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With an eye to global and eternal: how and why should startups get involved in the Sustainable Development Agenda

With an eye to global and eternal: how and why should startups get involved in the Sustainable Development Agenda
The first stage of the international program “Global Challenge — Artificial Intelligence for Sustainable Development Goals (SDGs)” by the Skolkovo Foundation was completed in August.
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02.10.2020

The first stage of the international program “Global Challenge — Artificial Intelligence for Sustainable Development Goals (SDGs)” by the Skolkovo Foundation was completed in August. The program provided an opportunity for the Russian technology-based companies to introduce their developments for export and get involved into the global agenda.

Sergey Dutov, Director of Business Development and Industrial Partners of the Skolkovo Foundation IT Cluster, spoke about the UN SDGs and the potential for the Russian startups to enter this market.

Sustainable development is a globally recognized term to describe economic, technical and social measures aimed at improving the overall life quality of the whole humanity. In 2011, UN defined and documented SDGs on a single paper with a prominent name “Transforming our World: The 2030 Agenda for Sustainable Development”.

UN has outlined 17 SDGs and 169 Targets. Among them are no poverty and zero hunger, quality education, decent work and economic growth, climate action, responsible consumption and production and more.

“As a third of time before the deadline announced by UN has elapsed, SDGs became a hot topic for discussions.”

National governments, charity organizations and foundations support numerous programs aimed at achieving the global goals to transform our world. Today venture capital market and major players are interested in finding promising projects in the field of sustainable development.

It is highly likely that those startups will become the new unicorns within the next decade.

Prospects of SDGs market

SDGs topics are popular today among investors, and it is illustrated the best by the example of Jeff Bezos’s Foundation (Jeff Bezos is the founder of Amazon). With $2 billion, the Climate Pledge Fund, acting as a venture investor in exchange for a stake in the project, provides support to environmentally focused hi-tech startups.

“This means that major players in this field are acting not as charity givers, but as usual investors with specific focus. Nothing personal — SDGs are also business.”

ESG (Environment, Social, and Governance) is another important term in discussing sustainability projects. This abbreviation stands for the three major factors describing a responsible business: environmental, social and managerial (governance). Businesses that adhere to stringent ESG standards focus on environmental protection, corporate social issues and building relations with public authorities.

It has been proven that companies with high ESG ranking have higher yields on their securities, and larger national foundations build their investment strategy taking into account ESG factors when selecting the projects. According to PWC, the amount of capital in the responsible investments increases by one third every two years. In 2018, ESG capital was estimated as $ 30,683 billion.

Unfortunately, SDGs topic only remains the focus for the largest corporations and international organizations. Lack of support from larger companies makes it almost impossible for smaller businesses to increase their footprint within the UN SDGs. However, the projects addressing global sustainability issues have rather high commercial potential.

Business needs

In general, the major needs of large companies can be divided into several categories:

  • reducing impact (in the ideal case scenario — achieving net zero impact) on the environment as a result of the company’s operations;
  • improving the quality of life for the customers, users, employees, local communities;
  • initiatives transforming social habits towards SDGs.

All these areas have both commercial and investment potential. If we are talking about particular markets, where SDGs focused startups look most promising, here some priority areas that can be defined. The Skolkovo Foundation has analysed around 300 projects and acquired data on the most popular industries among SDGs focused startups.

The top three areas:

  • Smart city (15,6%);
  • Healthcare (14,4%);
  • Industrial (12,2%).

Through the prism of the UN’s SDGs, the following popular areas can be identified:

  • “Sustainable Cities and Communities”;
  • “Good Health and Well-being”;
  • “Industry, Innovation and Infrastructure” and “Responsible Consumption and Production”

Interestingly, up to this year in Russia the companies focused on the following three SDGs has demonstrated the most prominent progress: “Decent Work and Economic Growth”, “Quality Education”, and “Sustainable Cities and Communities”. However, this year we see the drastically increased interest towards healthcare issues for the obvious reasons.

How to find your niche and how to get started

If you have decided to launch a project to pursue global and eternal goals, think over the following aspects.

First, you cannot make a startup only to address the UN’s goals and agenda.

“As such, there is no SDGs market — this is a general concept, a framework, a language understood worldwide and at different corporate levels.”

SDGs focused projects are of a current interest globally. An organized startup by the students from the Far Eastern Federal University can become well known in California, if the offered technology offered helps to solve this state’s issues. It is a trans-boundary phenomenon, because Russian technologies can be introduced in any country thanks to SDGs, for example, the whale collision avoidance technologies can be applied by tanker owners. It does not matter what prevails: the animal safety or commercial benefits from good risk management.

SDGs should not also be measured in terms of too complicated and global targets. Sometimes, even minor, cute and insignificant from the first sight projects are suitable to achieve these goals. This year the technologies for animals have become the discovery among the program participants.

If we have learnt how to use effectively AI technologies for human diagnostics, why cannot we use the same technologies for treating dogs, cows, and whales? One of the projects, RocketSound, offers a solution for the analysis of the horse breathing audio to check the condition of the animal, who does not show any signs of illness. There is also a project by Hydrobionika that teaches a neural network called “Neurobelukha” by using the bio signals produced by sea mammals: this solution helps to reduce the possibility for the sea mammals to get trapped in the fishing nets.

SDGs in Russia has just started

Conscious human behavior, positive impact on the environment, and responsible business are important for motivation towards achieving SDGs.

There is also a formal aspect — the UN-level intergovernmental treaties, commitments by the development institutions, business associations, attention from media and many other stakeholders. No wonder that the latest topic for discussion among the world leaders in Davos was stakeholder capitalism. Thus, for large companies, especially public corporations, building their strategies around SDGs is a new normal.

In Russia, the SDGs market has its potential, but it can hardly compete with Europe, in particular, with the northern European countries. Here we see 100% correlation with the level of countries development and population life standards. In other words, until the Level 1 internal issues are not addressed, businesses are reluctant about investing in climate action.

However, we still have time before 2030, and eventually we all will have to deal with these issues.

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The ecosystem for global development
and interaction of Russian AI projects