Author: The Technology Executive Committee
Site of publication: United Nations Framework Convention on Climate Change
Type of publication: Report
Date of publication: November 2018
The need for innovation
The Paris Agreement and the 2030 Agenda for Sustainable Development both set out a vision of a low-carbon, climate-resilient and sustainable future for all. That vision needs to be urgently pursued. 2017 was the third warmest year on record, and the average global temperature is now almost 1 °C above the pre-industrial level. Climate change effects of ever greater intensity are being observed more and more frequently in all corners of the world, threatening the prospects of sustainable development. Under the Paris Agreement, countries have developed nationally determined contributions to the global response to climate change, national adaptation plans and mid-century strategies. Now, countries and the international community are focused on implementing them.
Technological innovation is a key catalyst of efforts to implement national climate action and realize the above-mentioned vision. The Paris Agreement explicitly refers in Article 10 to the need for such innovation. In the 2030 Agenda for Sustainable Development, technological innovation is mentioned under several of the Sustainable Development Goals, particularly goal 7 (affordable and clean energy), goal 8 (decent work and economic growth), goal 9 (industry, innovation and infrastructure) and goal 17 (partnerships for the goals).
Since 2015, the Technology Executive Committee has analyzed how we can accelerate and scale up technological innovation in order to achieve the purpose and goals of the Paris Agreement and the Sustainable Development Goals. The outcomes of its work are reflected in a series of publications on topics such as strengthening national systems of innovation and enhancing financing for climate technology research, development and demonstration. In 2018, it worked together with the Green Climate Fund and the Climate Technology Centre and Network to improve understanding of the role that incubators and accelerators can play in assisting entrepreneurs to innovate climate technologies. This has helped the Green Climate Fund to explore how it may support such incubators and accelerators. The work undertaken has also resulted in a publication by the three organizations titled Catalysing Finance for Incubators and Accelerators. This TEC Brief complements that publication by highlighting policies and measures that can help entrepreneur in innovating climate technologies.
What is an entrepreneur?
An entrepreneur is someone who transforms an idea into a product that is of practical use. In the field of technology, this generally means that the entrepreneur takes an invention and turns it into a technology that benefits and is used by society. However, the scope of an entrepreneur’s activities is much wider. An entrepreneur may devise and implement a new business model that uses existing technologies in innovative ways. An entrepreneur may also tailor an existing technology to the needs of a new market or community. Entrepreneurs are not inventors as such (although they can be). Rather, an entrepreneur is an individual who works on turning an invention into a product that meets the needs of certain users. Similarly, an entrepreneur is not a financier (although they can be that too). Rather, entrepreneurs develop a product they hope will prove attractive to investors and, consequently, secure their financial support. Thanks to this injection of capital, the entrepreneur is able to transform their prototype into a fully fledged product that is used on a broad scale. The above-mentioned activities may be undertaken by entrepreneurs as individuals or as a team of people engaged working together. Furthermore, entrepreneurs can pursue these activities under their own enterprise or as part of the operations of an existing company or organization.
There are many reasons why individuals engage in entrepreneurship. Being an entrepreneur is a profession and entrepreneurs thus generally seek to generate an income from the activities they undertake. However, entrepreneurs are often motivated by reasons beyond financial gain. For instance, recognition of their efforts and the prestige derived from this may be just as important, if not more so, as the economic benefits. Furthermore, entrepreneurs may wish to tackle specific social or environmental problems, such as creating jobs for women, lifting people out of poverty and responding to the challenge of climate change.
While entrepreneurs may innovate for a variety of reasons, they are inevitably engaging in a highrisk activity. Trial and error, often leading to failure, is an essential part of the process. Setbacks nonetheless often lead to the discovery of new solutions or solutions to problems different from those originally considered. The possibility of failure also means that not all entrepreneurs manage to achieve their objectives (whether these are financial gain, recognition or social or environmental solutions).
Encourage the entrepreneur
A key challenge that many developing countries face is how to establish a constant supply of capable local entrepreneurs. While enthusiasm for entrepreneurship will always exist, it is often the case that would-be entrepreneurs in developing countries end up working in other professions, since the risks associated with becoming an entrepreneur are too high. Societal pressure, the local culture and a lack of economic incentives can discourage such individuals from entrepreneurship. If they do decide to take the plunge, new entrepreneurs in developing countries often lack the education and skills that they would need to make effective use of the opportunities they have identified. Female entrepreneurs often have to contend with additional hurdles. Globally, women are underrepresented in this space.
The foundation for encouraging new entrepreneurs is the country’s entrepreneurial ecosystem, which can be defined as the set of “actors, institutions, social networks, and cultural values that produce and sustain entrepreneurial activity” (Roundy, Bradshaw and Brockman, 2018). In an entrepreneurial ecosystem, governments and relevant organizations do not target individual firms or sectors but whole groups of enterprises and entrepreneurs. They provide holistic, systemic support, reflecting the fact that the development of innovative solutions and their commercialization are the result of interaction and collaboration among a wide range of individuals and institutions. Hence, an entrepreneurial ecosystem is not a direct, top-down tool for the promotion of entrepreneurship, but a “complex adaptive system” that emerges from the “uncoordinated, semi-autonomous actions of individual agents”, in which governments work alongside other agents while shaping the institutional framework.
A healthy entrepreneurial ecosystem fulfils two major functions: it encourages individuals to embark on entrepreneurial activities and supports them as they engage in these (see also section 3). Such an environment motivates individuals to become entrepreneurs by providing them with incentives and a supportive culture, including access to education and training, infrastructure, sources of finance, and policies and regulations to provide assistance (such as a safety net when entrepreneurs inevitably fail). At the same time, an entrepreneurial ecosystem ensures that there are few ‘freeriders’, discouraging those without entrepreneurial talent from continuing their efforts in that direction.
In order to encourage local entrepreneurship, governments, with the support of the international community, may wish to:
- Promote opportunities for entrepreneurship through targeted communication and awareness programmes;
- Incentivize individuals to become entrepreneurs by introducing policies that support entrepreneurship and job creation. These may include tax cuts for small businesses, microfinancing, social protection programmes and regulatory reforms that make it easier to do business;
- Build the capacity of would-be entrepreneurs by implementing suitable education and training programmes;
- Encourage the participation of female entrepreneurs by introducing tailored niche support programmes;
- Enhance the infrastructure required for effective entrepreneurship (e.g. Internet access); • Promote international networking between local small and medium-sized enterprises and those of other countries.
- Non-governmental organizations are encouraged to highlight the opportunities for entrepreneurship that exist in different countries, regions and sectors. They could also showcase specific countries’ strengths and areas requiring improvement with regard to facilitating innovation (building on existing initiatives such as the Global Innovation Index);
- Interested potential entrepreneurs (and, more broadly, the private sector) are encouraged to contact local, subnational and national offices that promote entrepreneurship in order to gain a better understanding of relevant opportunities that are available to them.
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