Platforms aiming for net zero

In our globalised world, shared issues demand collective action – perhaps none more urgently than the climate crisis.

Jennifer Schenker, Founder & Editor-in-Chief, The Innovator, Lucie Basch, Chief Expansion Officer and Co-Founder of Too Good to Go, Peter Windischhofer, CEO and Co-Founder of Refurbed and Martí Escurell, Managing Director at Bonsai Partners discussed the role of sustainable platforms at the Platform Leaders event on the 7th of June 2022.

As a judge for the World Economic Forum Tech Pioneers, Jennifer Schenker is aware of the scope of what needs to be done: “The answer is: a lot.”

Achieving net zero requires a change in consumption, adds Jennifer. “Looking at today’s consumption levels, sustaining our current growth trajectory would require the ecological resources of 2.3 planets by 2050.” However, Jennifer offers an alternative: “The good news is that it’s possible to decouple our world’s growth from the consumption of the Earth’s resources by shifting from a linear ‘take, make, waste’ economy to a circular ‘reduce, reuse, recycle’ one.”

More good news: a crop of sustainably-minded platforms are working towards that future.

Reduce food waste – and create value

For Lucie Basch, Chief Expansion Officer and Co-Founder of Too Good To Go, the need to actively combat food waste was clear. “Today, we throw away 40% of the food we produce. […] That represents 10% of greenhouse gas emissions, and even economically speaking, it makes no sense to throw away $1.3 trillion of food every year.”

In Lucie’s view, it simply made sense to build technology that would ‘connect the right people at the right time and help them to save food together.’ Too Good To Go’s platform allows restaurants and supermarkets to offer their excess food supply to consumers at reduced prices. The numbers are convincing: “We save more than 300,000 meals every day from the trash, and this actually gathers a community of close to 60 million consumers and 150,000 stores,” says Lucie.

She also underlines that Too Good To Go’s impact-driven approach does not come at the expense of their bottom line. “Our business model is really aligned with our ecological impact. For every meal we save, we take roughly $1 or €1,” she explains. “Since the start, we’ve saved close to 150 million meals. Therefore, we also generated more than €150 million in revenue. […] It’s possible to build a profitable company while aiming for impact.”

A multi-sided marketplace for the circular economy

Linear consumption is also being disrupted by Refurbed, a multi-sided marketplace for high-quality refurbished products. Peter Windischhofer, Refurbed’s CEO and Co-Founder, shares the problem that they originally set out to solve: “Every household has between 8 and 10 old electronic devices lying around not being used – and that’s crazy.” By connecting consumers and refurbishers, the platform is extending the shelf-life of high-consumption products.

Since launching five years ago, Refurbed has expanded beyond electronics and into sports equipment, furniture and fashion. Their long-term goal is to be a trusted consumer partner for sustainable products. “It’s very complicated for consumers to understand [what] is really sustainable [and what] is being greenwashed,” Peter says.

In Refurbed’s model, circularity is also not unidirectional. “We built this platform in both ways. So, consumers can also sell back old devices to refurbishers,” says Peter. “Our goal is to make it as easy as possible for a consumer to live sustainably, because unfortunately we believe consumption will not stop – you have to make consumption sustainable.”

ESG investments on the rise

To enable their mission, some companies are turning to venture capital and private equity. Martí Escursell, Managing Director at Bonsai Partners, has seen the profile of ESG investment rise steadily in recent years. He describes Bonsai Partners as focused on software but ‘agnostic’ in terms of industry or sector, yet ESG companies are proving themselves to be good investments. Bonsai Partners participated in Refurbed’s Series A funding round in 2020 and joined for the Series B round in summer 2021. “The investment thesis that we had when we invested in Refurbed, in the end, was the same as we have in any other investment,” Martí says.

In the more than 20 years since Bonsai Partners raised its first fund, Marti has seen ESG investments growing both as a share of their portfolio and in terms of valuation. “Comparing this last fund with our former track record, the percentage of investment in ESG companies has grown from 18% to slightly over 50%,” Marti shares. However, these ESG investments represent 70% of the fair value of Bonsai’s portfolio. “And actually, the multiple of the ESG investments is a bit over two times bigger than the multiple of the non-ESG investments,” he adds.”There are many other components but in a nutshell, clearly, the performance of the ESG investments is pretty good within our portfolio.”

Balancing investment with impact

Other companies may be hesitant to raise capital. Lucie shares the concerns that Too Good To Go had before they found the right investment partner: “We were worried [that VCs] would change our DNA or not respect our values or our ambition to truly change the world.” As she notes, their metrics might have seemed unorthodox to traditional investors: “Our most important KPI since the start has been – and is still today – the number of meals we save every day.” However, Lucie perceives a shift taking place. “Recently, we’ve seen more and more interest from VCs to actually do a full due diligence process, not only a financial one, and really look at our full impact on the world and in our society.”

This, Lucie believes, is the way forward. “That’s the future of the financial world: reinventing the KPIs of tomorrow to define what value is in a holistic view,” she says.

The challenges of scaling sustainability 

As for many platforms, maintaining their value proposition and building trust with users are key topics for Refurbed. They solve this with oversight algorithms to monitor customer satisfaction. “We built a lot of technology that automatically checks the quality of the products, not by physically touching the products, but by analysing the kind of messages and reviews that our merchants get,” Peter explains. Refurbed’s search and sorting algorithms then prioritise the highest quality products, which incentivises merchants to improve their quality rating. This allows Refurbed to quickly scale within existing verticals and expand to new ones.

Meanwhile, Too Good To Go’s main expansion obstacle is a familiar one for many businesses: supply constraints. According to Lucie, close to 90% of their existing supply is being utilised daily, and they have the capacity to onboard as many as 150,000 additional suppliers. For Lucie and her team, it’s a matter of getting the ear of the right decision-maker at a potential supplier and convincing them of the value in joining the platform. “People are busy,” she smiles. “Once we have them, then it’s fairly easy to sell, because there are no cons to saving your food, generating a new consumer flow and showing that your brand is doing the right thing, sustainably speaking.”

Peter sees the importance of messaging on the demand side, as well. “We have very universal products – an iPhone is the same in France, Germany or Sweden. [But] consumer motives are very different,” he points out. “Especially in the Nordics, Germany and Austria, sustainability is very important for consumers.” In Italy or in Eastern European markets, consumer priorities are different, which creates an interesting challenge for Refurbed as they eye further market expansion. “We have to adjust our messaging to attract different types of consumers in different markets,” says Peter.

Opportunities for regulators to support sustainable platforms

Both Peter and Lucie believe that regulation can play a role in supporting sustainable platforms. 

Peter highlights the pain points for many consumers: “Most products out there that are sustainable are more expensive than a conventional alternative. […] That’s ultimately one of the biggest barriers, I think, to sustainable consumption.” He recommends that regulation focus where everyone feels the difference: their wallets. “I believe that there has to be a different tax machine in place that massively incentivises people through taxes, cheaper prices, or lower VAT on sustainable products,” he says.

Lucie sees opportunities closer at hand: “For me, the private sector is the most efficient vehicle for driving impact.” She shares an example of a date labelling project that Too Good To Go conducted. After aligning with major manufacturers and supermarkets, they drafted recommendations for best practices that could be implemented to reduce food waste. Then, these results were presented to local, national and European regulatory bodies. In Lucie’s view, this is an example of how innovation can begin in the private sector and become codified by regulators. “We can pilot many initiatives, prove the results, and then [regulators] are here to roll it out and make sure that the best practices become the norms,” she says.

The future of sustainable platforms is…

Facing the future, Martí, Lucie and Peter believe that innovative, sustainable platforms can inspire other businesses. Martí says: “For me, it’s about the traceability of the items sold, which brings credibility.”

Lucie remains focused on impact. “The future of sustainable platforms is about refining the way we measure performance and having new KPIs to define what a good platform is,” she says. “Those need to be linked with our environmental and social impact.”

Again, Peter believes in a broad-spectrum approach. “It’s about building a holistic product offering for consumers. Sustainability has to be the foundation, but it has to meet all the other elements of customer expectations: price, quality, convenience. If you, as a business, can bring value to all of these, then you have a very bright future.”

To go further

This panel with Jennifer Schenker, Lucie Basch, Peter Windischhofer and Martí Escurell, was part of the Platform Leaders event organised by Launchworks & Co on the 7th of June 2022 (full list of speakers and agenda). To watch the full event, play the video below.