🍃Sustainability Startups Edition

Hi 🖐,

While in Costa Rica, I had the opportunity to talk to founders of three very different startups there that are moving sustainability forward and I wanted to share some of the conversations with you (I will share the regular Top10 edition later this week). It was interesting to see the commonalities on how they have gained traction including educating consumers and clients, telling stories, leveraging past experiences, but also how their experiences are applicable for sustainability professionals and startup founders anywhere.

1. Dosmil50 - supplying high performance biodegradable and compostable packaging

2. Susty - platform to generate company sustainability reports and manage KPIs in any certification, standard or award

3. Theobroma Cacao - producing specialty, single-origin chocolate

Here are some highlights from these conversations! 👇

Jose Gonzalez, Founder of Dosmil50, supplying high performance biodegradable and compostable packaging

• Why composting is so important: “about 15% of methane emissions come from landfills. When organic waste arrives and layers are placed on top, what is below is deprived of oxygen, which causes an anaerobic fermentation and produces methane which is 20-26 times more powerful than CO2 in causing the greenhouse effect.

• Impact focus: “At Dosmil50 we are strategic in offering compostable packaging in areas with very low recycling rates: materials that have many layers or that have organic residues. For recycling these materials are contaminated and not usable, but for composting it is raw material. In these cases, composting can be the cheapest option to manage that waste.”

• Value proposition: “it is not just an issue of packaging degradation, but of maintaining the food fresh and reducing food waste. My packaging offerings cost 3 times more than normal plastic but that's only 10% of the cost of the product, and if that's going to give me 4 more days of shelf life on a food product that only has 11 days of shelf life, that's money. At that point, the price of material becomes secondary, and the main purchase intention from companies comes from the functionality of the packaging. In some cases, we are becoming advisers to these companies as suppliers, advising them on what materials to use and how”.

• Educating and engaging consumers: “part of what we are beginning to see is that there is too much greenwashing with packaging that confuses consumers: for example, a packaging can say that it is biodegradable but in how long? In what conditions? It may be in 100, 1000 years, it is not known. As part of our packaging, we are including a QR code to educate the consumer on how to compost at home (see image below). This also gives the brand the opportunity to interact with the consumer”

• Client engagement: “To successfully implement in companies, it helps a lot when there is already a person in charge of sustainability, because if there is not, we are going to compete on price. For prospects, you have to gain their trust and educate them, and possibly have a product trial. When the customer understands the value and is involved, adoption at scale occurs much faster.”

• Finding the right client and being nimble: “one of our clients, Automercados, is a brand very focused on added value, on sustainability, with highly educated clients, and with a lot of pressure regarding sustainability. People tell them on social media: ‘why are you using so much plastic?’ With them we started a project in which we placed bioplastic collectors from our packaging at 3 points of sale to take them to composting stations. With the pilot we showed that it can be done and we put together the project at Dosmil50 for only USD4000”.

• Circularity requires a complete solution: “it is not only about choosing the material that degrades the fastest, but also the one that supports all the technical needs of a production and distribution chain. The perfect material does not exist, every material has a carbon footprint and material degradation is only 20-30% of the solution. It must be accompanied by a strategy on how to build a circular economy.”

• Alliances and cross-stakeholder collaborations to drive change: “for composting, we are looking for alliances since we have shown that the packaging is compostable, but now there are other specialized companies that can put the packaging into their composting network and we can all share strategies to channel compostable materials to the right place. Interactions between government, industry and academia are also emerging. Costa Rica is looking for ways to give support to private industry on sustainability issues. For example, the Food Industry Chamber of Commerce is forming a sustainability committee and will be a link with the government on legislation, labeling, etc. Alliances will be key in delivering on the circularity of packaging”.-o-

Esteban Echavarria, Co-founder/CMO of Susty, platform to generate company sustainability reports and manage KPIs in any certification, standard or award

• The why: “for me, having a startup in sustainability is more than just about making money, it is raising the level of awareness under a new social and environmental responsibility. Sustainability is the most serious problem of humanity. It is a moral problem, but the survival of companies also depends on facing it”.

• Susty's beginnings: “in Kimberly Clark, where I worked, we had a B2B business, and the companies had recycling problems, so we started collecting their waste paper, which could be a raw material for Kimberly Clark's production. I realized that customers not only wanted me to solve the problem of paper but of all the packaging, so I started my own business. Eventually, they started asking me to help them reporting sustainability indicators. At that time there were reporting platforms for finance and for the commercial area, but there was nothing for sustainability, so it was something very manual. That is why we decided to create a tool that would help them monitor sustainability indicators and also to report at the end of the year, and that is how Susty began”.

• A likely future of mandatory sustainability reporting: “in Europe, starting in 2023, more than 50k companies have to report on European sustainability standards. And although reporting is voluntary in the US and Latin America, it will probably be mandatory in the future as well. Just as it happened 40 years ago when voluntary financial reports became mandatory because there were many serious problems something similar is likely to happen with sustainability reporting.”

• Simplifying work for sustainability professionals: “we have seen how a company with 600 branches entered sustainability information into 600 Excels. What if a person leaves a branch and takes the Excel? Well, the data history is lost. With Susty, now everything is more organized and easier: each branch can have access to the platform and it is like a control tower to monitor progress. We see a similar opportunity with companies that have hundreds of suppliers and would like their suppliers to have at least a small report."

• Reports that can be generated: “the platform began giving support to create GRI reports, which is the most complete sustainability report, and also with a specific report for Costa Rica called the Ecological Blue Flag. However, the online platform now has a basic administrator that can change the indicators to suit each company and more specific reports will be covered in the future. Now we are also developing a carbon calculator that a company of any size and structure can use to monitor emissions.”

• Value prop: “we are facilitating sustainability management. Sustainability is generally a department with few resources, particularly in Latin American companies, and in some cases, there is not even a sustainability department, and it is managed by the quality assurance or public relations department. We help our clients to implement a sustainability strategy, indicators and tools in a simple way and at a reasonable cost. A consultant can charge USD10-20k/yr for a sustainability report. With our platform, we empower companies to generate these reports. For example, for a company with 26 locations that needed to make 26 reports, we did them for much less than what a consultant would charge. Now, with just a click, the company can generate those 26 reports”.

• Governments encouraging companies to be sustainable: “We currently have some very good modules for SMEs and we launched them in Colombia where they established the type of SAS BIC company that is similar to Corp B in the US. The government made it easy to adopt BIC: there are 5 dimensions and, as long as companies demonstrate one action in each dimension, they can maintain status as BIC companies. And there are already more than 1,400 BIC companies in Colombia and it is possible that the idea will expand to other countries in Latin America”.

• Partnering with companies: “companies see in us a solution not for a problem but for a group of problems since we are specialized, and we provide support in sustainability. We are not a consultancy but we provide support with experts in finance, carbon, strategy, the environment, etc.”-o-

Ariana Morales - Chocolate Maker & Founder of Theobroma Cacao, producing specialty, single-origin chocolate

• Intro: Ariana Morales and her business partner and husband, Paulo, in a short time have created a high-quality product as part of the bean-to-bar movement. Bean-to-bar producers start their process from the raw cacao bean and make chocolate in small batches versus mass produced bars. Bars are often associated with single-origin and more sustainable, fairly-traded cocoa. Luckily for me, more than an interview, my visit was an opportunity to try different aromas and flavors of Costa Rican cacao from places like Upala (Nahua Cacao), San Carlos (Fincas La Dorada) and Siquirres (Hacienda Dos Lagunas).

• The Spark to start Theobroma Cacao: “one day, in front of a mass-produced industrial chocolate bar, we asked ourselves the question 'where does this come from?', and it led us to see that the source of its cocoa is often deplorable labor conditions in West Africa, involving human rights violations and child labor, plus ingredients we could not even pronounce. So we joined the Bean-to-Bar movement, and we began the search for the best cocoa beans, from ethical and sustainable sources to make our own, high-quality chocolate. After all, Costa Rica is a cocoa country!"

• Telling stories: “specialty coffee gives a high grade and is traceable. However, in many cases, cocoa does not tell a story. What many feel for their wine collection, which turns a glass into a trip around the world, you can also feel for a bar of chocolate”.

• High quality delivers results: “we have seen how the obsession with details pays off: we have few clients, but they are loyal to the quality we offer”.

• A different perspective: “investors have offered us investment capital to expand, but so far, we have said “no thanks” because small is beautiful. I see bean-to-bar as a revolution, where we can return to the neighborhood economy in which in five blocks you have everything, much of it including local production”.

-o-

If you made it all the way here , I hope you found these conversations insightful. I was certainly inspired by the work Jose, Esteban and Ariana are doing. Thank you for sharing your work with us!

Warm regards / saludos, Julio