Innovation Institute

What Green Innovation Means for Environmental, Social and Governance

There's a lot of buzz around "green innovation," and for a good reason. It can mean big things for the environment, social responsibility, and the future of our economy. But what does it mean? And why should we care? In this article, we'll explore those questions and more as we take a closer look at green innovation and what it could mean for ESG investing. Stay tuned!

What is green innovation?

At its core, green innovation is about developing new technologies and processes that are environmentally friendly and sustainable. This could mean anything from developing a new renewable energy source to creating a more efficient way to recycle materials. Businesses, governments, and even individual consumers can all play a role in green innovation.

Green innovation is also an essential environmental, social, and governance (ESG) consideration for investors. ESG investing is a type of investment that considers environmental, social, and governance factors when making decisions. This approach to investing studies the financial performance of a company and its impact on society and the environment.

It has grown in popularity in recent years as more and more investors look to put their money into businesses that are not only profitable but also have a positive impact on the world.

Green innovation in society

As of now, green innovation is still in its early stages. But there are already several examples of how it is making a positive impact on society.

Sustainability in commerce

One of the most obvious places green innovation influences is in the world of commerce. As consumers become more aware of their buying habits' environmental and social impacts, businesses are starting to take notice. A recent First Insight study reported that Gen Z consumers (those aged 18-24) are willing to pay up to 10% more for products from sustainable brands. [1]

This shift in consumer behavior is leading businesses to re-evaluate their supply chains and production processes. Many are investing in green innovation to make their products more sustainable and appeal to eco-conscious consumers. Even big businesses like Walmart are getting on board, with the company announcing a goal to become a zero-emissions business by 2040.

They plan to harvest renewable energy to power all of their stores, invest in electric vehicles, and work with suppliers to reduce emissions throughout their supply chains. [2]

Green engineering

Green engineering is another area where green innovation has a significant impact. This type of engineering focuses on developing technologies and processes that are environmentally friendly. It uses a holistic approach to problem-solving that considers a project's environmental and human impacts.

The principles of green engineering are a set of guidelines that engineers can use to ensure their projects are as sustainable as possible. [3] Developed by Paul Anastas and Julie Zimmerman, these principles include:

  • Inherent Rather Than Circumstantial
  • Prevention Instead of Treatment
  • Design for Separation
  • Maximize Efficiency
  • Output-Pulled Versus Input-Pushed
  • Conserve Complexity
  • Durability Rather Than Immortality
  • Meet Need, Minimize Excess
  • Minimize Material Diversity
  • Integrate Material and Energy Flows
  • Design for Commercial "Afterlife"
  • Renewable Rather than Depleting

One example of green engineering is biodegradable packaging. This type of packaging is made from materials that can be broken down by microbes, making it much easier to recycle or compost. Plastic is still the most common type of packaging, ending up in landfills or the ocean, where it can cause environmental damage. [4]

The food industry is one of the biggest users of packaging, especially since the pandemic began, and takeout and delivery meals have become more popular. But some companies are beginning to experiment with alternatives to plastic. McDonald's, for example, is testing out paper straws in some of its restaurants. If successful, the company plans to roll out paper straws globally. 

Green innovation in governance

While businesses are doing their part to reduce their environmental impact, government agencies must continue to develop policies that will further support and encourage green innovation. Recent years have seen an increase in government initiatives aimed at promoting sustainability.

In 2018, the European Union introduced a new directive that requires member states to reduce their greenhouse gas emissions by at least 55% by 2030, according to the Paris Agreement. This directive aims to prevent global warming from raising the planet's temperature by more than 2 degrees Celsius. [4]

The directive will require member states to increase their use of renewable energy, improve energy efficiency, and promote sustainable transport. The EU has set up a fund to support green innovation projects to meet these goals.

Transportation industry

Speaking of sustainable transport, the transportation industry is one of the most polluting industries in the world. It's no secret that cars, trucks, and planes produce a lot of emissions. In fact, transportation is responsible for about a quarter of all greenhouse gas emissions in the US. [6]

As a result, many countries have been working on developing more environmentally friendly modes of transportation. Of course, the electric car comes to mind, with companies like Tesla spearheading this transition. Most major automakers now offer at least one electric vehicle model, and many more are on the way. Mercedes, for example, will offer an electric version of every model in its lineup by 2025. [7]

This comes as many government bodies plan to outright ban the sale of new gasoline and diesel cars. In Canada, the Trudeau government has announced that it will ban the sale of new gas and diesel cars by 2035. [8]

Digital measures

The UK government recognizes the environmental, social, and financial benefits from

leaner, greener operations, estate management and procurement. The Greening Government Commitments (GGCs) set out the actions the UK government departments and their partner organisations will take to reduce their impacts on the environment in the period 2021 to 2025. And, both the US and Canada have also combined forces in 2021 to launch the Greening Government Initiative [9]. This measure enables governments from around the world to share information and practices on how they are reducing their environmental impact. [10]


It's clear that green innovation is becoming more and more important, both in the private and public sectors. As the world becomes more aware of the need to reduce our environmental impact, we can expect to see even more innovative solutions being developed.

We're seeing fleets of electric vehicles being developed, new sustainable packaging materials being created, and government policies being implemented to encourage green innovation. ESG investing has also seen a surge in popularity, as more and more people want to invest their money in companies working to make a difference.

It's safe to say that green innovation is here to stay, and we can only hope it picks up even more steam in the coming years.








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