Entrepreneurship
Opinion Article
June 29, 2022

Ecosia - An example of Applied Entrepreneurship, by Joana Mitzlaff

Executive Summary

   One of the major problems of the 21stCentury is climate change, notably the active engagement of solving it. Eventhough there are regulations for companies and targets for countries to meet,one notices that revenue numbers are still the major obstacle in solvingclimate change and taking action. In addition, the fact that it is a globalproblem does not help in solving it as there is a lot of discussion going onabout who should take more responsibility and what is more threatening to theenvironment.  

   This case study presents the specific caseof Ecosia, a social enterprise that aims to look further than just their profitand geographical location by creating a real impact in financing reforestationorganizations all around the world. Their search engine enables their users tonot only plant trees but also to simultaneously reduce carbon dioxide in theatmosphere.  

History of Ecosia

   Ecosia was launched on the 7thof December 2009 on the same date as the UN climate talks in Copenhagen. Theidea of Ecosia was created by its founder, Christian Kroll, who, after hisstudies, was inspired to create a business model with positive social impact. Hisstay in Argentina taught him about reforestation projects which helped him developthe idea of Ecosia, a project with the purpose to help others to neutralize carbondioxide (CO2) emissions on a big scale (EcosiaSupport2022b). In 2014 itbecame the first German company to receive the B-Cooperation Certification andin 2019 it achieved one of its planting millstones (planting 60 million trees).In the same year they also built their solar energy plant to provide energy forevery search (Info.Ecosia2022) making themnot only carbon neutral but also carbon negative.

How does Ecosia create value?

   Ecosia is a browser just like Google, Bing,or Yahoo, meaning that they use the same business model in terms of financing. Thismeans that they generate money through “EcoAds and EcoLinks” (BusinessModelOf2020), meaning that,depending on the keywords used and on the different ads or links shown in aspecific order, they receive money. Their main difference to the other browsersis in the way of how they use their profit, as 80% of it is donated to treeplanting organizations all around the world (see Appendix 1), implying thatfor every 45 searches, one tree is planted. In fact, just by havingreforestation as one of their main goals, already makes Ecosia a socialenterprise (see Appendix 2). Looking at SDGs, deforestation tackles numbers 11,13, 15 and 17 (United Nations 2022) (see Appendix3).  

   Other major differences when compared tomainstream browsers is that Ecosia does not create personal profiles foreach user, underlining that their main interest is planting trees and notselling individual data. Furthermore, while it is becoming conventional forbrowsers to be carbon neutral, by using renewable energy to feed their servers,Ecosia not only runs 100% on renewable energy but also finances solarplants as it grows. With this idea, they are tackling SDG 7 “Affordable andclean energy”, in particular, 7.2 as with their investments in renewable energythey are also promoting the energy mix to become greener. Ecosia claimsthat in every search their users make, 1kg of carbon dioxide is removed fromthe atmosphere, making them carbon negative (BusinessModelOf2020).

    To increaseand maintain credibility they publish, every month, their financial reports(see Appendix 4), enabling their users to not only see to which projects thedonations are going and in what quantity, but also providing exact informationwhere all the money, other than the donations, flows. Transparency isindeed a major aspect of their reputation (Blog.Ecosia2022b). Furthermore,on their FAQ there is a section on how money is generated, showing, forexample, that for every t-shirt they sell 20 trees are planted, and that, forevery click on ad per search one clicks on, they make on average 0.5 cents(Euro) (EcosiaSupport2022a).

   In fact, openness is a big part ofEcosia value creation. Through the EcosiaBlogeveryone has easy access to all projects that Ecosia is doing. With its easylayout, big pictures, and one to two sentences under each picture, it gets themain information across without overwhelming the user. Clicking on each pictureleads to articles and/or videos that specify the different topics presented onthe front page. If we look at their most recent article (at the time ofwriting) it is about the current Russia-Ukraine conflict and how Ecosia istrying to help (Blog.Ecosia2022a). Written byits CEO Christian Kroll, it shows how the impact is their main driverand that they don’t stop at planting trees.

Deep analysis of the problem

   As climate change itself is a complexproblem to solve, Ecosia started by primarily tackling one of its causes,deforestation. Now, having developed a strategy to tackle the problem at abigger scale, they are also focusing on promoting green energy, and inparticular, solar energy (see Appendix 5).

Deforestation

   From (Chakravartyet al. 2012), thedefinition of deforestation is when a “forest is converted into an alternativenon-forest land use, such as agriculture, grazing or urban development”. Withit comes the loss of biodiversity as the ecosystem, where plants and animalslive, is destroyed. According to Our World in data, the estimation forthe amount of forest in the world before humans interfered is around 6 billionhectares (Ritchieand Roser 2021). A sharpcontrast to 2020 when the Food and Agriculture Organization (FAO) stated the globalforest area was equivalent to 4.06 billion hectares (FAO2020) suggestingthat humankind alone is responsible for destroying 33% of what forests used tocover.[1] Furthermore, the FAOestimates that between 1990 and 2020 420 million hectares of forest have beendeforested and that the estimated rate between 2015 and 2020 was around 10million hectares per year which is smaller than during the 1990s, at 16 millionhectares per year (FAO2020).

Themain driver of deforestation is Agricultural expansion, which in itself is dueto the growing population, rising incomes, enhancing the meat and dairy demand,and rising fuel prices, increasing the demand for biofuel production (Tscharntke2010). Anotherreason for deforestation is the expansion of infrastructure, including, forinstance, the whole infrastructure to transport goods from one place toanother. Another major driver comes from deforestation allowing easier accessto the minerals lying beneath the ground and/or making way for new roads forthe aforementioned agricultural expansion. In addition, the growing population furtheradds to the pressure of expanding infrastructure as cities and towns aregrowing (Hyde2021). Moreover, forestfires also have to be mentioned as another cause for deforestation, as they burnevery year millions of hectares of forest worldwide (WWF2022). Then, illegallogging occurring mainly in Brazil and Indonesia contributes heavily to theproblem by “destroying nature and wildlife, taking away communitylivelihoods and distorting trade” (WWF2022) and “tropicaldeforestation correlates with crimes such as corruption and violence” (Boekhout 2014). Lastly onecan also name climate change, which is simultaneously a cause as the change inclimate drives the death of tropical forests, and an effect, as this also drivesgreenhouse gases to  grow boostingclimate change (WWF2022).

   Regarding the effects of deforestation,beyond the loss of biodiversity and the increase of greenhouse gases. Another effectis less natural regulation of the water cycle, as there are fewer trees tocapture water from the air and drive it to the ground. Due to less water in thesoil and without the forest to stimulate the ecosystem, soil erosion isintensified (Lawrence and Vandecar 2015). This makesagricultural plantations to move and leaves the lifeless land behind as thesoil does not have enough nutrients to stimulate the growth of new plants. Theland left behind is then even more susceptible to flooding, especially if it islocated near the coast (PachamamaAlliance n.d.)

Burning fossil fuels

   When burning fossil fuels a lot of  CO2 “that was stored ascarbohydrates by photosynthesis over millions of years is being returned backto the atmosphere at an incredibly alarming rate” (Peter 2018), being one ofthe main drivers of climate change. Since the beginning of the industrialrevolution, CO2 presence has increased by 50%, driving up theaverage temperature of the globe, and while the world has its natural andsustainable carbon cycle, due to the significant extra amount of CO2in the atmosphere and the fact that it needs around 300 to 1000 years beforebeing captured back by the ocean and soil, it causes long lasting damage to theworld and all living things. On top of that, it is also one of the main driversof air pollution (JoanPye Project n.d.).

Anothergas with less duration in the atmosphere (7 years) but with 80 times morewarming power is Methane, this is released mainly due to oil, gas, coal miningand other heavy industries. Other known pollutants that have major problemsassociated with health are nitrogen oxides and sulphur oxides, which can beformed during some combustion processes (JoanPye Project n.d.).

Key performance indicators

   Ecosia claims that they want to have “thehighest positive environmental impact per dollar possible” (B-Crop2021), meaning theyneed to find a credible measurement of their impact. One could quantify it through:

·      Number of treesplanted - Making sure that the trees are planted,and that money is not only flowing somewhere without generating impact.

·      Number of treessurvived after x years – Looking long-term atthe problem, as planting trees can have a major impact, especially if theysurvive for many years.

·      Biodiversity –measure, each year, the number of new species in plants and animals appearingfrom reforested areas.

·      Air quality –since more oxygen is going into the air, and CO2 filtered back down,one could measure the local decrease in CO2 and increase of O2near the florets.

·      KW of solarproduced electricity – measure how muchelectricity is produced with the solar panels and put that into perspectivewith what is consumed of it

Which potential challenges and risks affect the socialenterprise?

   One of the main challenges is user gainsince Google is the biggest search engine worldwide and “googling” itself, theverb associated with looking something up on the internet. It is difficult toget users to switch browsers, especially given Google is already set as thedefault browser on many electronic devices.

   Another challenge faced by Ecosia is its dependenceon Microsoft Bing as technically, Ecosia, is not a new search engine buthas a “syndication agreement” with Bing, implying that when one is searchingthrough Ecosia one is in reality searching through Bing (Owens2021). Even thoughEcosia is very transparent, it is unknown to the public how much money theycontribute to Bing’s revenue every year.

   Lastly, one of the biggest risks Ecosia couldface are scandals. Particularly since their main value created is throughthe plantation of trees, it only takes one major scandal such as some organizationthat they are supporting misusing the money, for Ecosia’s credibility to godown drastically.

Improvements and recommendations:

Recommendation1: Develop partnerships with universitiesto use Ecosia as their default search engine given that many universities, suchas Nova SBE, are now trying to be more sustainable and greener it wouldbe perfect to use a browser that allows students to have an impact just bydoing their normal searches and by getting to know Ecosia better.

Recommendation2: Since Ecosia is already tackling two of the main human causes forclimate change (Deforestation and Burning of fossil fuels), they could start exploringways to finance and/or promote sustainable agriculture. As such, they diversifythe channels in which they fight against climate change and become a major rolemodel for other countries and companies.  

Endgame

   Assuming that all human causes of Climatechange would have been solved, Ecosia would go out of business with theircurrent business model as there would be no more significant need to planttrees, all energy would be green and agriculture would be sustainable. Having this,there are two scenarios to be considered, either the world described abovewould never exist, or it would.

   Looking into the case that it will neverexist, Ecosia’s main purpose would be to continue their actions and to increasethe number of places they create impact on. They could even go as far asinvolving themselves in helping the government change policies so thatreforestation, green energy and sustainable agriculture would be at the core ofconcerns and discussion of the different countries they operate in. This wouldin turn mean, that they would then also tackle SDG 13.2, “Integrate climatechange measures into national policies, strategies and planning” (United Nations 2022a).  

   In case one believes in the existence ofthe ideal world, then Ecosia would need to change the business model and investigateother SDGs to continue creating impact and help improve the world. They couldmove, for instance, into restoring the coral reef (SDG 14), solving worldhunger (SDG 2), improving the health system throughout the world (SDG 3), creatingaccessible clean water for everyone (SDG 6), providing quality education aroundthe world (SDG 4).

Main conclusions

   Even though Ecosia hasn’t developed itstechnology to not be dependent on Microsoft Bing, their efforts in being animpact-driven search engine seem to be genuine. Through their transparency anduser privacy conditions, they underline that their main goal is solvingdeforestation, with trees standing at the centre of their value creation. Furthermore,by investing in solar energy and being carbon negative, they are also tacklingthe second human cause for climate change. In the future, Ecosia could also movetoward helping to implement sustainable Agriculture around the world. Finally,if one day there are no more human causes of climate change, Ecosia couldchange its business model to help solve other SDGs.

Bibliography

B-Crop. 2021. ‘Ecosia GmbH - CertifiedB Corporation - B Lab Global’. 2021.https://www.bcorporation.net/en-us/find-a-b-corp/company/ecosia-gmbh/.

Blog.Ecosia.2022a. ‘Ecosia Invests €20M into Renewable, Independent Energy’. The EcosiaBlog. 2022. https://blog.ecosia.org/futureproof/.

———.2022b. ‘Ecosia’s Financial Reports’. The Ecosia Blog. 2022.https://blog.ecosia.org/ecosia-financial-reports-tree-planting-receipts/.

———.2022c. ‘Where Ecosia Plants Trees | Projects by Country’. The Ecosia Blog.2022. https://blog.ecosia.org/tag/where-does-ecosia-plant-trees/.

Boekhout,van Solinge Tim. 2014. ‘Researching Illegal Logging and Deforestation’. InternationalJournal for Crime, Justice and Social Democracy 3 (2): 35–48.https://doi.org/10.3316/informit.270234000784127.

BusinessModelOf.2020. ‘Ecosia Business Model: How Ecosia Makes Money’. BusinessModelOf(blog). 2020.https://whatisthebusinessmodelof.com/business-models/ecosia-business-model/.

Chakravarty,Sumit, S. K., C. P., A. N., and Gopal Shukl. 2012. ‘Deforestation: Causes,Effects and Control Strategies’. In Global Perspectives on SustainableForest Management, edited by Dr. Clement A. Okia. InTech.https://doi.org/10.5772/33342.

EcosiaSupport.2022a. ‘How Does Ecosia Make Money?’ Ecosia’s FAQ. 2022.https://ecosia.zendesk.com/hc/en-us/articles/206019452-How-does-Ecosia-make-money-.

———.2022b. ‘How Was Ecosia Founded?’ Ecosia’s FAQ. 2022.https://ecosia.zendesk.com/hc/en-us/articles/205038392-How-was-Ecosia-founded-.

FAO.2020. ‘The State of the World’s Forests 2020’. Www.Fao.Org. 2020.https://doi.org/10.4060/CA8642EN.

Hyde,Elianna. 2021. ‘How Infrastructure Development Is Depleting the Forest Cover |Management Innovation EXchange’. 2021.https://www.managementexchange.com/story/how-infrastructure-development-depleting-forest-cover.

Info.Ecosia.2022. ‘Meet the Team’. 2022. https://info.ecosia.org/about?ref=fb-share.

JoanPye Project. n.d. ‘Problems with Fossil Fuels | Joan Pye Project – Putting theCase for Nuclear Energy in the UK’. Accessed 12 March 2022.https://joanpyeproject.org/news/problems-with-fossil-fuels/.

Lawrence,Deborah, and Karen Vandecar. 2015. ‘Effects of Tropical Deforestation onClimate and Agriculture’. Nature Climate Change 5 (1): 27–36.https://doi.org/10.1038/nclimate2430.

MetOffice. 2021. ‘Causes of Climate Change - Met Office’. 2021.https://www.metoffice.gov.uk/weather/climate-change/causes-of-climate-change.

Owens,Jasmine. 2021. ‘How Ethical Is the Search Engine Ecosia?’ Ethical Consumer. 4March 2021.https://www.ethicalconsumer.org/technology/how-ethical-search-engine-ecosia.

PachamamaAlliance. n.d. ‘Effects of Deforestation | The Pachamama Alliance’. Accessed 12March 2022. https://www.pachamama.org/effects-of-deforestation.

Peter,Sebastian C. 2018. ‘Reduction of CO2 to Chemicals and Fuels: A Solution toGlobal Warming and Energy Crisis’. ACS Energy Letters 3 (7): 1557–61.https://doi.org/10.1021/acsenergylett.8b00878.

Ritchie,Hannah, and Max Roser. 2021. ‘Forests and Deforestation’. Our World in Data,February. https://ourworldindata.org/forest-area.

Tscharntke,Teja, ed. 2010. Tropical Rainforests and Agroforests under Global Change:Ecological and Socio-Economic Valuations. Environmental Science andEngineering. Environmental Science. Heidelberg ; New York: Springer.

UnitedNations. 2022a. ‘Goal 13 | Department of Economic and Social Affairs’. 2022.https://sdgs.un.org/goals/goal13.

———.2022b. ‘Goal 15 | Department of Economic and Social Affairs’. 2022.https://sdgs.un.org/goals/goal15.

———.2022. ‘THE 17 GOALS | Sustainable Development’. 2022.https://sdgs.un.org/goals.

US EPA,OAR. 2021. ‘Impacts of Climate Change’. Overviews and Factsheets. 2021. https://www.epa.gov/climatechange-science/impacts-climate-change.

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Joana Drago Mitzlaff

Joana Drago Mitzlaff

Joana Mitzlaff is a Nova SBE MSc Management Student.

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