way to make the technologies work in the economic landscape, and thus were unable to compete with more traditional industries.

With the benefit of hindsight, it’s clear there were many hurdles to commercialization – such as the high cost of production – that were not outlined at the time and ultimately led to their demise. There were other issues too. Production required a high level of power, which limited the environmental case for their existence. We also saw contamination issues; releasing GMO microbial strains into the environment could have a significant impact on ecosystems. These challenges meant many biotech companies fell down at the regulatory hurdle before they’d even considered mass uptake.

Looking at more recent success stories, however, there has been a shift in the way such products are manufactured. Companies are now relying much more heavily on CMOs to scale their process, rather than building their own facilities from the get go. This cuts the capital expenditure required in the early stages of investment and development, making for a much more attractive – and lower risk – proposition for investors. 

The legacy of the biotech 1.0 era is not just in economic learnings, however.

As these companies had to drive down production cost, they began using novel technologies around large scale fermentation development and synthetic biology. They looked at high throughput screening in order to identify the best performing microbial strains, and recombinant protein processing to genetically modify cells to help them perform better in fermentation. They also developed a number of AI and machine learning tools to test new strains and model new fermentation methods to try cut costs. 

The above innovations have all now been used in the development of alternative protein products that are created through fermentation. 

How can the bioeconomy contribute to a healthier world?

As the ECC puts it, the bioeconomy could pave the way to “a more innovative, resource efficient and competitive society that reconciles food security with the sustainable use of renewable resources for industrial purposes, while ensuring environmental protection.”

A successful bioeconomy would ensure food and nutrition security, manage natural resources sustainably, reduce dependence on non-renewable, unsustainable resources, mitigate and adapt to climate change, and strengthen competitiveness and create jobs. 

However, in order to work towards these goals, governments and public institutions must strengthen and scale-up bio-based sectors by unlocking investments and markets, rapidly deploy local bioeconomics, and better understand the ecological boundaries of the bioeconomy. 

The immediate need for the improvement of the current bioeconomy is clear when considering earth overshoot day. In 2016, the world had used a year’s worth of its resources by August 8th. By 2019, it had hit this worrying milestone by July 29th. With the world blowing its ecological budget earlier each year, something’s got to give. 

Conclusion: How can CEOs contribute to a green recovery?

There are three main actionable steps CEOs should achieve in order to contribute to a green recovery, and – ultimately – a healthier world. 

First, they must grow their companies and create demand from consumers before investing huge amounts in industrial processes. 

Secondly, they need to collaborate across the value chain, work with partners and multinationals, and research institutes to leverage existing resources and access to markets. 

Finally, CEOs should promote the vision of a healthier world through the company’s actions and by being a cheerleader for change.