" /> Ben Gracey, Author at Edinburgh Innovations
Sustainable finance: putting UK consumers at the heart of the government’s net zero target

Sustainable finance: putting UK consumers at the heart of the government’s net zero target

There has never been a stronger case for taking meaningful action to address climate change than the one delivered by the IPCC in August, we are running out of time, on this we all appear to agree. Therefore, it is time to trust the consumer with the information they need to take individual but collective action.

Here at the University of Edinburgh, the Edinburgh Futures Institute is currently leading a coalition of UK universities and other stakeholders to explore the economic case for the type of consumer-focused instruments to definitively reduce our emissions.

Climate change, driven by anthropogenic greenhouse gas (GHG) emissions, is the defining challenge of our time and has rightly dominated public consciousness in many countries over the past few decades. In a bid to address it, the landmark 2015 Paris Agreement proposes the long-term goals of “holding the increase in global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels”.

Although the UK government has since 2019 enshrined a legally binding net-zero target into law, the current emissions trajectory here and elsewhere strongly suggests that we are yet to be on a sustainable path to reducing emissions. The reason for this is not difficult to understand.

Consumer action is not placed at the heart of national and global climate change policies, where it needs to be. According to the UK’s Climate Change Committee, at least 62% of the actions we need to take to address climate change involves changes to the ways we heat our homes, power our vehicles, and shop for our households – these are changes that we, as a society, cannot meaningfully make without a concerted push by everyone.

Indeed, achieving the net-zero target is dependent on the hundreds of millions of choices consumers make every day throughout the UK. Therefore, to deliver the transition to a low carbon future in an effective way, we need to understand how consumers may behave and which policies better encourage the required changes.

However, human decision-making is complex and can often result in behavioural biases working against us and influencing our behaviour in ways that are unbeneficial to us, perhaps as much as they can work in our favour. This implies that even when we are offered low-emission product options, there is no guarantee that we will take them. This dynamic is aptly captured by a recent survey by Deloitte, which shows that only about 20% of UK consumers have switched to low carbon modes of transport, reduced their air travel or switched to renewable energy in response to climate change concerns.

And cost is only a small part of the problem, apathy is the main barrier to change. A Sky/YouGov survey also finds that only 20%, 13% and 2% of Britons would welcome climate action-induced changes to the costs of air travel, animal products and heating respectively, while 23% are unwilling to see any action on climate change.

Hence, based on the evidence, successfully enabling the changes in consumer attitudes and behaviour that are needed to achieve net zero will require more than just providing options.

One way we can bring about these changes is by putting a price on emissions (or carbon) – this is not a new concept, but it matters how we do it as demonstrated by the gilets jaunes protests in response to the 2018 plan for petrol tax rises in France.

Indeed, influencing consumer behaviour is already at the heart of existing carbon pricing instruments globally. Instruments such as cap and trade and carbon taxation are designed to impose higher costs of consuming emission-intensive goods so that consumers become inclined to pursue less emission-intensive options.

However, this expectation of significant changes in consumer behaviour leading to a reduction in emissions has not materialised in countries using these instruments. The reason is simple: the instruments are not apolitical. They are only as effective as the restrictions or caps they impose on emission production by the companies that are subjected to the emission caps.

Effective lobbying and other pressing priorities by successive governments have always combined to ensure that the caps are not stringent enough to drive up the cost of emissions to significantly high enough level to force large scale consumer course corrections.

The High-Level Commission on Carbon Prices estimates that reducing global emissions to allow for achieving of the Paris Agreement’s temperature goals requires carbon prices to be between US$40 and US$80/tCO2e by 2030. However, in 2020, only about 5% of GHG emissions covered by a carbon pricing scheme was in this price range, half are priced at less than US$10/tCO2e and, according to the IMF, the global average price is just about US$2/tCO2e.

Companies realise that without significant and risky new investments in low carbon technology on their part, changes in consumer spending patterns could result in significant losses in revenues. This is why, despite being efficient in putting a price on carbon, carbon pricing instruments have not been very effective in reducing emissions – the lack of political will to make them work.

This failure is underscored by the fact that there has been no empirical evidence of companies adopting innovative low carbon technologies requiring significant upfront costs, have long implementation lags and are difficult or very costly to reverse, therefore ensuring their lasting economic impact.

For carbon pricing instruments to work, the political nature of climate change policy development and how this is driven by signals emanating from consumers, from whom policymakers’ authority derives, must be acknowledged. Instruments should be designed as to incorporate the buy-in of consumers/voters, whom politicians are beholden to.

One way to do this is by designing regimes that make it difficult for consumers to overlook the contributory impact of their activities on climate change, so that they can easily link their decisions to the production of emissions, and they may also easily access remedies for their actions.

This implies that policy instruments must prioritise the signalling of the environmental effects of consumer behaviour at source. This is akin to labelling packed products on supermarket shelves to signal the presence of allergens or calories.

This is what many of the existing instruments currently lack – the prominently placed signal(s) consumers need to act. Already active in the space, without potentially helpful regulatory push, are sustainable finance FinTech start-ups, such as Meniga, Yayzy and CoGo, that are utilising consumer financial transactions data to compute consumers’ carbon footprints and therefore inform their spending patterns on investment and everyday household products. Initiatives of this nature need to be more commonplace and given legislative impetus for us to effectively induce the creation of true emission-constrained economies.

Understandably, if effective, the impact of far-reaching and effective emission reduction instruments will be more significant on the economy than the current slew of policy instruments, i.e., they are likely to lead to the shrinking of certain sectors of the economy, specifically, those driven by fossil fuels.

However, any effective action on climate change cannot avoid the shrinking of fossil fuel sector or at least the constraining of the sector to only options that work with economically viable carbon sequestration options. This is the reality that any serious attempt to address the climate change challenge must contend with.

Nevertheless, effective instruments for addressing climate change are also likely to enhance economic welfare, in at least three ways.

Firstly, the need for consumers to seek out low carbon alternatives will give rise to new industries because changes in consumer spending patterns will force significant investments in immature, high investment, and relatively irreversible technologies.

Secondly, the revenue that such instruments may yield can be deployed to providing incentives to innovative companies to invest in low carbon innovation and cushion their effects on lower-income families.

Thirdly, effective policy instruments will address distortions in the pricing of energy commodities that have arisen due to current climate change policies in the UK. For example, achieving net-zero in the UK requires extensive electrification of the economy; however, the UK’s levies on electricity are unjustifiably high, while other sectors are in effect free-riding as they benefit from the negative externality that is climate change. This has led to UK consumers and businesses arguably currently paying more for electricity than they would under an economy-wide implementation of net-zero policies.

It’s simple, we need to reduce our carbon emissions faster than we are doing now. At the Edinburgh Futures Institute we are already working hard, with multiple partners, to establish how consumer-focused instruments could help us do just that – one of the many ways our data-driven research and innovation is working towards a better world.

Gbenga Ibikunle
Professor of Finance, The University of Edinburgh
Director for Industry, Economy & Society, Edinburgh Futures Institute.


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Future Proof: Edinburgh Futures Institute

Future Proof: Edinburgh Futures Institute

By Professor Chris Speed, Chair in Design Informatics, University of Edinburgh

Ever since the publication of the review of Scotland’s technology ecosystem by Mark Logan, founder of Skyscanner, a year ago, the term ‘innovation ecosystem’ has become somewhat de rigeur.

Adding some extra momentum to this term, just a few weeks ago the UK government published its innovation strategy. While the drivers of the strategy seem pretty terrifying (Brexit, global economic disruption, societal unrest and unprecedented global competition) the solutions, are, fairly standard; investment, stimulating innovation and creating new Prosperity Partnerships between government, industry and academia.

So mention ‘innovation ecosystem’ in a conversation nowadays and many heads will sagely nod and marvel at the paradox of ‘building an ecosystem.’

Yet, here at Edinburgh Futures Institute (EFI) we are already working inside and outside of an extraordinary innovation ecosystem where co-creation, morality and data-driven innovation are catalysing our business and public sector partners to, make the world a better place.

Allegedly Scotland lacks a Market Square, where incubators, scale ups and large companies mix in something of an innovation soup along with educators, researchers and labs producing a multitude of different, unpredictable, hopefully beneficial, outcomes. But EFI is already a place where histories and futures collide to provide a valuable coordinate in the innovation landscape of the city.

In addition, central to steering the Institute and all those that sail within her, is a moral compass that is cultivated through debate, deliberation and discourse toward academic and business practices that are good for society. Not fearful of engaging with the biggest challenges facing us all, the unique anatomy of the Institute encourages responsible innovation to flourish at whatever scale.

In short, a relationship with Edinburgh Futures Institute signals an affinity that an organisation ‘subscribes’ to our critical, values driven approach toward developing a challenge-led and data-rich culture that will deliver ethical, social, cultural, economic and environmental impacts.

We thrive on the reciprocity of challenges, ideas and economies that flow between learners, researchers and businesses. Central to that process is co-creation.

Co-creation, in the context of research and business, refers to a product or service design process in which input from all stakeholders plays a central role from beginning to end. With spaces dedicated to fuel conversation and engagement, the outcomes of a co-creative culture are wide and varied, supporting trust-building, access to talent, networking within an ecosystem, growth and inspiration. The Futures Institute allows internal and external parties to meet, exchange and explore how knowledge from multiple perspectives (civic, technical, corporate and social) can tackle the significant challenges that society faces in the present, and near futures.

EFI supports plural forms of innovation: Continuous Innovation, the adoption and use of data-driven technologies to enhance established businesses and organisations; and Disruptive Innovation, fuelling start-up cultures that allow new businesses to emerge that use data-driven technology to signal new experiences, business models and services.

With a wide ‘funnel’ that onboards members across all sectors through events, skills, collaboration models and value creation, EFI is an exemplar for helping established organisations to continually innovate, and for new ones to begin.

We also support Speculative Innovation. Speculative Innovation is a Futures approach that identifies that the prevailing models of innovation remain anthropocentric with a limited social and environmental baseline. Alongside our responsibilities to support the business models of 20th-century organisations that need to evolve and help startups pivot until they find meaningful market fit, our approach to Speculative Innovation embraces a more-than-human culture that looks toward including the environment as a key stakeholder.

This agile and design-led approach is how we can innovate with you to use our expertise and energy to future proof workplaces, government organisations, communities, creative industries and more.

We are an innovation ecosystem with purpose.



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Design Informatics

Edinburgh Futures Institute

The Second Pitch

The Second Pitch

Thanks to television shows such as Dragons Den and Shark Tank, when we think of a ‘business pitch’ we simultaneously think of terrifying humiliation and success beyond our wildest dreams.

Neil Pollock, Professor of Innovation and Social Informatics, believes that as a result, while entrepreneurs focus on navigating that particular minefield, the second pitch seems to be an extremely distant and almost unimportant milestone.

However, it is this, second pitch that could very well make the real difference between triumph and disaster for emerging companies.

Because it is the second pitch that is primarily about the processes of ‘scaling-up’ and ‘credentialing’.

Which is why our study will directly observe how digital enterprises prepare for and give pitches. This will therefore provide the first ‘naturalised’ study of this kind of pitch (again most existing research on investment pitches tends to be based on reality TV). We are also conducting semi-structured interviews to understand both:

  • the processes assessors use to make sense of the pitches and assess the start-ups
  • how they may then go on to recommend or publicise these ventures to others

To analyse these pitches we draw on the emerging specialism of ‘Valuation Studies’ (which is the application to market situations of analytical techniques borrowed from Science and Technology Studies, Sociology of Finance, and Economic Sociology). We will extend this current work through conceptualising these pitches as part of an ‘endorsement economy’. This idea captures not only that market actors provide assurances about the viability or value of a venture, but how/whether they play a key role in helping to realise that value through ‘championing’ a venture.

The suggestion is that new companies endorsed by important market actors receive a significant boost and, by the same logic, the lack of that particular seal of approval becomes a block or impediment to progress. We term this hurdle the ‘second most important pitch’.

It’s obvious that pitching to analysts is a crucial step in the early life of a digital venture, particularly when they attempt to scale. It is the critical practice in fiercely competitive technology markets where attention gets funnelled to some enterprises and away from others. Whether or not a venture will grow can depend upon how well it overcomes this hurdle. The UK, for instance, is recognised as among the most vibrant places in the world for the creation of digital start-ups. However, its new enterprises are often unable to take the next important step.

According to Nesta “[t]oo many start-ups start, but never scale”. Analyst pitches are key to these processes of scaling, but little is known about them. The Scaleup Institute highlights six factors that hinder the development process of ventures, but there is no mention of this second pitch. Since industry analyst outputs are widely read by technology adopters and investors, those pitching to these actors receive not only increased attention but essential forms of ‘credentialing’.

It is only in recent years that industry analysts have systematically turned their attention to start-ups. Typically, they paid attention only to larger vendors. However, with the accelerating pace of digital innovation, given added impetus by the appearance of lightweight technologies such as ‘apps’, important technological developments now come to prominence quickly and outside the large vendor labs. For instance, the leading analyst firm Gartner has a category for potentially transformative start-ups labelled Cool Vendors and those designated as such are said to benefit from increased ‘visibility’, ‘sales enquiries’, and ‘investment’. HfS and Aragon Research have similar ‘hot vendor’ designations’.

Another important new development is the proliferation of specialist analyst services sold to equity investors (the IDC Private Vendor Watch Service, the 451 KnowledgeBase, Ovum’s Investment Tracker).

So, as the barriers to digital innovation continue to come down, we expect further changes to the evaluative infrastructures underpinning the start-up community, where the enterprises connecting with analysts are boosted and those failing to do so are put at a disadvantage.

At the University of Edinburgh we are at the forefront of understanding this shifting landscape and that expertise can help organisations adapt and improve; to future proof.

Discover more about our Future Proof campaign and how our expertise can help your organisation. You can also sign up to our newsletter to hear about news and developments.

Why we need innovation

Why we need innovation

If we were to ask a dozen people their definition of innovation, it is likely we would get twelve different answers.

This may strike us as odd since seeking to deliver innovation is a key goal for both corporations and academia. However, it highlights some of the challenges of being innovative.   

While both academia and industry have individually been successful in delivering innovative products and services, we have also seen great success from academic/industry partnerships. Why? Because innovation involves not only having an idea but also successfully implementing it. The development and distribution of Covid vaccines has been an excellent example of this – both positive and negative. The pandemic has spawned many different types of partnerships: collaborations between companies, collaborations between universities and all kinds of partnerships involving both sectors.   

Universities in the UK have traditionally had a greater focus on pure research and sometimes (quietly) frowned at those who emphasise the commercialisation of products, appropriating the term “The Dark Side”. This was a term I heard all too often after I had graduated with a degree in Biochemistry and joined a pharmaceutical company. While perceptions may have evolved over the years, sadly elements of this legacy still linger and can often unintentionally limit progress. 

Commercialisation of products is fundamentally about getting the product to someone who needs it and can provide enormous benefits to the relevant end-user. A consequence of shying away from “commercialisation” means many potentially good ideas remain just that – ideas.  In the US we have seen many universities become major forces in innovation, and have institutions such as Stanford and MIT where driving ideas to products is in their DNA.   

In the UK, universities that have long embraced innovation are now really well placed to contribute to the economic and social recovery from the pandemic. Indeed, university innovation and knowledge transfer have not just helped us fight Covid, they are now helping us build back better.  And this is one of the reasons that at the beginning of this year I was delighted to become a Non-Executive Director of Edinburgh Innovations, the University of Edinburgh’s commercialisation service.  

For example, our campaign Bench to Bedside highlights a number of cases where world-class academics are working with companies, or setting up their own companies, to directly improve patient outcomes.  

This is effectively demonstrated by Dr Luca Cassetta, founder of Macomics, which develops novel, first-in-class immunotherapies designed to modulate macrophages, increasing the body’s immune defence against tumours.  And Professor Neil Henderson who is leading research – in collaboration with two major pharmaceutical companies – to develop therapies that improve the prognosis for people living with liver disease. 

But companies face challenges too innovation is dependent on team members coming with great ideas – but how we find these is critical.  I have worked in companies where brand teams are asked to generate their annual plans, then spontaneously add one or two “innovative ideas” to their closing comments – this is innovation for innovation’s sake and rarely produces the desired outcome.  A more useful approach is to improve our ability to uncover and develop the ideas that thoughtful people already have – these can come from within the company or from collaborations. New ideas often come at the juncture at two disciplines where one expert can look at the work of an expert in a different field and immediately see opportunities. This frequently happens when we develop successful collaboration between industry and academia, and connect people with very different backgrounds and experiences. 

There was a lot of wisdom in George Bernard Shaw quote “If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.” I like to think he would have extended it in today’s world to encompass the concept that if we then worked together we could make those two ideas into something really meaningful, or dare I say – innovative. 

By Dr Gillian Cannon, Non-Executive Director of Edinburgh Innovations

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Older Workers – reducing barriers to employment for the over 50s in Scotland

Older Workers – reducing barriers to employment for the over 50s in Scotland

Older Workers – reducing barriers to employment for the over 50s in Scotland. 

Scotland’s population is aging and one in three members of the Scottish workforce is now aged 50 or older. Many organisations have developed policies to reduce discrimination on the basis of race, sexual orientation or gender. However, with demographic change, and the particular challenge of an ageing workforce in Scotland, the Scottish Government commissioned research to increase a focus on age inclusion at work.   

Age discrimination is invisible and is seen as less important than other forms of discrimination, but ultimately it’s the one type of discrimination that may affect us all.   

Professor Wendy Loretto and Dr Laura Airey’s research focused on the implications of extended working life policies for employers and older workers. It looked at the opportunities and challenges associated with managing an older workforce. Their research has achieved three main outcomes. 

1. Informed Scottish Government policies to improve older workers’ labour market position. The research has been cited in the Older People’s Framework, the Gender Pay Gap Action Plan, and the Women Returners Programme. 

“The research was really useful and actually quite vital to inform policy development across Scottish Government. We used it to raise awareness across Scottish Government of the issues that older workers face. So it informed policy development in other areas, whether it’s transport, care services, care provision. As part of our policy development when we come up with projects and funding streams we make sure that it targets the people that need the help. So I think it has had an immediate impact on individuals and also employers too.

Lorraine Lee, Scottish Government, Fair Work and Skills Division 

2. Underpinned development of Age Scotland’s Age Inclusive Matrix (AIM). This innovative HR consultancy service supports businesses to develop age-inclusive workplace policies and practices. 

The research paper that came from Edinburgh University was relevant because it was by far the strongest Scottish based research. The matrix is now going to be delivered in 35 Scottish organisations, doing a real deep dive to make those organisations as age inclusive as possible.”

– Mike Douglas, Director, Social Enterprises, Age Scotland

3. Raised the profile of ‘age-inclusion’ within the Equality, Diversion, and Inclusion agenda among Scottish employers. Key strategic organisations now collaborate to promote age-inclusive workplaces. 

Wendy and Laura’s work has had significant impact to the HR profession in Scotland and the work that CIPD Scotland has been delivering with its members and its wider stakeholder groups. It’s made us think about our own research and insight in a different way and through the eyes of an older worker.

Lee Ann PangleaHead of CIPD, Scotland and Northern Ireland

“I believe the University of Edinburgh’s work had a real world impact on TAQA as an organisation to support our age inclusiveness.

Pauline RobertsonSenior HR Business Partner, TAQA 

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