The Twin Transition: How Digitalization Drives Sustainable Entrepreneurship in Latin America

Technological adoption enables innovative entrepreneurship that addresses climate change and environmental sustainability.

By Rodrigo Morales

Entrepreneurial ecosystems evolve constantly according to the geographic context in which they develop. However, in a globalized world with challenges like climate change, environmental degradation, and the digital revolution, entrepreneurs are increasingly adapting their strategies. The rapid development and adoption of digital technologies, driven by the COVID-19 pandemic, plays a crucial role in this adaptation.

Digital transformation and the environmental crisis present huge challenges to societies, but they also offer opportunities for entrepreneurship, especially in achieving emission reduction targets. Digitalization, which includes technologies and solutions such as smartphones, social media, artificial intelligence, industrial automation, and the Internet of Things, helps improve waste management and optimize energy usage in cities. Digitalization connects people, provides valuable access to information, and fosters better data-driven decisions.

These efforts make projects focused on addressing climate change and protecting the environment more efficient and effective, enabling a strategic integration that addresses complex problems in a coordinated manner.

In the Central American and Mexican chapter of the Aspen Network of Development Entrepreneurs (ANDE), we partnered with the German Technical Cooperation in Mexico to promote Twin Transition entrepreneurship.

What Does Twin Transition Mean?

Twin Transition represents the intersection between digitalization and climate change challenges. Entrepreneurs adopting it use technology and digital solutions to implement environmentally sustainable practices.

In 2023, we developed a project to identify the needs of Entrepreneur Support Organizations in Mexico and train them to promote Twin Transition entrepreneurship. We also produced a research document outlining these enterprises in the context of the Mexican ecosystem.

In discussions with various organizations, we identified several challenges for entrepreneurs, with financing being a notable one. While environmental enterprises can access grants and donations, the requirements are often stringent, especially for early-stage projects. Impact investment and incubation and acceleration programs present significant opportunities for these entrepreneurs.

Universities also offer opportunities as breeding grounds for entrepreneurship, thanks to new educational models focused on science, technology, and the environment.

Although Twin Transition entrepreneurship is in its early stages in Mexico and Latin America, opportunities already exist. Promoting it requires strong alliances between various Entrepreneur Support Organizations, including foundations that fund support programs and organizations with specialized professionals to bolster entrepreneurial skills.

At ANDE, we aim to catalyze these enterprises. In 2021, we launched a global digitalization initiative to guide our members through digital transformation, enabling the same process for the entrepreneurs they support. This effort is even more meaningful given our strategic focus on climate and gender, which ANDE has prioritized over the past five years.