By Liisa Suvorova, Head of Growth at Planet42
Liisa Suvorova is Head of Growth at Estonian-based car subscription startup Planet42. Liisa has helped Planet42 co-founders Marten Orgna and Eerik Oja raise $30 million from investors like Lendable, Change Ventures, Startup Wise Guys, Bolt, and Pipedrive and is currently working on the company’s expansion to Mexico. The team aims to help its customers purchase 1,000,000 cars worldwide by 2025, with plans to expand its business from South Africa and Mexico to all of Africa and Latin America.
In developing markets such as South Africa and Mexico, sustainability sometimes takes a back seat to more immediate challenges. This isn’t due to a lack of care for the environment, but rather a result of more pressing concerns such as energy supply, inequality, unemployment or political issues.
It may seem convenient to “bring” sustainability to developing markets like South Africa and Mexico by applying the latest trending technologies, such as electric car charging stations or car sharing. But solutions that are effective in Europe or America are often totally ineffective or impractical in emerging market economies.
South Africa, for instance, has a failing power grid with daily, rolling blackouts, and it doesn’t make sense to argue for an electric vehicle charging network before first fixing the normal electrical network or the water supply.
Unfortunately, the climate crisis will not wait for the developing world. In 2021, Earth Overshoot Day landed on July 29, meaning that humanity has already used all of the resources available for a sustainable year in just seven months. South Africa and Mexico offer valuable case studies on how difficult it is for developing countries to become more sustainable.
Sustainability challenges facing the developing world
South Africa is one of the world’s most carbon-intensive economies, due to its major reliance on fossil fuels for transport and energy generation. The country also faces an agonizing consumer energy crisis which has persisted for 14 years and shows no sign of stopping. South Africans are regularly subjected to “load shedding” and rotational power outages, leaving homes without power.
To overcome these problems, South Africa needs new power plants and a rebuilt grid, but these improvements aren’t cheap. The same is true for more sustainable solutions. While the country offers ideal conditions for wind and solar farms, these are even more expensive than traditional fossil fuel plants. In other words, the country’s financial position leaves it maintaining infrastructure built in the 1994 electrification program, all while releasing untold carbon emissions.
On the other side of the world, Mexico faces similar issues. Although Mexico has recently made efforts to expand its geothermal, solar and wind generation capacity, the country’s energy balance skews heavily toward fossil fuels. The transportation sector alone is responsible for 34% of the country’s total emissions, and 97% of this is from land transport.
Such challenges can be addressed sustainably, but the solution cannot be to simply transpose developed-world solutions onto these emerging economies. If we think of sustainability as a pyramid, then electric cars and renewable energy farms are at the top. To build toward these goals, there must first be a solid foundation of economic and political stability.
Because of these challenges, working sustainably in these emerging economies might not appear to be sustainable from the perspective of people in fully developed economies. Said differently, it can be difficult to address sustainability directly without first helping grow the economy, getting people into good jobs, and building adequate infrastructure.
Climate change is a global problem that until now has mostly seen luxury solutions. In emerging and rapidly developing economies, sustainable solutions often take the form of helping average people in their everyday lives.
A better model for transportation
One of these everyday issues is transportation. While it may not seem like an issue in Europe or the US, transportation is a major challenge for people in the developing world. Vehicle financing can free people from having to use unreliable, painfully slow and sometimes even dangerous public transportation systems, and unlock better career and educational opportunities.
This is precisely the problem of balance that the developing world must contend with. Governments could spend decades and untold millions bringing public transportation into the 21st century – and they should – but in the immediate future, getting people into their own cars will have a larger impact on their lives and the economy.
Our company offers access to mobility through a subscription model. We buy mainly used cars and rent them out to people ignored by banks, giving them the possibility to buy out the vehicle in the future or return it at any point after 6 months. We don’t operate under any pretenses here: buying and renting cars is not typically thought of as a “sustainable” business model. These are mostly gas-powered vehicles with conventionally harmful emissions. But sustainability and social impact is close to our heart and we wanted to act now.
We are offsetting our negative environmental impact by investing into carbon offset projects in the markets we operate in, for example wind farms in South Africa. Sustainability should not be a goal for 2030 or 2050 but for today, which is why we decided to lead by example. We became a certified carbon neutral company in 2021.
It would be better if all of these people were driving electric vehicles or biking or partaking in a robust public transportation system, but those are not really workable solutions right now. We believe we are doing our part by helping people to “level up” quickly, growing the economy, and investing in longer term green energy infrastructure. 93% of our customers would not have a car without us, and we are happy that we can empower them to improve their livelihood.
People who are unsure whether or not they can pay the rent at the end of the month typically don’t have the bandwidth to worry about recycling or what percentage of the electricity generated for their houses is “green.” We help people take care of the nitty gritty of their lives, and we hope to thereby free up time and energy to start addressing more advanced problems.
Tackling sustainability must be a part of modern solutions
Both government and private actors are working to address the significant challenges that people face in rapidly developing countries. Everything from energy blackouts to unreliable transportation can disrupt a person’s everyday life, affecting their wellbeing and limiting their ability to reach their full potential. However, in addressing these challenges, we must ensure that we don’t lose sight of the massive and urgent challenge that we all face with climate change.
The planet simply doesn’t have the time to spare and people in these regions shouldn’t have to wait. We think that one way forward is to spur economic growth while remaining carbon neutral. In the areas of the world that need it the most, sustainability will most often take the form of practical solutions to help people live better lives. While we are in the business of putting gas-powered cars on the road, we think the net results of our business are generating real investment income for greener infrastructure while also pointing the way for how any business can ‘go green’ right now.