ESG – Patents and Innovation

A new wind has been blowing in the field of innovation and patent strategies, with a shift taking place towards a more stakeholder-centric approach based on Environmental, Social and Governance (“ESG”) values. Sustainability has rightfully become a major priority for corporations across the globe. The fight against climate change, for example, relies heavily on innovation. The creation and implementation of environmentally-friendly innovation can be facilitated by the patent system. Sustainable innovation requires significant investment and entails substantial commercial risk. In this context, patents provide legal certainty, confer a competitive advantage and serve as a fundraising mechanism. The patent system also helps companies keep track of how far along they are in reaching their ESG objectives.

In this article, we will focus on meat substitution as a recent example of sustainable innovation where we see growing investment, cooperation and use of the patent system.

How can patents help to achieve ESG goals?

Sustainable innovation relies on a host of technological products and processes. Technology and innovation go hand in hand to achieve growth. With emerging environmental challenges generating fresh and expanding market prospects, there is a rising trend of investors who regard ESG as a significant value metric. 

Protecting sustainable innovation through patents enables companies to bring to market environmentally friendly products and processes, while at the same time tracking their commercial value. The patent system therefore offers useful insights in sustainable innovation. As a worldwide benchmark of innovation, patents provide a rational means for appraising sustainable business practices objectively in the market. They serve as a blueprint for a company's research and development endeavors and chronicle the outcomes of fruitful investments in innovation. Patents also facilitate transparency, making it easier for investors to identify and support companies that prioritize sustainable practices. Finally, patents make it easy to monetize investment in innovation through licensing and cooperation with third parties.

Case study in the field of ESG-friendly patents: meat substitutes

The contemporary food system has a significant ecological footprint linked to intense animal farming and sometimes excessive consumption. Meat production in particular is associated with environmental stressors such as fossil fuel pollution, the consumption of land and water and animal welfare issues. 

Alternatives are therefore, especially in recent years, highly sought after, even within the traditional meat sector. Many behemoths in the meat industry are actively researching meat substitutes, and aim to transition an important part of their turnover from “real” meat to plant- or cell-based alternatives that (almost) taste the same. The contemporary palate also seems to be ready for such alternatives. Meat substitutes are therefore rapidly expanding and fit well with the pursuit of sustainability. 

Companies involved in this innovation are heavily relying on the patent system to see their inventions in this field protected, and we see a rising number of food patents for meat substitutes. The economic importance of these products as well as the value of the corresponding patents will only increase. We also see a lot of cooperation between larger traditional  companies, who have the machinery, space and work force, and smaller start-ups who have the meat substitution technology to make this happen. Sensible contracts must be put in place to ensure an optimal cooperation and a fair compensation for all the resources this requires, including of course the patents and sometimes trade secrets that protect this technology.

At Taylor Wessing, we work hand in hand with these companies to achieve their ESG objectives and contribute to a better environment in the process.