2022 Tech Trends: Sustainability


Editor’s note: In a report titled 2022 Technology Trends and How They Impact Industry 4.0, Education, and Retail, a team of Orange Silicon Valley analysts with deep subject matter expertise looked at five key innovation trends and how these trends will affect the Industry 4.0, Education, and Retail sectors. This report – from Kevin Baker, David Martin, James Li, and Arpan Soparkar – is now being made available for our Orange Silicon Valley website readers in a series of five weekly articles.

This article examines Sustainability. Other articles in the series include the Metaverse (including XR/AR/VR); Data & AI (Artificial Intelligence); Future of Work; and Cloud/Edge Computing. Each section of the report includes success stories and promising startups that play into each trend. For additional questions or information, please email David Martin.

Trend 4: Sustainability

At the current rate of GHG (greenhouse gas) emissions, the world has ten years before global warming exceeds 1.5℃ above pre-industrial levels. With increasing transparency, public awareness, and data-driven actionable insights, industries across sectors are acting on green transition, with measurable results and defined timelines. Some major trends in the sustainability space include adoption of electric vehicles and plant-based foods, transition to clean energy sources and circular economy, investment in climate resilience infrastructure and climate-tech innovation, and lastly, systemic move towards sustainable supply chain and finances.

Vertical: Sustainability & Industry 4.0

Industry 4.0-related technologies pave the way for more transparent and sustainable business practices. By gathering and analyzing environmental data and data related to energy systems, these systems can be optimized for energy efficiency. Increasing efficiency in seemingly small ways at the most basic levels of infrastructure can have large impacts on large enterprises. For example, buildings are the source of 20% of greenhouse gas emissions, with 50% of those emissions attributable to the heating, ventilation, air, and cooling (HVAC) system. Relying on manual control of these systems leads to suboptimal usage of the systems, which can be improved with minimal intervention.

Example

A Quebec Holiday Inn hotel deployed AI-powered SaaS to reduce its energy consumption. Minimal equipment alterations were needed to reap the benefits of this technology. After simply replacing their thermostats with Wi-Fi thermostats, the SaaS provider used four algorithms aimed at optimizing the use of the hotel’s temperature control equipment according to the weather and zone-based energy demands of the system. After years of consuming consistent amounts of energy, this solution helped the hotel achieve energy savings of 34%. Key to this success was centralized control of the HVAC system, which allowed for holistic and continuous monitoring/adjustment.

Startups

BrainboxAI has a team comprised of experts in the fields of AI, data science, real estate, HVAC, and energy efficiency. Their AI HVAC technology studies how your building operates and analyzes the external factors to identify every potential improvement opportunity and then act on them.

Vertical: Sustainability & Education

With the ever destructive and pervasive effects of climate change in an increasingly warming world, the need for education on sustainability is growing quickly. Corporations are asked to offset their carbon footprints; consumers are switching to eco-friendly products, and governments are putting in regulations and incentives to decarbonize their economies. In this race against time, the list of companies accused of greenwashing is long and growing. Education about the most effective ways to sustainability hence is imperative. Many top universities are now offering courses and certifications and even graduate-level majors in sustainability practices. After creating a soup of impact metrics frameworks such as GIIRS, UNSDG, and B-corp certification, the world increasingly recognizes the need for uniform standards.

Example

One major success story on the shareholder education – and activism – front took place in June 2021, when Engine No.1, a relatively unknown tiny startup formed by industry veterans, through its partnerships with CalPERS and other large funds, toppled three board members of Exxon Mobil while holding only 0.02% of its shares. In other wins that marked ESG going mainstream, Aperio, and Sphera, companies offering sustainability-focused data and investment platforms, got acquired by BlackRock and Blackstone, respectively, each for over $1B.

Startups

Amalgamated Bank, Aspiration, Atmos Financial, and Carbon Collective are some of the new startups educating and enabling consumers on sustainable finances. Joro, an Oakland, CA-based startup enables people to manage their carbon footprint, develop a climate action practice, and build a community to tackle this biggest crisis of our generation.

Vertical: Sustainability & Retail

Globally, the second-hand goods market (aka circular shopping) is growing exponentially from $36B USD to $77B USD in 2025, according to ThredUp Resale Report. In 2020, 33M US residents bought second-hand clothes for the first time, and 76% stated they would increase their spending on second-hand clothes in the future.

Consumers are demanding mission-driven organizations that highlight their sustainable practices. 33% of consumers care more about wearing sustainable clothing than before the pandemic, and 40% of millennials and Gen Z shopped second-hand clothing or accessories in 2020.

Thirty-six billion items of clothing are thrown away each year in the United States. Reselling massively reduces the environmental impact of each piece of clothing: the carbon emissions drop 82% to 1.7 kg of CO2; the energy consumption drops 88% to 4.8 kWh of energy, and water use drops 98% to 4.5 liters of water. (Source)

In 2021, 1 in 3 retail executives stated that resale is becoming “table stakes” for retailers.

Use cases
  • Returns: Companies understand that returns are part of the purchasing experience with their brands, and a hassle-free experience improves brand loyalty. Many US shoppers buy two sizes of an item and return the one that doesn’t fit.
  • Second-hand goods marketplaces: Depending on the margin and logistics of returning purchases, returns may be burned, sent to landfills, returned to the manufacturer, or pushed to lower price retailers that specialize in selling returned products.
  • 1st party resale / recommerce: Brands now recognize that millennial and Gen Z consumers want to buy gently used products and clothes. These companies see many benefits to this, including additional revenue streams, new customer segments, and making their brand more sustainable both in reality and in the eyes of their customers.
Example

The outdoor wear brand Arc’teryx chose to work with Trove to launch their “Used Gear” to buy back gently used clothing and resell it directly to consumers through their website. As a comprehensive white-label resale solution, Trove manages the buyback, authentication, photographing, pricing, listing, and shipping, as well as real-time analytics and business insights. For Arc’teryx, the program had to align with its values, be self-funding, and be margin accretive. “Used Gear launched in 2019 and processed nearly 5000 items in the first six months. In 2020, Used Gear doubled the number of accepted trade-ins.” For Arc’teryx, the program is profitable, and they have seen an increase in customer retention and loyalty. Over 18 months, 20% of customers have traded in items for resale. (Source)

Startups

Companies in the returns space include Narvar, Optoro, and Happy Returns. Narvar’s customers include On, Sonos, Gap, Home Depot, and Dyson.

Trove builds white-label technology and end-to-end operations that power circular shopping for premium and luxury brands. Some of their customers include Patagonia, Lululemon, Levi’s, REI, and Cotopaxi.