Climate change: is there an exit?
Includes a Venture Capital (VC) response
How did we get here?
The second industrial revolution brought to the humanity the most beautiful advances of the twentieth century: transatlantic signal, radio, telephone, cinema, phonograph, oil extraction… Among them, the transportation industry got major shifts with the first automobile ever invented (Karl Benz’s Motorwagen in 1885) and the flying machine of Wright brothers in 1903. Quickly people left the euphoria of these amazing technological prowesses to jump in the queue to get one of these inventions. Ford helped by democratizing to the middle class its Ford model T and the first commercial aviation travels rapidly took place.
The logical continuation? Roads soared from everywhere to drive the cars which became more and more affordable as they were mass produced. Planes took more passengers not only from a local distance but now from a continent to another. All these industries fueled by a cheap and now easily extracted crude oil. Probably a key turning point in the rapid growth of many industries, the use of crude oil has significantly broke the established standards. Exhibiting a wide range of derivatives’ uses than the historical coal, crude oil is not only a key input for the above industries, but also a resource for plastic based industries, construction, fertilizers, electricity, clothing… Definitely, oil is well wearing its famous name: “black gold”.
Maybe Gold for this era of revolution but probably Black for the earth future.
In the midst of all these developments, what have we done?
Well, we have celebrated these advances with arms wide open. Our habits, once localized, planned and budgeted have ceded the seat to the mass consumption. We were able to buy an affordable car (for the modest) or an expensive one embarked either with super high speed or unlimited features (for the richest). And then able to change it, less than 5 years later to jump in the new model increasing the appetite for “the new”.
We were also able to discover parts of the world far from our respective homes thanks to cheaper travel tickets even for trans-continental flight’s tickets. And we weren’t concerned to ask ourselves if it was sustainable to travel more than 5000km several times a year. In fact, why would we have done the opposite as others did the same?
We have developed a ton of economical concepts aimed at maximizing the profit of our businesses ranging from world’s established supply chains, outsourcings, globalization, distribution 2.0… Yes, distribution 2.0 where we were happy to eat in Japan a Cameroonian mango for the breakfast or amazed to diner an Argentinian meat in France (for the sake of the example). Forgetting that such envies implied a massive greenhouses gas emissions in the atmosphere.
Hard to admit but our actions have catalyzed the climate change.
Why is there a feeling that things will not change easily?
For many reasons, understanding / accepting and engaging for the climate change will be a long road to free our planet of this sword of Damocles.
First, people are still divided about the reality of the climate change. Do we need to waste time debating with the skeptics when the climate change consequences are surrounding our homes? I don’t think so. The melting in Antartica, the multiplication of heat waves in temperate zones, the recurring fires in Europe and America, the intense drought in Africa and its corollaries (less agricultural production and chronic starvation), obviously the high environmental hazards faced by pacific islands population…
“We cannot hope for a global change if we do not change our self habits”
In a second place, the human nature takes a critical role in our ways of thinking and acting. In fact, people believes that it is important to resolve their personal fundamental needs before resolving the collective needs. That’s the hard thing that life teaches us… Beyond, our diverging rules of thoughts when facing global priorities prevent us to easily agree on a common cause. Look at how it’s hard to agree on a political vote… And above all, the habits that the advances of the twentieth century gave us are difficult to abandon. In fact, traveling across the globe for the annual holidays is more and more affordable leading people to renew as frequently as possible the experience. And for the ones who have waited to do so, it will be unthinkable to not enjoy also. We cannot hope for a global change if we do not change our self habits…
Being VC in a climate devastated
The Venture Capital (VC) industry can play a role to find this exit and it can be articulated around 3 pillars: feeling the change, influencing the change and acting for the change.
Feeling the change
There is a young generation very concerned about the earth planet in which they will live tomorrow. They are building some impressive entrepreneurial projects for a better future. Too small, they are either always under the radar levels of potential investments or they do not get the sufficient support to grow their ideas to sustain a global movement. VC need to find them. And they should do it by jumping outside of their glass tower and hushed office where they generally receive the entrepreneurs. They have to be at the contact of the climate change by becoming more closer to the ones who are suffering from the direct effects. Generally these last got the simple answers to the local effects of climate change.
Influencing the change
Promote awareness. There are not solely the Governments, the NGOs, the climate advocates, the activists… who are the ones devoted to this task. VC should take also their part. The means to start exist: inform regularly on the climate change evolutions and the actions that you are taking to fight it, join others VC (under whatever agreement you think) to develop a common response or develop bridges with others change catalysts…
More interesting, the biggest challenge for VC will be certainly to move “money” from the result of the climate change equation to one of its component. Indeed, this time the paradigm needs to be changed, a capitalistic approach isn’t the right one. For once there is an opportunity to get as retribution of investments: lower greenhouses gas emissions, less environmental hazards and more ecosystem lives. And here the KPIs shouldn’t be the Investment Rate of Return (IRR), revenue’s multiples, earnings growth potential… but new ones attached to the value added to the environment.
Acting for the change
In the first days of 2022, Satgana’s founder introduced to me its new venture studio dedicated to invest in the next generation of planet-positive startups. This early-stage Climate Tech Venture Capital firm was using a guiding framework to invest in startups addressing the United Nations Sustainable Development Goals and operating under the B-Corp principles. I was amazed. Such an initiative works on finding projects aligned with their objectives, on building along with the entrepreneur the foundations and the perspectives of their venture and on funding their ventures growth (either with a smart funding or with bringing the right people / skillsets adapted). This is one way to act for the change.
We need more initiatives like startup studio dedicated to the climate change and even more early-stage funds on climate thematic. The circle of change will surely catalyze it: feel-influence-act.
Along the human history, I learned one thing: each time our backs were against the wall, we have found the energy to surpass ourselves for a better tomorrow. This time Earth is out of breath, so we need to multiply our efforts to find this exit. And as a positive believer I can say no more than there is an exit.
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Disclaimer: climate change is the result of wide range of natural phenomena, human actions and unknown causes. This article doesn’t have the ambition to circumscribe it to specific root causes.
