Periodic Reporting for period 1 - EIT-CKIC BP2023-2024 (EIT Climate-KIC Business Plan 2023-2024)
Reporting period: 2023-01-01 to 2023-12-31
The EIT Climate-KIC Business Plan 2023-24 focuses on creating the right conditions for EIT Climate-KIC to be financially independent of European institute of Innovation and Technology (EIT) by the end of its 15-year Partnership Agreement in 2024. The financial model selected focuses on the commercialisation of our ‘systems innovation as a service (SIaaS)’ model. The model explicitly integrates the key elements of EIT’s innovation model – entrepreneurship, education, innovation, ecosystems – into a demand-led framework which addresses well-known market failures in scaling climate solutions. The model entails working with places to map climate action needs, priorities, and actions, from which we co-design and implement place-based portfolios of innovations on the ground to develop and match scalable solutions to places and industry value chains. By orchestrating key stakeholders to develop new markets related to climate challenges, and by enabling large-scale ‘learning by doing’ frameworks, the model mobilises public and private funding to test and produce actionable intelligence, shared learning, and solutions from the portfolio of innovations, leading to practical change. The success of the implementation is being measured against core KPIs EITHE11.1 Total non-EIT financing generated by the KIC Legal Entity and EITHE11.2 Financial Sustainability Coefficient.
The implementation of this Business Plan addresses investment into three key areas as key over two years of to secure organisational financial sustainability:
- Securing new – non-EIT - funding and commercial sales to ensure financial sustainability of EIT Climate-KIC after 2024.
- Strengthening EIT Climate-KIC’s internal infrastructure and capabilities for effective financial control and management in a more commercial multi-funder environment and refinement of a viable business model so that it does not require EIT top-up funding.
- Ensuring existing and pipeline SIaaS contracts are delivered successfully and with a high quality of service to existing and future customers.
Through 2023 this Business Plan has progressed towards achieving major impact by creating the conditions to embed what is described in the Strategic Agenda as ‘advanced knowledge triangle integration’ within Europe. It synthetised and expanded upon its learnings to ensure EIT Climate-KIC has a well-tested model of systems innovation which is financially sustainable and deployable across Europe following the end of this grant. In addition, these insights, knowledge, and actionable intelligence emerging from EIT Climate-KIC’s innovation activities are being disseminated widely through platforms we lead with EU cities and regions.
The implementation of this Business Plan addresses investment into three key areas as key over two years of to secure organisational financial sustainability:
- Securing new – non-EIT - funding and commercial sales to ensure financial sustainability of EIT Climate-KIC after 2024.
- Strengthening EIT Climate-KIC’s internal infrastructure and capabilities for effective financial control and management in a more commercial multi-funder environment and refinement of a viable business model so that it does not require EIT top-up funding.
- Ensuring existing and pipeline SIaaS contracts are delivered successfully and with a high quality of service to existing and future customers.
Through 2023 this Business Plan has progressed towards achieving major impact by creating the conditions to embed what is described in the Strategic Agenda as ‘advanced knowledge triangle integration’ within Europe. It synthetised and expanded upon its learnings to ensure EIT Climate-KIC has a well-tested model of systems innovation which is financially sustainable and deployable across Europe following the end of this grant. In addition, these insights, knowledge, and actionable intelligence emerging from EIT Climate-KIC’s innovation activities are being disseminated widely through platforms we lead with EU cities and regions.
The specific objectives of the Business plan 2023-24 – to ensure delivery of the overarching 2027 societal impact targets set out in EIT Climate-KIC’s Strategic Agenda - were:
- Securing new - non-EIT – funding and commercial sales to ensure financial sustainability of EIT Climate-KIC after 2024.
- Strengthening internal infrastructure and capabilities for effective financial control and management in a more commerical multi-funder envrionment.
- Delivering existing and pipeline Systems Innovation as a Service contracts successfully to existing and future customers.
EIT Climate-KIC has made good progress towards Financial Sustainability through 2022 and 2023, as noted in the EIT 2022 Resolution Meeting, the independent 2022 accounts audit, and the EIT Rapporteur meeting in Sept 2023. However, the EIT Final Review of Climate-KIC continues to flag concerns about Climate-KIC’s financial sustainability post-2024 (while recognizing good progress has been made in the last year).
For strengthening our internal infrastructure and controls in 2023, we have been systemically developing and executing plans to reduce our high internal operating costs, with results anticipated to start to be visible from 2024. These include:
- Investing in our digital infrastructure to better link our internal ERP, HR, and finance systems, to address financial controls within the organization, manual processing of transactions, project management tools, and ensure seamless monitoring of projects in multi-funder world.
- Reducing organizational complexity, since our current inefficient organizational and tax structure puts at risk our ability to secure future funding/finance, acts as a financial deadweight on the organization, and/or risks of insolvency.
- Developing plans to improve the overall value proposition of working in Climate-KIC, to ensure retention of key staff, and staff with the right blend of capabilities for operating in a more commercial environment.
For the third objective – delivering existing and pipeline ‘systems innovation as a service’ (SIaaS) contracts successfully and at lower cost – we have worked closely with existing customers and beneficiaries to understand key lessons and issues.
- Securing new - non-EIT – funding and commercial sales to ensure financial sustainability of EIT Climate-KIC after 2024.
- Strengthening internal infrastructure and capabilities for effective financial control and management in a more commerical multi-funder envrionment.
- Delivering existing and pipeline Systems Innovation as a Service contracts successfully to existing and future customers.
EIT Climate-KIC has made good progress towards Financial Sustainability through 2022 and 2023, as noted in the EIT 2022 Resolution Meeting, the independent 2022 accounts audit, and the EIT Rapporteur meeting in Sept 2023. However, the EIT Final Review of Climate-KIC continues to flag concerns about Climate-KIC’s financial sustainability post-2024 (while recognizing good progress has been made in the last year).
For strengthening our internal infrastructure and controls in 2023, we have been systemically developing and executing plans to reduce our high internal operating costs, with results anticipated to start to be visible from 2024. These include:
- Investing in our digital infrastructure to better link our internal ERP, HR, and finance systems, to address financial controls within the organization, manual processing of transactions, project management tools, and ensure seamless monitoring of projects in multi-funder world.
- Reducing organizational complexity, since our current inefficient organizational and tax structure puts at risk our ability to secure future funding/finance, acts as a financial deadweight on the organization, and/or risks of insolvency.
- Developing plans to improve the overall value proposition of working in Climate-KIC, to ensure retention of key staff, and staff with the right blend of capabilities for operating in a more commercial environment.
For the third objective – delivering existing and pipeline ‘systems innovation as a service’ (SIaaS) contracts successfully and at lower cost – we have worked closely with existing customers and beneficiaries to understand key lessons and issues.
EIT Climate-KIC has been particularly successful at securing EU Missions’ funding (in the Cities, Climate Adaptation, Soils Missions), and associated Horizon Europe programmes, which act as core building blocks for our work in the coming years. To ensure effective financial sustainability, EIT Climate-KIC needs to secure the associated income from ‘added-value’ service, commercial and philanthropic contracts that build on the EU Mission funding. good steps have been taken on developing these ‘added value’ services, but much needs to be done to ensure steady income flows (to moderate the ‘lumpiness’ of EU grant funding, and to build profit margins).
The new activities to commercialize Climate-KIC’s services recognize the value of the EU Mission funding – the Net Zero City platform of 112 cities; the 150+ regions being supported through the Pathways 2 Resilience platform; the 100+ landscapes being used to test soil health – as creating ideal test beds to speed up the innovation cycle. We are building a commercial service to test, learn, share, and scale new solutions on these testbeds as a means of attracting commercial income – from those wishing to scale solutions within cities, regions, landscapes; from philanthropic income, who are prepared to put all their capital at risk to test and learn about new solutions; and from investors, who are seeking pipeline for investment.
This activity is tracked and measured by the numbers of contracts secured and, primarily, income generation and FS Coefficient using core EITHE11.1 and 11.2 KPIs.
The new activities to commercialize Climate-KIC’s services recognize the value of the EU Mission funding – the Net Zero City platform of 112 cities; the 150+ regions being supported through the Pathways 2 Resilience platform; the 100+ landscapes being used to test soil health – as creating ideal test beds to speed up the innovation cycle. We are building a commercial service to test, learn, share, and scale new solutions on these testbeds as a means of attracting commercial income – from those wishing to scale solutions within cities, regions, landscapes; from philanthropic income, who are prepared to put all their capital at risk to test and learn about new solutions; and from investors, who are seeking pipeline for investment.
This activity is tracked and measured by the numbers of contracts secured and, primarily, income generation and FS Coefficient using core EITHE11.1 and 11.2 KPIs.