Our Rationale for Investing in Both Planetary and Human Health
We often face questions about our dual-focused investment thesis in health and climate: “Aren’t you taking on too much?” Our answer is clear — we think big and act boldly because human health and planetary health are deeply interconnected.
Advances in healthcare have often led to breakthroughs and lessons that benefit environmental work, highlighting the crossover potential between these sectors. Simultaneously, planetary health means human health — if our soils cannot provide us with healthy foods, the air we breathe is polluted… we cannot be healthy, either. Our experience in both health and climate investments provides valuable insights for navigating across both, allowing us to zoom out and see models through a fresh lens. By applying a unified investment framework to both areas, we harness the power of integrated innovation to drive significant change and create sustainable impact.
The Impact of Climate on Human Health
Climate change directly affects public health, with immediate and severe repercussions. Recent events underscore this reality:
- Heatwaves Cost Lives: Heatwaves are getting hotter and more frequent with wildfires blazing across Greece and the US. In the U.S., the wildfires in Maui this year claimed 97 lives.
- Spread of Diseases: Last year in Pakistan, floods displaced at least 130,000 people, submerging hundreds of villages and facilitating the spread of diseases.
- Water and Food Scarcity: The Horn of Africa faces unrelenting droughts, leaving over 20 million people in acute food insecurity.
- Mental Health Issues: High temperatures have several negative effects on mental health and there is a proven link between rising temperatures and anxiety. Data indicates that for every 1°C increase in temperatures, mental health deaths increase by 2.2%.
- Poor Air Quality Kills: Air quality is the world’s largest single environmental health risk, causing around 7 million premature deaths annually, which exceeds the total global death toll from the COVID-19 pandemic. It is second to only high blood pressure as the leading risk factor for poor health worldwide.
Thankfully, overall air pollution is getting better and the overall death rate resulting from it has gone down, but this is hardly a reason for celebration! The trend is driven mostly by a reduction in indoor air pollution, underscoring an improvement in living conditions but no action at the environmental level, as the death rate from outdoor air pollution continues to rise.
Impact of Human Health on Climate
The relationship between human health and climate is reciprocal. Developments in human health, such as increased life expectancy, place additional strain on planetary resources and contribute to the increase in individual emissions. The global population recently surpassed the 8 billion mark and despite a decline in the growth rate, the global population is not expected to plateau until 2100 at around 11 billion people.
We are currently consuming resources at twice the rate the Earth can renew them. This rate has increased steadily since the 1970s and by 2050 we will need the resources of 3 Earths to supply our needs.
It is sometimes thought that population growth is the reason for an increase in emissions, but countries with a high population growth rate are not the largest contributors to climate change. Data show a mismatch between population growth rates and emission levels across different geographies. Most emissions originate from regions where population growth has stagnated or is minimal, yet these are the areas with the highest historical and current emissions — the US, China, and the EU have an enormous footprint per capita.
Health and Climate Regulation: Parallels and Learnings
Regulatory frameworks in both health and climate have historically followed similar trajectories: initial scientific discovery leads to public awareness, which gradually builds pressure for regulatory action. This process often spans decades, highlighting the necessity of long-term efforts and sustained commitment.
Regulation Timeline and Impact
Since the 1970s, health regulations in the United States have seen substantial evolution. The Clean Air Act of 1970 marked a foundational moment, merging environmental policy with public health to significantly reduce air pollution. In the 1990s, HIPAA revolutionized how patient data privacy and security were handled, setting a precedent for adapting regulations in response to technological advancements. More recently, the Affordable Care Act of 2010 broadly increased healthcare access and prevention efforts, while the swift global response to the COVID-19 pandemic highlighted the effectiveness of international regulatory cooperation. These developments underscore the ongoing need for adaptive regulatory frameworks that can respond to both emerging health crises and technological changes.
Climate regulation has progressively tightened over recent decades, beginning with the introduction of fuel economy standards in the 1970s to address automobile emissions. Major milestones include the Kyoto Protocol in 1997, setting the first legally binding emission targets, and the Paris Agreement in 2015, which committed the global community to limiting warming to below 2 degrees Celsius. Recent efforts have concentrated on achieving net-zero emissions by 2050, demonstrating a significant shift towards ambitious and precise climate goals.
Recent Developments and Stringency
In recent years, regulations in both sectors have not only increased in stringency but also in precision and adaptation to new scientific findings and technological advances.
Health
- Opioid Crisis Response: In the U.S., the SUPPORT for Patients and Communities Act was passed in 2018 to combat the opioid crisis through enhancements in treatment, recovery, and prevention efforts, demonstrating responsive and targeted health regulation.
- Digital Health Regulations: The FDA has begun to rigorously regulate digital health technologies, including mobile health apps and AI-driven diagnostic tools, to ensure efficacy and safety while fostering innovation. This mirrors the precision and adaptability required in climate regulations, where emerging technologies like carbon capture and storage are becoming increasingly regulated to ensure they contribute effectively to climate goals.
Climate
- Green New Deal Proposals: Various iterations of the Green New Deal have been proposed in different countries, aiming to link climate action with economic reforms and social justice. These proposals reflect a holistic approach, similar to public health initiatives that address underlying social determinants of health.
- European Green Deal: Launched in 2019, this set of policy initiatives by the European Union aims to make Europe climate-neutral by 2050, indicating a significant ramp-up in both ambition and regulatory stringency.
- Renewable Energy Advancements: Nations have increasingly adopted specific renewable energy targets and subsidies to promote solar and wind energy, reflecting the urgent push toward sustainable energy sources. Just as health campaigns promote preventative measures to ward off diseases, these energy policies promote preventive approaches to mitigate climate change.
Over time, both sectors have shown that stringent and well-coordinated regulations can lead to significant societal benefits. In health, regulations have improved patient outcomes and public health safety, while in climate, similar regulatory rigor has led to reductions in emissions and advancements in renewable energy.
A key synergy between the two involves the use of technology and innovation, spurred by regulatory support, to achieve goals that seemed distant a few decades ago. In health, technological advancements like genome sequencing and personalized medicine have revolutionized treatments thanks to regulatory frameworks that encourage innovation while ensuring safety and efficacy. Similarly, in climate, advancements in renewable energy technologies, energy storage solutions, and smart grids have been propelled forward by policies like the IRA and the European Green Deal.
So, how have these advancements evolved across both sectors?
Inherent Similarities and Transferable Learnings Between the Climate and Health Sectors
We have identified seven similarities between investing in climate and health sectors, highlighting valuable insights transferable from well-established health investments to the more recent field of climate tech. This comparison not only informs our investment playbook for asset and technology-intensive companies but also underscores the necessity of building robust companies that are best equipped to tackle today’s challenges and succeed in the future.
Time to Problem
The impacts of climate change mitigation, such as reducing greenhouse gas emissions, typically unfold over the long term and may not be immediately noticeable. Similarly, most cancers develop slowly, often going unnoticed for years before becoming aggressive. Like forest fires, once cancers begin to progress, they are exceedingly challenging to control. Therefore, the most effective solutions in both climate and health are preventative, addressing the root causes before they escalate, rather than treating them as isolated incidents.
In-Silico to Lab Scale Problem
The success of AI in drug discovery, particularly with models that enhance molecule selection and design, has catalyzed similar breakthroughs in materials science, critical for advancing climate tech. In 2021, DeepMind’s AlphaFold showcased the potential of AI to predict the 3D structures of proteins. By 2023, DeepMind’s AI tool GNoME had facilitated the discovery of 2.2 million new crystals, including 380,000 stable materials, employing techniques akin to those in drug discovery.
However, technical prowess alone is insufficient; deep, relevant subject matter expertise is crucial in both fields to effectively direct modeling efforts and experimentation. Many startups, despite raising substantial funds for their data capabilities, often underestimate the challenge of scaling these technologies without in-depth domain knowledge. As the adage goes, “If you don’t know what you are looking for, any road will get you there,” highlighting the necessity of targeted expertise to steer innovation towards meaningful outcomes.
Platform Approach
Traditionally, biotech companies have concentrated on specific technologies or biological pathways. Recently, however, there’s been a shift towards a platform or portfolio approach, popularized by companies like BridgeBio and Roivant Sciences, which manage diverse portfolios to distribute risk and boost R&D efficiency. This model is gaining traction in climate tech as well, with companies like Ginkgo Bioworks and Lonza adopting similar strategies to expand their influence in climate-related applications.
Bisness Models and IP Ownership
IP ownership is crucial for building a successful company in both the health and climate sectors. In health, startups typically license their products to pharmaceutical companies for scaling after completing clinical trials. Similarly, in the climate sector, once technology is derisked (beyond TRL 8), startups should look to license their technology to large industrial players for scaling.
Fundraising Journey: High Stakes and High Costs
The path to market for both health and climate tech companies involves navigating capital-intensive phases:
- Drug Development: From clinical trials (Phases 1 through 3) that are complex and costly, with recent studies indicating a median cost of approximately $985 million to bring a new drug to market.
- Climate Tech Scaling: From prototype to First of A Kind (FOAK), each stage on the Technology Readiness Level (TRL) ladder involves substantial financial outlay and risk, similar to the progression through drug development stages.
The fundraising journey in both sectors reflects a movement from technical risk to commercial viability, significantly influencing company valuations and investment dynamics.
The Valley of Death: A Critical Inflection Point
Both sectors experience crucial inflection points, often referred to as the “valley of death” in climate tech, where projects are most susceptible to failure due to technical and financial challenges:
- Drug Discovery: The transition from Phase II trials, which test the efficacy of a drug, represents a significant hurdle where many potential treatments fail to demonstrate sufficient benefits to proceed.
- Climate Tech: The scaling to FOAK involves substantial risks as technologies move from controlled lab environments to real-world applications, often revealing unforeseen challenges and inefficiencies.
The drug development process benefits immensely from the structured framework of clinical trials, which successively derisk the drug by proving its safety and efficacy. This framework provides clear benchmarks for capital requirements, valuation at each stage, and necessary resources. Adopting a similar structured approach in climate tech could significantly enhance risk assessment and resource allocation, improving the evaluation of opportunities and identifying the best-suited partners for support.
Closing Words
Our mission is to invest in companies that not only catalysts of innovation but also that we are proud to tell others about. We focus on health and climate where the potential for positive impact is immense. Understanding and leveraging the disruptive technologies that span these fields allows us to address the complex challenges each presents. The similar risk profiles and prolonged market entry timelines in both sectors necessitate patient capital and deep industry collaborations. By partnering with giants from pharmaceuticals to heavy industry, we offer founders not just funding, but substantial commercial and strategic value-add. Our approach ensures we are not just investors, but active participants in shaping a sustainable future.
