There is no single method to achieve the UN’s sustainable development goals (SDGs). In the same way, there is no single actor that can allow us to reach our social, environmental and economic aims. There are, however, many small actions by many different actors that are all pieces of the puzzle, fitting together to create the final picture. Social innovation offers a way for these many different puzzle pieces to fit together. This article will focus on one such social innovation, sustainable tech transfer from one country to another.
Problem: The uneven distribution of deployed tech holds back developing nations, and makes it harder for them to achieve the SDGs
Technology has long been a major driver of global development. Agricultural technology in Mesopotamia and Peru circa 10,000 years ago allowed humans to move from being hunter-gatherers to settling in villages and towns and to the founding of civilisation. In turn, the advent of watermills for textile and food processing in the 1700s decoupled productivity from labour, allowing humanity to move away from a reliance on the absolute majority of people growing food, to having time for many people to move into professions such as doctors, engineers and scientists. The growth in these professions then improved our health, our infrastructure and our understanding of the world around us.
Each technological revolution has led to the betterment of human lives or, that is, of some human lives. As is often attributed to William Gibson, a science fiction author, ‘the future is already here, it is just not evenly distributed yet’. In his seminal work Neuromancer, Gibson describes a world where a few elites have it all – luxury, good health – and the poor live lives that are as bad as ours are now. As ever, the statement of a futurist describes both the present and past. The steam revolution in the UK enabled the expansion of the professional classes. It also led to tens of thousands in Britain living in miserable squalor in cities, and to millions more being colonised by the former’s empire. Those who had the technology benefited, while those who did not suffered.
This trend has continued. With each revolution – steam, oil, telecommunications – the groups that own and use the technologies live better lives through higher income, reduction in disease and better physical and mental health. These benefits are clearly evident in the US, Europe or Japan where living standards are, according to a world population review, high relative to the global average. This is less the case across most of Africa or South Asia, where the same technological advances have not been as widely deployed, and poverty is still rampant in many areas. A core requirement to achieve the sustainable development goals is for nations to deploy the latest technologies to those individuals who lack it and need it most.
Solution: Deploy technology that achieves SDGs evenly between nations
Of course, not all development is sustainable development. To allow less developed countries to develop sustainably they need to deploy technologies to improve their cities and transportation, food and agriculture, education and learning, health and well-being, and energy and resources. These technologies include solar PV and wind turbines to produce renewable energy, waste management technologies,
including those for recycling municipal waste and to move waste more efficiently from the point of disposal to reuse, investments in new crops and planting methods, such as with robotics and remote monitoring to both increase yield per farm and reduce agricultural pollution, and in the latest drugs and medical deployment methods for diseases such as HIV and malaria.
Technology use is a two-step process. As demonstrated by Carlota Perez in her book Technological Revolutions and Financial Capital, the first step is the research and development undertaken at universities and within businesses that create a new technology. The second step is the wide-scale deployment of that technology for and by the end users. Individuals or institutions that performed the R&D own the rights to sell and deploy the technology. If a technology is developed in one country, it must be transferred to another country to benefit them. This process of tech transfer, transferring the knowledge of technology from one entity to another, was defined by the United Nations Industrial Development Organisation as technology transfer in 2004.
I have identified three broad methods of tech transfer: 1) a company that owns a technology can enter a new market, 2) the rights to use the technology can be purchased or rented by a second company through reseller rights, 3) a company in the developing country can develop a similar technology that does not infringe on the patent of the first company.
Who: Private equity holds the key to deploying technology for sustainable development
Key actors in tech transfer are private equity investors. These investors can provide the capital for a business to make the shift from selling a technology to a single customer, to selling it to a million customers. Unlike most funds, whose activities are limited to investments in public markets, private equity firms invest solely in non-listed companies, or to take listed companies private, and can reach parts of the economy that other investors cannot. One category of private equity investors, namely growth investors and venture capitalists, focus on investing in small firms and growing them. When these small firms sell solar PV or a new agricultural product then the growth results in the deployment of the new technology.
Of course, there is always the question of why private equity investors deploy sustainable technology through tech transfers. In this case, there is a simple answer: To make money. If a better technology exists in the UK market than the one being used in China, then financing the entry of one of the businesses in the industry to move to China and sell goods there increases the size of their potential market from 60 million people to 1.4 billion people.
Earth Capital is a UK-headquartered private equity investor that exemplifies this investment approach. The firm has followed a growth investment strategy, and in their own terms act like a team of industrialists. They invest in growing firms with strong sustainability credentials and assist them to expand and deploy their solutions. Earth capital has its own in-house tool, the Earth Dividend, to assess the sustainability of the firms they invest in. On 19th December 2019, Earth Capital signed a joint venture with Nansha Financial Holdings and iGreenBank to establish an international green technology innovation base in Guangdong, as well as an industrial development fund to finance green tech transfer. This is the second initiative of this type that Earth Capital has undertaken in China, the first being in Shangdong Province. The activities are at an early stage, but the potential is vast. China has developed rapidly, but in many key areas, such as agricultural technology, it still lags behind the West. This transfer has the potential to positively impact 1.4 billion people while also reaping huge rewards for Earth Capital and the firms they invest in.
Recommendations to ensure that tech transfer results in sustainable development
To achieve the SDGs faster, we need more tech transfer. For this we need more investors such as Earth Capital to finance the transfer of sustainable technology to the regions that most need it. We also need to
ensure that the transfer of technology is done in such a way that does not create new inequalities as described by William Gibson. To achieve this tech transfer investors need to work with social innovators to ensure that not only those with ready resources get access to the new technologies, but also those at the bottom of the income pyramid.
Tech transfer investors need to work closely with social innovators that offer one of the following two approaches. First, actors helping those without the resources to purchase new solutions through community crowdfunding. These comprise banks such as Triodos, whose crowdfunding platform creates direct investment opportunities with business, charities and social enterprises, which will use the money to deploy sustainable solutions, such as hydroelectric technology in a community in York, UK. Often, any new international endeavour lacks knowledge of the communities they are working with, and of the specific cultural significance of local habitats. For this reason, local governments and charities are the second set of actors that tech transfer investors should ensure are involved in initiatives. These can provide valuable expertise to ensure local communities or areas of the environment will not be damaged.
Sebastian is an industry analyst providing growth advice for firms that offer digital solutions to tackle industrial risks, improve safety and reduce environmental pollution. He works with investors, solution providers and end users to gain the most value from their investments. Prior to joining Verdantix, Sebastian worked for Trucost, a division of S&P Dow Jones Indices, and held positions in China, Brunei and Kenya. Sebastian holds an MSc Environmental Technology from Imperial College London.
Sebastian has co-founded Entelechy, a boutique advisory firm, to help social enterprises grow through finding new ways to access capital. Current activities focus on firms in the UK, China and Kenya.
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