Carbon dioxide and related GHGs are central to climate discourse because of their major role in global warming. However, carbon emissions are only one part of the picture, and focusing on them alone is not enough to prevent climate disaster. This essay highlights other climate indicators, such as air quality and ocean acidification, that are essential for fully addressing climate change.

The Importance of Climate Indicators

Climate indicators help us track environmental changes across different variables over time. This has many uses, of which we think the two most important are:

• Monitoring climate patterns: Indicators like global temperature and sea level rise reveal long-term and regional trends in climate. For example, monitoring precipitation patterns helps us understand drought frequency and severity changes, while shifts in plant and animal behavior can signal abnormal ecosystem changes.

• Evaluating policy effectiveness: Tracking key indicators helps identify whether changes are natural or human-made. This data allows us to assess the impact of policies, such as linking carbon reduction to specific regulations.

Looking beyond carbon

Focusing only on carbon emissions can create carbon tunnel vision, ignoring other crucial issues like pollution, biodiversity loss, and waste management. Climate change is multifaceted, and addressing it requires considering factors beyond carbon — failing to do so can obscure significant environmental harms.

We love this image below, which makes the point better than any words:

Fig. 1: Carbon tunnel vision overlooks a multitude of environmental and social factors. Source: Stockholm Environment Institute

For example, electric vehicles (EVs) are championed as the future of sustainable transportation due to their potential to reduce carbon emissions, but the mining of materials like lithium and cobalt for EV batteries comes at an environmental cost. Here are a couple of examples:

• Water-intensive mining: In Chile, 65% of the region’s water is used for mining activities, forcing communities to source alternative water supplies. Additionally, toxic leaks from mining activities cause significant pollution in surrounding areas, causing severe ecosystem degradation that has cascading effects on human and environmental health.

• High emissions from mining: EVs generally produce fewer emissions than gasoline-powered cars over their lifecycle, but only if they are driven enough to offset their production emissions (or “embodied carbon,” which tends to be higher than that of gas-powered cars).

The danger of overemphasizing carbon goes beyond mere oversight—it can distort our understanding of and response to climate change. To tackle the climate crisis effectively, we need a broader approach that includes non-carbon climate indicators.

How Non-Carbon Climate Indicators (NCCIs) can fill the gap

NCCIs measure climate-related factors beyond carbon emissions, such as air pollution, ocean pH levels, biodiversity, and the severity of extreme weather. They help decision-makers prioritize various climate actions, including conservation efforts, and study long-term trends in vulnerable ecosystems, which have implications for issues like food security.

Fig. 2: The UN Biodiversity Lab provides decision-makers with high-quality spatial data to track global biodiversity and ecosystem restoration efforts, among others. Source: UN Biodiversity Lab

It’s essential to recognize that NCCIs don’t exclude emissions data but complement it, as all environmental factors are interconnected. Emissions can directly influence specific non-carbon indicators, such as ocean acidification and the concentration of airborne allergens. Together, these indicators offer a more complete view of environmental impact and provide insights into human and ecological health, infrastructure resilience, and secondary climate effects

This broader approach is already helping companies assess their environmental footprint. For instance, Kering Group found through an Environmental Profit and loss (EP&L) assessment that emissions accounted for only 36.6% of their environmental impact. Land use and water pollution, on the other hand, accounted for 33.6% and 14.5%, respectively. This data enabled Kering Group to make more sustainable choices, demonstrating how NCCIs can guide better decision-making.

Fig. 3: Breakdown of Kering Group’s 2023 EP&L results: impact across indicators and lifecycles. Source: Kering Group

NCCI data challenges

Measuring NCCIs is not without its challenges. Although technological advancements and sophisticated modeling techniques have dramatically enhanced the volume and quality of climate data available, obstacles remain:

• Inconsistent data quality: Data accuracy and reliability vary widely across regions, making it difficult to compare areas with rich data to those with limited resources.

• Lack of granular data: While global trends are well-documented, there is a pressing need for more detailed, real-time data at the local level, particularly for weather patterns. This level of detail is crucial for predicting localized weather events and crafting targeted policies.

• Lack of data availability: Collecting ecological data often requires extensive fieldwork and long-term monitoring, which can be resource-intensive and challenging.

Tracking environmental impact can be especially challenging for early-stage companies due to the cost and complexity of Measurement, Reporting, and Verification (MRV) processes. Even with access to extensive quantitative data, decision-making can be difficult due to potential misinterpretation.

Amasia and climate data

Amasia’s investment thesis includes a strong focus on climate data through our AI & Data for Sustainability theme, which helps organizations make data-driven, climate-smart decisions. Thematically, this also fits within our broader focus on the energy transition.

Tackling these data challenges is critical to building a comprehensive repository of NCCI data for better decision-making and impact tracking. Our AI & Data for Sustainability portfolio companies provide better access to climate data, giving businesses and consumers a deeper understanding of environmental impact beyond carbon.

We also use non-carbon data to help our portfolio companies develop customized “north-star” impact metrics. For example, Topanga tracks reusable assets, and the company includes in its impact measurement the amount of single-use plastic diverted from landfills each quarter.

Conclusion

Having clear insights into our impact on climate change is transformative. Every decision we make has a more significant environmental impact than we might realize, and the only way to truly understand and manage it is through data.

Bottom line: the view here is that we must incorporate non-carbon climate indicators to address climate change's complexity fully.

This essay explores how aging populations are more vulnerable to climate change and how longer lifespans and growing healthcare needs impact the climate. We then discuss potential ways to meet the needs of both the elderly and the planet.

What Demographics Tell Us About Aging Populations

We are experiencing an unprecedented trend in the global population: in 2020, the number of people aged 60 and older outnumbered children younger than five years. And by 2050, one in six people will be over 65, up from one in 11 in 2019.

Populations are aging faster than ever due to two key factors: birth rates are dropping, and people are living longer thanks to better healthcare. Countries like Japan, Germany, and Italy already have over 20% of their populations aged 65 and up, and almost all countries in Asia Pacific are grappling with aging populations. Shifts towards older populations are also taking place in developing regions like Latin America and the Caribbean. Northern Africa, Western Asia, and sub-Saharan Africa are expected to experience the fastest growth in the number of older people over the next three decades. The UN predicts that by 2050, 22% of the global population will be 60 or older — a whopping 2 billion people.

An aging population significantly impacts a country, affecting everything from the job market to healthcare systems and social services. Japan, the world's oldest population (more than 1 in 10 people are over 80 years old), is a prime example. While many countries face declining birth rates, Japan experiences an additional driver: a long history of longevity. The country’s aging population is profoundly impacting its economy, workforce, and society, most notably contributing to its sky-high public health expenditure and enduring economic recession.

Although it should be celebrated that social and economic development has allowed us to live longer, healthier lives, the consequences of our longevity cannot be ignored. Current rates of global aging imply that the number of countries immediately concerned by population aging will increase significantly from 96 in 2020 to 147 in 2050 – that is, more than three-quarters of all countries and around 87% of the global population. This phenomenon will substantially alter economies, social structures, and the environment. Crucially, aging populations are also highly vulnerable to the dangers of our already unpredictable climate.

Why Aging Populations Are More Vulnerable to Climate Change

In recent years, the planet has become all too familiar with the adverse effects of climate change, including alarming increases in the frequency of severe weather events. And with unceasing GHG emissions, the state of the climate is only worsening. While climate change’s disastrous effects have implications for everybody, older people are disproportionately susceptible to them. There are several reasons for this:

1. Their bodies can't handle extreme weather as well. Older adults often have health issues that make heat waves, cold snaps, and natural disasters even more dangerous. Older bodies aren't as good at regulating temperature, making heat waves more dangerous and deadly.

2. For many seniors, money is tight. Living on a fixed income makes it difficult to adapt to climate impacts: they might need help to afford air conditioning during a heatwave or fix up their homes after a storm. This money crunch, combined with their heightened health risks, puts much pressure on public healthcare spending.

3. Getting around takes more work. Many older people have trouble moving around, making evacuating difficult during emergencies. If they live alone or in care homes, getting them to safety is even trickier. As extreme weather becomes more common, less mobile seniors face higher risks of injury or death. Additionally, many emergency preparedness and response systems are currently unprepared for the added burden of evacuating aged populations despite the mounting pressure to adapt to a changing demographic situation.

4. Seniors might need more support systems. As people age, their social circles often shrink. This leaves many elderly folks without support systems to help them cope with and recover from climate-related events. It's another challenge for public health and emergency services as they try to help older populations bounce back after disasters.

The accelerating pace of climate change underscores the urgent need for comprehensive climate action to mitigate their far-reaching impacts, especially on our most vulnerable populations.

How Aging Populations Impact the Climate

Every person, through their activities and consumption habits, places an individual burden on the climate. Everything from our diets, commuting habits, and heating or cooling needs for our homes has an environmental price tag.

Of course, our levels of resource consumption don’t stay the same across our lifetimes — our needs and wants evolve as we age. Studies show that consumption levels decrease after retirement due to lower non-essential consumption, lower activity levels, reduced demand for private transportation, and changes to our diets.

But we must also consider the fact that older adults often require more healthcare: nearly 95% of them have one chronic condition, and 80% have two or more. Healthcare is resource-intensive, and demand for it has only been rising worldwide, driven partly by aging populations. The direct consequence is structural growth in global healthcare spending, which is expected to increase by 4% per year for the foreseeable future.

Although older people may have smaller environmental footprints, longer lifespans mean they’re still consuming for more extended periods and requiring healthcare support for longer periods. It’s undeniably a triumph of modern medicine and nutrition that we’re living longer; and yet we need to be mindful of how our increasing longevity affects the environment, and plan appropriately.

Longevity in a Climate-Changed World

To combat the challenges of aging populations, many countries have implemented pro-natalist policies to boost the declining total fertility rate (TFR), but with limited success. Reversing TFR decline has proven challenging, with very few countries achieving significant and sustained success after having historically low birth rates. France and Sweden are often cited as countries that (briefly) managed to stabilize or slightly increase their fertility rates, though not to the minimum replacement level of 2.1 children per woman.

These countries have implemented comprehensive family-friendly policies, including generous parental leave, subsidized childcare, and financial incentives for families. The complexity of reversing TFR decline is underscored by the multifaceted nature of fertility decisions, which are influenced by societal attitudes and opportunities.

Rapid and profound demographic transitions compound the difficulty of reversing the historical declines in fertility many countries have undergone. The persistent decline in TFR across diverse cultures and economies suggests that broader societal shifts, such as increased education and career opportunities for women, changing attitudes towards family size, and economic uncertainties, play a significant role in fertility decisions that are not easily influenced by government policies.

Addressing TFR alone, however, does not solve the issue of there simply being more people living longer. Preparing for an aging population in a climate-changed world requires a multifaceted approach. Two key aspects of this include:

Technological advancements

Innovations like telemedicine make certain forms of healthcare available for older adults no matter where they live, expanding healthcare access without the need for emissions-intensive infrastructure and transportation. Other tech, like wearable fitness trackers, act as preventative measures by encouraging physical activity, while smart home technologies enhance safety and comfort for older people. Smart home tech can also alert caregivers and loved ones in accidents or medical emergencies.

Wearable devices and sensors can track vital signs and medication adherence, allowing healthcare providers to monitor patients remotely. This proactive approach can prevent unnecessary hospital visits and travel emissions, aiding in managing chronic conditions and early detection of potential health issues.

Urban planning

As populations age, thoughtful urban planning becomes crucial for creating a more sustainable and livable environment for older adults: we need to build age-friendly and eco-friendly cities. Designing walkable communities encourages older adults to stay active, cuts down on car use, and reduces emissions.

Adding green spaces encourages physical activity and lowers ambient temperatures during heat waves, reducing energy and acting as a carbon sink. Promoting biodiversity, capturing airborne pollutants and heat stress, and improving air quality are other benefits of greening a space.

Access to amenities, accessible public transportation, and energy-efficient housing are crucial, but we cannot forget the importance of social infrastructure and community support for age-friendly neighborhoods.

Conclusion

The relationship between aging populations and climate change is multifaceted, and this blog post only brushes the surface of the issue.

Technology and thoughtful urban planning offer significant opportunities to address this challenge in a way that not only meets the needs of aging populations but also safeguards the environment — or, at the very least, minimizes the environmental impact of our newfound longevity.

By harnessing the power of innovation and focusing on environmental and social well-being, we can create a more sustainable and resilient future for our aging populations in the face of climate change.

Many thanks to Amasia Summer 2024 Fellow, Sara Goh, for supporting the research and writing that went into this essay.

These represent the key areas where we believe behavior change can have the greatest impact in fighting the climate crisis. This is a different way of thinking about a VC investment thesis, and so we are writing a series of blog posts to explain each in more detail.

We’ve explained our approach to shifting to circular and more environmentally-friendly consumption patterns in our Circular Economy blog post, and in our latest blog post on Sustainable Cities, we discussed tackling the emissions of the built environment and transportation.

Our next theme in the series is Sustainable Supply Chains: How do we make supply chains far less wasteful?  In other words, how do we shift from a wasteful, degenerative supply chain to a regenerative, resource-efficient one?

Typical supply chains are emissions-intensive, wasteful, and insight-poor

Supply chains are the lifeblood of today’s economy, producing and distributing goods and services worldwide in a complex web of interconnected systems and processes. However, activities along the supply chain, from highly-pollutive raw resource extraction to inefficient last-mile delivery and poor waste management logistics, impose significant environmental burdens.

These include high GHG emissions, natural resource over-extraction, pollution, and waste generation. A typical consumer company’s supply chain accounts for over 80% of its GHG emissions and over 90% of its impact on air, land, water, biodiversity, and geological resources.

Fig. 1: The environmental impact of supply chains; Source: McKinsey Sustainability

GHG emissions and resource extraction, however, aren’t the only issues that must be contended with. One of the biggest contributors to supply chains’ environmental impact is the massive amount of waste that they generate. Across all global supply chains, over $163 billion worth of inventory — 8% of total inventory — is thrown away yearly due to expiry or overproduction. Expiry and overproduction are driven by many factors, including inventory mismanagement, outdated systems, transportation and storage issues, and difficulty estimating and managing demand.

These challenges are partially due to the fact that many companies lack a systematic way to track inventory, relying instead on manual tracking; in fact, 73% of supply chain managers still use manual spreadsheets or outdated software to track inventory.

Moreover, increasing material shortages are encouraging a shift from a Just-in-Time (JIT) inventory model (goods are produced only as needed) to a Just-In-Case (JIC) model (companies keep large inventories on hand). While a JIT model inherently minimizes waste by actively adjusting supply to match demand in real-time, the JIC model relies on overproduction to mitigate the risk of stockouts.

We need to tackle supply chains inefficiencies, for both people and the planet

Prioritizing sustainability and transparency requires us to reimagine how supply chains can meet businesses’ and consumers’ needs in the least resource-intensive, emissions-heavy, and waste-generating way possible.

Enter our theme, Sustainable Supply Chains. Under this theme, we look at companies that rethink traditional supply chain management approaches, and enable us to move away from siloed systems and processes to a more integrated, data-driven model. These companies’ software solutions can be leveraged by actors along the supply chain, helping to minimize inefficiencies and optimize networks, processes and inventory.

Fig. 2: Where food waste occurs along the supply chain; Source: ReFED

How can companies solve supply chain challenges?

Software companies hold great potential in shifting behavior across the entire supply chain. We see three broad areas to address these shifts: planning, visibility, and management. In other words:

• How do managers plan waste out of the supply chain?

• How do managers manage the movement and conditions of inventory across each stage of the supply chain?

• And how do managers gain visibility over their processes and suppliers to ensure environmental standards are met across the full scope of a company’s value chain?

Software that enables better planning includes demand forecasting and route optimization software for planning delivery routes and times. Inventory and waste management software help leverage data to increase real-time visibility of inventory location and quantity, greatly easing inventory management across the supply chain. Lastly, software can aid in increasing visibility across the supply chain: supply chain mapping and supplier collaboration software can play a significant role in streamlining processes and communication.

Fig. 3: Supply chain transformation prioritized by a majority of firms; Source: Bloomberg

The Sustainable Supply Chains companies in our portfolio demonstrate how software and software-enabled companies can effectively cut supply chain waste and inefficiencies. For example, TreeDots in Singapore is a B2B platform leveraging technology to match food supply and demand, procuring surplus and imperfect food and redistributing them to users at affordable prices. This helps prevent food waste and associated emissions.

Shortening supply chains can also mean significantly reducing emissions, especially from transportation. In eastern Indonesia, Super enables affordable access to consumer goods to rural populations via its network of community-based agents and logistics centers. Agents sell products directly from manufacturers to customers through its app, cutting out many layers of middlemen and reducing associated emissions.

How we view supply chain solutions also applies to a plethora of B2C companies — supply chains that lead up to individual consumers can and should also be reconstructed. One such company in our portfolio is Living Food in India, which provides healthy meals made with locally sourced, high-quality ingredients to consumers through its cloud kitchens and offline outlets. Living Food reduces delivery emissions by sourcing local ingredients, and minimizes waste and plastic use.

Conclusion

The ideal supply chain is transparent and traceable, with full end-to-end visibility, ranging from the extraction of raw materials to the end-of-life of a product. This transparency allows businesses to identify areas of inefficiency and environmental harm and take corrective action, reducing waste and emissions.

Such supply chains could allow businesses to identify and track progress toward environmental goals, and empower consumers to make informed choices about the products they purchase, thus dramatically changing the way we produce and consume goods.

Many thanks to the Amasia Summer 2023 Fellows, Alannah Nathan and Nazli Dakad, for supporting the research and writing that went into this essay.

Our investment pillars, or the sustainable themes — AI & Data for Sustainability, Circular Economy, Sustainable Supply Chains, Sustainable Cities, and Clean Energy Transition — each tackle an area where large-scale behavior change is needed to avert the climate crisis. We are dedicating a blog post to each of the themes to explain their significance and how they guide our investments.

In our last blog post, we dove into how to shift to circular and regenerative consumption patterns in Circular Economy. The next theme we will explore is Sustainable Cities: How do we rethink the environmental impact of the built environment? In other words, how can we change how we use our buildings and move around to minimize emissions and resource use?

The built environment is highly GHG intensive

63% of our energy-related carbon emissions are housed in the built environment when considering emissions from buildings and transportation: buildings alone are responsible for 39% of global energy-related carbon emissions, with just concrete responsible for 8% of global carbon emissons. The emissions intensity of buildings is driven by short building lifespans; upfront costs of emissions-minimizing smart infrastructure and retrofitting; and misaligned incentives between developers, owners, and occupants for improving buildings’ environmental impact.

Source: Architecture2030

But the built environment doesn’t just encompass buildings — it also includes the transportation sector, which consists of our roads, bridges, and transportation systems. The global transportation sector is responsible for 24% of energy-related emissions, with road traffic being the biggest contributor.

Source: Our World in Data

In the US, car-centric infrastructure, a culture of car ownership, inefficient public transportation systems, and suburban sprawl further drive up the carbon footprint of road transportation. The majority of U.S. transportation emissions are attributed to the use of personal cars: 57% come from light-duty vehicles like sedans, SUVs, and pickup trucks, while only 8% come from aircraft.

We need to rethink how we use our built environment

Even though the built environment is very emissions-intensive, several impactful ways exist to reduce this effect. Some of the most direct and immediate ways of doing this is by changing how and how much we rely on physical infrastructure. For instance, lengthening build lifespans from their current 50-year average to 80 years will reduce their environmental impact by 29%. Households that switch their 20-mile commute from a personal car to public transportation will cut their yearly GHG emissions by a third.

Source: Programme for Energy Efficiency in Buildings

Apart from building less and building to optimize material usage, we must also use our buildings in the most efficient manner possible. On average, 30% of energy used in commercial buildings is wasted. Reducing avoidable emissions – such as those from wasted energy – is vital to curbing climate change. This includes implementing smart infrastructure throughout the built environment to maximize resource efficiency and reduce our carbon footprint. For example, using smart street lighting can reduce electricity use by up to 80%. This alone is equivalent to Germany cutting its nationwide electricity use by 80%.

Within the transportation sector, we must reduce demand for the most pollutive types of transport and choose sustainable mobility options when possible, including zero or low-emission vehicles, electrified public transport, and biking or walking. If 29-34% of all urban passengers opt for public transit, 9.42–15.42 gigatons of GHG from cars would be avoided by 2050.

These changes in behavior must take place on a large scale in order for the environmental impact to be significant. This is where the Sustainable Cities theme comes in: investing in companies that reframe our approach to building use and transportation can ripple changes in behavior throughout society. This can subsequently reduce GHG emissions, raw material use, and waste generated by the built environment.

How can companies change our relationship with the built environment?

Software companies hold massive potential in the built environment space because of their potential to reduce barriers to sustainable transportation and enable efficient use of buildings. Software solutions can also reduce our reliance on buildings altogether by providing remote alternatives to services we rely on.

For example, Mobility-as-a-Service (MaaS) software enables users to map, book, and pay for their entire journey using a user-friendly platform. MaaS integrates diverse transportation options like public transit, ride-sharing, and bike-sharing. This helps enhance mobility for users, reduce traffic congestion, and promote sustainable transportation options. Energy management software is also designed to monitor, analyze, and optimize energy consumption within buildings and facilities. The software provides tools and functionalities to track energy usage, identify inefficiencies, and implement energy-saving strategies to reduce emissions.

Other big players within the Sustainable Cities theme include remote services companies: they decouple the provision of essential services from the use of physical infrastructure by making said service available digitally. Consequently, remote services reduce the need for car travel and air travel and diminish reliance on buildings. Digitizing services like healthcare and education will ensure access to these vital services without physical infrastructure's associated emissions and resource intensity.

Companies providing much-needed remote services include Dialpad, which is leading the way in remote business solutions with its AI-enabled, all-in-one voice, video, and messaging platform. They enable businesses to communicate and collaborate effectively and efficiently while working remotely. Similarly, Focusmate matches remote working professionals in virtual co-working sessions to increase productivity and accountability.

While the emissions savings of remote service solutions may not seem significant, the converse may, in fact, be true: researchers estimate that digital solutions can bring about up to 20% emissions reductions in energy, transportation, and materials sectors. Reducing business aviation due to telepresence could also avoid up to 4.43 gigatons of carbon dioxide emissions.

Conclusion

For our society to achieve net zero emissions, we cannot neglect the built environment’s impact on climate.

As our population increases in size, we must consider strategies to meet all individuals’ needs without a proportionate increase in physical infrastructure and the environmental impact that this will entail.

We must rethink how we plan our cities to make them more liveable and walkable, how to encourage sustainable decision-making regarding personal mobility, and how to reimagine the spaces we require to live, work, and play in.

Many thanks to the Amasia Summer 2023 Fellows, Alannah Nathan and Nazli Dakad, for supporting the research and writing that went into this essay.

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Behavior change is what this essay will refer to as a preventive strategy: Billions of people making trillions of decisions bear immense potential to prevent emissions from being generated, waste being produced, and natural resources being used. Preventive strategies aren’t just good for the climate; consumers and businesses also seem to favor them. 

Fig. 1. Opting for train rides instead of flights, and public instead of private transport, have the potential to significantly reduce transportation emissions. Source: Sustainable Travel International

After advising a range of clients in private equity and venture capital on ESG matters, Malk also sees preventive business strategies as appealing to consumers and enterprises. This is reflected in increasing capital allocated towards these solutions.

There is a clear commercial incentive to prioritize preventive strategies: Besides being a key lever for combating climate change through mass action, preventive strategies may also present significant business opportunities for enterprises capitalizing on climate solutions.

What are reactive strategies, and why aren’t they enough?

Reactive strategies are the counterpart to preventive strategies, and refer to those that attempt to reduce harm that is already inflicted. Examples include deep tech solutions like carbon capture technology to reduce atmospheric carbon; plastic-eating bacteria to counter rapidly accumulating waste; and stratospheric aerosol injection: introducing small, reflective particles into the upper atmosphere to reflect sunlight before it reaches the surface of the Earth.

While many such innovations have made significant progress in decarbonization, they’re not enough to stave off climate change. As David Biello writes, “without the societal will to decarbonize, even the best technologies won’t be enough”. We do not have enough land, capital, natural resources, margin for error, and, perhaps most critically, time. 

Scaling proposals for technical carbon removal, for instance, would require 180 Gt of clean water per year, which could deprive 53 million people of water, and cost over $1T annually. Even converting all of the Earth’s cropland to forests to remove CO2 would lower global temperatures by just 0.45°C. 

Fig. 2: Carbon capture technology. Source: Clean Air Task Force

At our current rates, we are simply emitting too much carbon for any solely reactive solution to be deployed at the speed and scale necessary to combat climate change.

For these same reasons, Malk Partners expects some degree of hesitancy among asset managers to invest in reactive strategies to climate change, outside of climate-specific investors. Reactive strategies are capital intensive and inherently speculative from a technological point of view, both of which may make them less attractive as business models to traditional investors, outside of a few unicorns. Preventive strategies may provide a less risky avenue for exposure to the rapidly growing climate solutions space.

We also need preventive strategies to tackle the problem at its root

While reactive strategies are valuable, it makes sense to address the source of the problem at its root, rather than just find ways to alleviate the damage. In an ideal world, mankind can sequester all the carbon we release, restore all devastated ecosystems, recycle all our waste, and reverse all our pollution. 

But until society gets to that point — if it is even possible — humans have to find ways to drastically scale back on our negative environmental impact so that there is less to undo in the first place. And to do this, the world needs preventive strategies.

For Amasia, this specifically means large-scale behavior change. The more society scales back on overconsumption and emissions-heavy behavior, the less pollution will be created and the less environmental degradation will be caused (and have to be undone). 

Through ESG diligence and advisory work, Malk has also observed these behavioral trends happening organically in the market. For instance, consumers are increasingly eschewing meat-based diets, at least partly for environmental reasons. In 1994, only 1% of Americans identified as vegetarian or vegan - in 2022, that figure was measured to be as high as 10%. These trends also extend to enterprises, with 39% of U.S. Fortune 500 companies holding at least one tracked GHG reduction initiative. Unsurprisingly, Malk has observed a corresponding increase in sustainability initiatives among corporates and investors alike, with both groups seeking to capitalize on these trends and to expand into rapidly growing sectors.

Apart from being more conscious of their carbon footprint, many companies are leading the way with preventive solutions. By powering reuse systems for food packaging, Amasia’s portfolio company Topanga helps their clients eliminate the need for single-use to-go containers by switching to reusables. This switch is made seamless and convenient for customers, such as students on college campuses, and prevents the use of hundreds of thousands of single-use containers per semester. 

Fig. 3: Reusable containers and packaging displace single-use plastic. Source: Unsplash

Similarly, TreeDots helps redistribute imperfect food to customers, creating a market for food products that might otherwise have been discarded. Reducing food wastage can prevent up to 8% of all GHG emissions annually.

There are, of course, other preventive strategies that don’t focus on behavior change, and that require deep tech — decarbonizing construction, for instance, and reducing water waste in clothing production. 

Preventive strategies that Amasia invests in take many forms, and ultimately aim to drive environmentally sustainable changes in behavior. This ranges from telehealth and carbon emissions measurement to remote education. Though they might seem disparate, in their own innovative ways, each of these companies presents a strategy that helps to prevent harm to the environment.

For instance, Commons helps users track their carbon footprint using credit card transaction data, and nudges users to make more sustainable lifestyle choices to reduce their footprint. Commons also offers a service to help users offset their unavoidable emissions. By helping customers measure air quality, often for the first time, Clarity raises awareness of air quality and air pollution issues, thereby enabling climate action to reduce emissions.

Conclusion

As the adage goes, prevention is better than the cure – and the climate crisis is the most appropriate and urgent example there is. While reactive solutions help slow down the advancement of climate change and maintain the liveability of our planet, they do not solve the root of the problem. Reactive solutions only buy us time while we implement preventive solutions to change behavior and build social momentum around prioritizing sufficiency, planetary welfare, and regeneration.

Amasia’s thesis centers on the idea that human behavior (and the resulting carbon footprint) is the key driver of climate change. It is behavioral change at scale that got us here, and it is behavioral change at scale that will help us fight the climate crisis. We’ve identified five areas where investments can drive changes in behavior, which we call our sustainable themes.

In the fall of 2022, we did a deep dive into one of our themes, Circular Economy, where our guiding question is: “How can we turbocharge the shift in consumption behavior towards reuse and recycling?”

Our current “take-make-waste” system of consumption depletes energy and natural resources, emit greenhouse gases, and generates over 2 billion tonnes of waste annually. Across its life cycle, the average product results in carbon emissions of 6.3 times its own weight. And once a material lands in a landfill, only an extremely small portion of the energy used to make the material can be recovered through landfill gas capture.

Our deep dive looked at a variety of solutions and alternatives to our energy- and resource-intensive system of consumption. Many (but not all) of the companies we came across fell into the so-called “circular economy.” One of our key learnings from this effort was that most of the proposed solutions to our consumption problem involve full-system replacement. We believe there is certainly a place for such models, but they are not the right fit for every situation.

Enter Topanga. Topanga is a platform that helps brands develop and manage successful reusable packaging programs. The founders have a deep understanding of the challenges of running a reusable packaging program—they previously operated a closed-loop market in Los Angeles and found themselves in need of tools to manage the reusable packaging in the store.

While the Topanga solution is broadly applicable — contorted calculations of TAM are not required! — the company is especially focused on campus settings, both corporate and education.

In universities, for instance, there is a high demand from students and other stakeholders for closed-loop dining programs. However, most universities already have their own reusable assets and cleaning facilities, and full-systems replacement services currently on the market are not flexible enough to accommodate the unique needs of these existing dining environments.

Topanga meets dining providers and users where they are, making behavior change achievable. Topanga’s software is easy to integrate into existing dining programs and offers numerous features to ensure that packaging loops are successful. Universities can track reusable packaging assets and design and implement systems of rewards and penalties to ensure their return. Integrations with existing systems like GrubHub make it easy for dining program participants to check out packages, receive reminders about due dates, and return packages.

Topanga’s dashboard also aggregates data to provide broader insights into the program’s success, enabling more robust and detailed ESG reporting and allowing for target adjustments to ensure effectiveness. Topanga-powered programs have reached return rates of 99%, saving tens of thousands of pounds of waste from entering landfills and providing a meaningful economic return compared to disposable containers.

Topanga currently supports programs at some of the largest universities in the country, including Ohio State University, Boston University, and Colorado State University. The company continues expanding its partnerships and product features, having recently finalized deals with the three largest food distributors in the United States—Aramark, Sodexo, and Compass. Topanga’s team estimates that, at scale, the company could save customers $120 billion per year and eliminate 222 million tons of CO₂ emissions.

We are excited to support Topanga on its journey to make reducing the consumption of wasteful materials easier and more enjoyable.

The first theme we’re going to talk about is Circular Economy: How can we turbocharge the shift in behavior towards reuse and recycling? In other words, how do we shift from a degenerative, linear model of consumption to a more regenerative circular one?

The problem with how we consume

Fossil fuel use has skyrocketed over the past few decades driven by sharply rising consumption. Our consumption habits are driven by multiple factors — social norms, mimetic desire, and increasingly sophisticated and targeted advertising, to name a few. We own more things than we know what to do with: the average American household contains 300,000 items.

Source: Our World In Data

In a society predicated on economic growth and a linear model of consumption, the status quo of “take-make-waste” depletes energy and natural resources, emits greenhouse gases, and generates over 2 billion tonnes of waste annually. This number is expected to increase to 3.4 billion tonnes by 2050.

This level of overconsumption is simply unsustainable. Producing material goods requires immense quantities of energy and raw material — 45% of global GHG emissions are directly linked to the production of goods and management of land. Across its life cycle, the average product results in carbon emissions of 6.3 times its own weight. And once a material lands in a landfill, only an extremely small portion of the energy used to make the material can be recovered through landfill gas capture.

The case for consuming less

There’s a plethora of emerging technological innovations that seem to be a remedy to the problem of overconsumption: carbon capture technology, plastic-eating bacteria, and other deep-tech solutions. They seem relatively promising — but technological innovations alone are not enough to deliver action at the speed and scale required to avert climate disaster.

An absolute reduction in production and consumption is required to mitigate climate change, conserve natural resources, and reduce the waste we generate. This involves reducing market needs altogether, particularly the vast quantities of consumer goods that don’t contribute to well-being. It also involves using existing materials to fulfill market needs by extending the lifecycle of existing goods and repurposing component materials into new goods, without the need for virgin resources.

Creating a circular economy requires changes in production and consumption behavior and, ultimately, change at the systems level. This is no easy task — it will require the cooperation of and contributions from governments, corporations, financial institutions, research institutions, and the general public. But this transition needs to happen now and at scale, and we believe corporations can help kickstart the requisite large-scale shift in behavior.

That’s where our Circular Economy theme comes in. To build a viable circular economy, it is crucial to make the reduction of consumption and the recycling and reuse of existing goods an exciting proposition for businesses and consumers. We believe that the companies in our Circular Economy portfolio are helping to turbocharge the shift in behavior towards reduced, circular, and more mindful consumption.

So how can companies enable a reduction in consumption?

Companies hold lots of potential in shifting customer behavior, and this includes adopting alternative modes of consumption and production. Sectors that we find promising include resale and recommerce, refurbishment and repair, upcycling, recycling and waste technology. Companies in these sectors enable consumers to opt out of take-make-waste and choose to consume in less environmentally impactful ways — and to scale back on consumption entirely.

Companies like Topanga provide software that powers large-scale packaging reuse programs, reducing and potentially eliminating the need for new packaging. At the time of writing, the university reuse programs that Topanga supports prevent 1 million single-use containers from heading to landfill every semester.

Other companies like Lucky Sweater expand access to second-hand clothing and provide a platform for peer-to-peer trading and swapping, shifting demand away from environmentally destructive fast fashion to slow fashion, vintage and reworked pieces.

Linear vs circular economy

Source: US Chamber of Commerce Foundation

There are many other possibilities. Companies that focus on purposeful disassembly of consumer goods, for example, enable damaged or faulty parts to be replaced or repaired without having to replace the whole product. This could significantly extend product lifespans. Rental platforms also drive down demand for brand-new products that people use rarely or only once.

Conclusion

Transitioning from a linear to a circular economy is a massive effort, but with all hands on deck, it’s something that definitely can happen — it has to. And we have reason to be optimistic: innovative companies can, and already are, accelerating this much-needed, large-scale shift in behavior.

Last September, we introduced our new impact assessment framework for the first time: a framework that is applicable to an early-stage VC like ours and that is rooted in our climate and sustainability-focused investment thesis.

Part of this framework is our impact screen, informed by established impact assessment frameworks like the Impact Management Project (IMP) and the Global Impact Investing Network (GIIN)’s IRIS+. Developed in partnership with Malk, this impact screen guides our assessment of companies we’re considering investing in across 5 key dimensions.

While these dimensions are all relatively straightforward, one of these is less intuitive than the others. We’re talking about additionality — a term wielded by many an impact investor but that has no universal definition. Multiple forms of additionality exist (e.g. “financial” vs “non-financial” additionality).

For the purposes of this blog post, we’re interested in the environmental additionality of our investments. We like this definition, from Project Frame: “Additionality is the degree to which a proposed climate solution causes GHG/environmental impact that would not have otherwise happened in a no-intervention baseline scenario.”

Baselines in additionality

By definition, this counterfactual baseline scenario cannot be directly observed because it did not happen, so it can only be estimated or inferred based on contextual information.

An investment is considered additional when it demonstrates a strong deviation from a counterfactual or business-as-usual scenario. Assessing additionality, therefore, requires comparing indicators in a portfolio company (environmental impact in our case) against a baseline. An investment can be considered additional if it yields outcomes different from its baseline.

However, it is common for organisations to define the project as being both the cause and effect for the assessment of additionality and baselines, leading to a circular definition of additionality:

An improved definition would look something like this:

Adapted from the GHG Institute

Applying this to our portfolio company TreeDots, we could say “The amount of food waste being saved is additional if it is different from what would happen without TreeDots’ food redistribution service”. If a proposed activity (e.g. saving food from being wasted) would take place even in the absence of the intervention (e.g. TreeDots’ service), then there is no change in behaviour and the proposed activity is actually the baseline scenario and therefore not substantively different.

Establishing a baseline is crucial in determining additionality, and this baseline should of course be specific to the company’s intended impact.

Baselines in themselves are tricky to establish; we make estimations based on as much contextual information as is available to us. In general, investments with the following characteristics tend to be additional or make additionality easier to justify:

• In sectors or geographic areas that are little or under-financed

• Benefits underserved segments of the population

• Leads efforts to encourage governments/regulatory bodies to facilitate investments in underserved communities

• In an environment with significant investment barriers (i.e. policy, institutional, market, value chains and human capital). E.g. renewable energy projects tend to be additional in unfavourable policy environments for renewable energy; projects tend to be additional in countries with undeveloped value chains, a lack of qualified human capital, and a weak institutional environment).

How does Amasia approach additionality?

A standard additionality approach cannot cover 100% of the portfolio as additionality looks different in different contexts — so we adapt our protocol for producing impact results on a company-by-company basis.

The two aspects that we look at, captured in our impact screen, are: (1) Absence of direct competitors or alternative products/services readily available; (2) The insufficiency of market trends, such as consumer preferences, to change behavior alone.

Our assessment of these two aspects comes in during our due diligence process in which we assess the current market, competitors, the novelty of the technology, and market trends. We then assign a company a score of 1-3 according to the rubric in our impact screen.

But we aren’t concerned with a company’s additionality only at the point of investment — additionality informs how we think about our companies’ impact approach and what impact metrics we choose to measure. It’s embedded in our long-term impact strategy.

For example, with Clarity, measuring additionality entails measuring how Clarity’s air quality monitors have enabled climate action. To do so, we must understand clients’ individual use cases and how Clarity’s monitors have informed their decision-making. We gain insight into this through surveys and conversations with clients.

Conclusion

Additionality can be a tricky concept, and it’s easy to misunderstand and misuse it — and as stated in its definition, additionality is impossible to definitively validate. However, it does still offer a valuable lens through which impact can be assessed. This blogpost outlines how we at Amasia apply it to our thinking, and so it is closely tied to our thesis and theory of change. As our approach to impact evolves, so will our application of additionality.

When we talk of Amasia’s “impact,” we mean making investments in companies providing products and services that directly support our theses.

The conundrum we face should be immediately acknowledged: these are very early-stage companies. For our portfolio companies, impact is core to their business and therefore managing impact is directly tied to their financial success. But reporting on impact is nuanced, and we cannot and should not overburden either ourselves or our companies with box-checking measurement exercises, something that we see happening within ESG and to a certain extent with “climatetech” investing. 

For early-stage companies, everything measured should be deliberate and value-additive—otherwise it’s a net drain on the business and defeats the purpose.

That's why we partnered with Malk Partners to craft an impact assessment framework that could work not just for us, but for many other early-stage VC firms. Malk is the preeminent advisor to private market investors on ESG and impact, and they were also deeply interested in applying their expertise to the early-stage VC world.

Context

While there are existing models for impact assessment—such as the Impact Management Project (IMP) and IRIS+ by the Global Impact Investing Network (GIIN)—we felt there was no clear framework to define and identify impact for early-stage VC firms. 

So we built our own with Malk’s help: a framework which was applicable to an early-stage VC like ours and which deeply embedded our own climate and sustainability investment thesis. We view this framework as a step towards capturing our companies’ impact potential in a form that can be understood by our companies and also other stakeholders (such as our co-investors). 

Our impact framework aims first to inform our investment decisions, and second to track our portfolio’s impact after the investment. It includes an intuitive Impact Screen, which assesses climate and sustainability impact potential across five key qualities, and a more thorough impact diligence process for “Core” investments, those where we typically have significant ownership, are deeply engaged, and hold a board seat.

We foresee impact assessment and management continuing to evolve; this framework is what works for us, at this time, with our current investment thesis. We do recognize the value of aligning with the consensus in the bigger impact assessment sphere and have embedded leading industry practices into our framework. 

Our Investment Thesis

Our investment thesis is built around the belief that it is behavior change at scale that will get us to a sustainable world. If you want to know more about how we got to that conviction, read this book by our managing partner Ramanan Raghavendran.

We invest across five themes, with each theme guided by a fundamental question:

1. AI & Data for Sustainability — “How do we help consumers, corporations and governments make better data-driven decisions about climate and sustainability?”

2. Circular Economy — “How can we turbocharge the shift in views on consumption towards re-use and recycling?”

3. Sustainable Supply Chains — “How do we help make supply chains far less wasteful?”

4. Sustainable Cities — “How do we rethink the environmental impact of the built environment?”

5. Clean Energy Transition — “How do we improve energy reliability and efficiency, and facilitate the uptake of clean energy?”

This way of thinking about climate, the environment, and sustainability is very different for a VC investor, for it is rooted in common sense rather than a sector-driven approach or one narrowly focused on carbon emissions. But we do find our way ultimately to sectors within each theme (and to emissions!), which we explore in our blog post here.

Benefits of Assessing Impact

Beyond simply having a shared way of talking about a company’s impact potential, assessing impact has a multitude of benefits for the companies themselves. First, just as companies perform market sizing, assessing the impact potential of a business gives the company a gauge of how their product or service can positively impact the planet. Continuing to assess and manage that impact allows companies to evaluate the progress of their impact goals more objectively. 

From a financial standpoint, consistently collecting data and compiling impact metrics give companies the ability to show their quantified impact to investors, customers, and other stakeholders. Companies can also find weak spots in their impact potential, which can guide their business decisions. 

Amasia invests at the intersection of purpose and profit. We believe the world is evolving to a state where doing good does not imply sacrificing economic returns. Showing this with data and performance will help attract more investment into companies doing good for the world.

Our Impact Screen

Fig 1: Amasia's Impact Screen

The core of our framework is the Impact Screen, which evaluates every potential investee company and measures impact potential on a three-point scale across five qualities of impact, each guided by a question: 

1. Positive Impact — How well aligned are the Company’s products/services with Amasia’s thesis?

2. Intentionality — How core is thesis-specific action to the Company’s business model?

3. Scale of Impact — Does the Company have the potential for global scale?

4. Depth of Impact — How significant is the Company’s thesis-related impact to customers or end-users?

5. Additionality — How additional is the Company’s impact (e.g., compared to competitor products/services and/or existing market trends)?

We will use the example of Clarity, a global leader in air quality management where we led the Series A and Series A+, to showcase how our framework works in practice. Here is Clarity assessed against our Impact Screen:

1. Positive Impact (Score: 3): Clarity fits within “R1” of our thesis, as it provides environmental data that guides decision-making around air quality management. Mitigating air pollution brings massive climate-positive co-benefits—the effects are immediate and measurable, which can be especially helpful for timely and accurate evaluations of climate change mitigation policies. 

2. Intentionality (Score: 3): Climate impact is core to Clarity’s business model. Measuring air quality spurs and enables efforts to mitigate air pollution, which directly contributes to reducing carbon emissions. Impact and profit move in lockstep. 

3. Scale of Impact (Score: 3): Clarity has a strong global presence, operating in 60+ countries across multiple continents, which includes cities measuring air quality data for the first time. The company continues to expand its customer base to more regions.

4. Depth of Impact (Score: 2): While measuring air quality data is the key first step to tackling air pollution, Clarity does not directly assist efforts to reduce air pollution and thus carbon emissions. Nevertheless, the company provides insightful air quality data and analytics which are crucial in spurring and evaluating mitigation efforts. 

5. Additionality (Score: 2): Other companies and governments are already measuring air quality in some locations, but rarely with the precision required to effectively guide targeted, local policy interventions. Clarity’s solution is unique in its affordability, scalability, and data accuracy, enabling more precise air quality measurement in both  locations where air quality monitoring is already in place and those where air quality measurement was not readily available. 

After giving a score to each of the qualities, we take the average of the five scores as the company’s overall score. We do not apply any kind of cutoff score, but the scores help us understand the company’s strengths and weaknesses in climate impact potential. 

Incorporating impact into early investment screening helps prevent “impact-washing.” It’s important to note that this is not where we end our process—that would be falling into the trap of “box-checking”—but rather, we use this score to help us identify pros and cons related to a company’s impact before moving forward with the investment, alongside other business factors. 

Our Impact Diligence Process

Our Core investments undergo an additional impact diligence process, engaging directly with Malk. Malk Partners advises VC firms and other private market investors on ESG and impact considerations including conducting due diligence pre-acquisition.

This diligence involves a deeper assessment of the company’s impact potential under our thesis and the extent to which the management team is currently aware of and managing impact. Malk also evaluates material ESG risks that threaten the potential for impact (e.g., poor labor practices, environmental mismanagement). The analysis is right-sized for early-stage companies and takes into account how their business will change as it rapidly scales.

It is very important to point out that this work is meant to be also helpful for the target company. One of the key results of this assessment is providing recommendations on how the company can maximize, manage, and measure its impact potential, which is later shared with the company. 

In addition to analyzing the five qualities of impact from the Screen, the diligence process includes a sixth dimension of ‘Measurement’. The company is first evaluated on where it currently stands on impact measurement. For example, Clarity was already measuring “cities where we made monitoring possible” and “percent increase in monitoring coverage (area)” to assess their impact, but did not yet start leveraging the data to inform any actions or decision-making. 

The ‘Measurement’ recommendations given are aligned with the IMP’s 5 Dimensions of Impact—who, what, how much, risks to impact, and contribution. These widely recognized criteria provide the building blocks to understand the breadth, depth, contribution, and likelihood of impact, and align impact measurement efforts across impact investors, enterprises, and practitioners in a way that can be clearly communicated. 

For Clarity, here are a few examples of the suggested metrics for each of the IMP’s dimensions:

1. Who: Demographics of populations affected by policy and business changes 

2. What: How customers are leveraging data to create change toward higher air quality

3. How Much: Number of policy changes performed utilizing the Company’s data; percent change in air quality over time

4. Risks to Impact: Data accuracy; customer feedback 

5. Contribution: Customers who did not have access to (due to affordability, etc.) alternative data on air quality prior to the Company

These metrics can be obtained through customer surveys, and Malk recommends using lean data methodologies and collecting low-burden data on a regular basis (e.g., annually). 

It is, always, up to the company how they want to use these recommendations; we do not impose our will, as founding teams of frazzled startups need to make their own decisions on when, how and what to measure. We find, though, that they tend to agree with us 😀.

Why should early-stage companies care?

Although early-stage startups know that assessing impact is useful, this is not a trivial task. Putting aside the fact that startup teams are frazzled almost all the time, “impact” is not an easily quantifiable term. But if impact is truly intentional and core to the Company’s business value, then impact management is critical to making smart business decisions.

To help guide companies in their impact assessment journey, it is important to first mutually understand how assessment can be useful for the company and get their commitment to impact assessment. 

In the case of our sustainability thesis, the most obvious reason all companies should care is that climate change is undeniably the biggest global challenge of our time. Countries have signed the Paris Agreement, declared nationally determined contributions, and it’s prime time to act. For us to get to a sustainable planet, everyone must contribute towards our common goal of net zero emissions. 

For climate-impact businesses, assessing and sharing their climate impact is bound to attract more support (e.g., from customers, investors, governments, etc.) for their climate-positive actions to further amplify impact. It is also important to showcase how we can leverage diverse climate solutions—including those which may not typically be labeled “climate solutions”—to tackle this crisis together. 

From a practical standpoint, regulations requiring companies to disclose their climate impact and risks are increasingly becoming widespread. Taking an early step toward what will certainly be required of them in the future will give them a significant advantage. (This is also the case with ESG risk management, but that is not the focus of our particular framework.)

Where does “ESG” fit in?

We think the ESG movement has turned into a giant box-checking exercise, and we were originally reluctant to do much here. There has been so much top-down pressure in ESG that investors and companies have been eager to adopt the easiest approach, with few investors truly committed to improving ESG management, leading to “green-washing.” These types of compliance requirements are burdensome on early-stage companies, and distract from the real point of ESG for start-ups: scaling responsibly. 

Ultimately, we concluded that there is value in our companies thinking about ESG risk mitigation early as it produces rewards in the future. An ESG risk assessment is included in the diligence process for Core investments, with recommendations for building strong practices where operationally relevant at scale.

Though frequently confused, impact and ESG are not the same. ESG refers to the risks and opportunities that arise from environmental, social, or governance factors within a company’s operations (e.g., fair wages, emissions reductions). As discussed above, impact relates to the social or environmental changes resulting from a business’s products or services. Material ESG risks are relevant to all companies, but impact companies have a particular responsibility to manage ESG factors as a risk to their impact potential.

We view ESG risk mitigation from a ‘risks to impact’ perspective—looking at which ESG factors pose material risks to the company’s impact and ways to mitigate those risks. Thus, the core ESG issue areas we focus on include: Climate Change, Data Privacy & Security, Ethics & Compliance, Social & Labor Conditions, and Diversity, Equity, and Inclusion. Other ESG issues are also reviewed (e.g., Supply Chain) when relevant to the business model.

Conclusion

Our impact assessment framework represents a significant step forward for Amasia in capturing the impact of our companies. We have now begun applying the framework to our investments. This is our first attempt at assessing the impact of our companies in a structured way, and we will continue to evolve our methods.

About Malk Partners

Malk Partners is the preeminent advisor to private market investors for creating and protecting value through environmental, social, and governance (“ESG”) management and impact investing. Founded in 2009, Malk Partners advises many of the world’s leading alternatives managers investing across private equity, growth equity, venture capital, and private credit by helping them define ESG goals, achieve ESG results, and guide their portfolio companies in driving value creation and mitigating risks. The firm is headquartered in La Jolla, California with a second office located in New York. For more information about Malk Partners, please visit www.malk.com. 

The earth’s climate has oscillated naturally for billions of years. The Industrial Revolution, starting just 250 years ago, triggered planetary change. The idea that human activity might affect entire natural systems, let alone the planet, was laughable at one time. But the facts are now incontrovertible.

Extraordinary population growth, increased per capita consumption, land use transformations, interconnected global systems of all sorts -- all these and more have led to a dramatic and unnatural shift in our climate. Congratulations, humanity: we’ve managed to change the *climate*!

This planet is all we’ve got. We need to preserve and nourish it.

Amasia’s journey began with a better understanding of the climate crisis. Our research helped us realize this, from first principles: changing human behavior is the key. The climate crisis is upon us because of behaviors of a certain kind. We will get out of the abyss, to a safer and more sustainable planet, with behaviors of another kind. To use our favorite phrase: “billions of people making trillions of decisions differently.”

This is our investment thesis as a VC firm: “Amasia invests in companies that help catalyze behavior change to build a safer and more sustainable planet.”

At the level of an individual, a single human being trying to figure out what to do, that thesis statement IS Joro. If we were asked to come up with a single company that encapsulates what we are trying to do, it would be: Joro.

Behavior change is really hard. And there is a reasonably widespread belief that it isn’t just hard, it is impossible — and so the onus shifts to governments and corporations. But what are governments and corporations but collections of individuals?

Early on we concluded that it was individual behavior change — either as consumers, or as decision makers in governments and corporations — that was going to drive fighting the climate crisis and getting to a more sustainable planet.

Technology can help. The hugely positive effect of learning apps, fitness apps, and productivity apps shows that anyone can benefit from something in the palm of their hand that can help change behavior and achieve goals.

That is why we like the Joro approach.

One of the main barriers to behavior change is the “bottom of the mountain looking up” phenomenon -- feeling something is so immense that one is completely paralyzed. Another is the complexity of the task -- the knowledge that there is no silver bullet solution even at the individual level. Yet another is a feeling of loneliness in thinking about the problem. Joro tackles each one of these obstacles:

• Joro makes us better informed by giving us data. You can connect your credit card to track the carbon footprint of your purchases if you are up for doing that (and many are). You also self-report on your own activities at various times. Joro crunches that information and gives you direction on where to focus your efforts.

  This focus on data is central to how we think about Joro. In our internal categorization of companies (nothing like VCs to find a way to pigeonhole everything…) we place Joro in the environmental data sector.

• Joro envisions each of us building, inside the app, a series of climate action practices. This takes what might seem like an enormous endeavor and breaks it down into simple steps that result in change. Joro knows that it isn’t “just one thing” -- it is many things.

  Over time the app will provide ways to change existing behavior or create new behaviors that will have a multi-pronged effect. This includes helping you take a class, read articles, buy a carbon offset, and much more.

• Joro is building a like-minded community. The Internet, as we are all sadly aware, can be a cesspool; my hope is that apps like Joro spawn new communities that are about positive change and upliftment. You don’t have to spend your day in a rage. 

One more thing: the Joro product is inherently global, which links to Amasia’s foundation as a firm that tackles global opportunities and issues. Climate and sustainability are truly global problems that require people around the world acting in concert to drive change.

In my Twitter header is this quote: “The things which seem most evident to us are always formed in the confluence of encounters and changes, during the course of a precarious and fragile history.” 

That quote can be pointed in many directions; here I point it in the direction of behavior change to fight the climate crisis. There is nothing pre-ordained about the path that humanity is on. We can choose to behave differently and get to a different place, and I am very hopeful that Joro will help get us there.

When we think about war, we understandably think about the immediate human misery and suffering. But war also inflicts another form of human suffering with effects that persist for decades and centuries, perhaps even millenia: it destroys the environment.

Since the onset of the Industrial Revolution, we have dramatically increased our ability to destroy our environment when we fight against each other. In this essay, Amasia Fellow Caroline Culmo and I try to put some more detail around this issue and its longer-term implications for climate.

It's Different Now

In medieval and pre-industrial landscapes partially or wholly denuded of people, local ecosystems were able to recover from the impacts of war. For example, the Sack of Rome in 410 AD rendered the maintenance of a large population and urban lifestyle virtually impossible (Cowdrey, 1983). In the centuries that followed, the region saw the revival of forests and wildlife and the spread of marshes. 

Similar effects followed the Hundred Years War of the late Middle Ages, when wolves were periodically reported on the streets of Paris, as well as the Thirty Years War of the early modern period, when German population fell by about a third from 1618 to 1648 (Cowdrey, 1983).

But these conflicts were small by modern standards, and the weapons and technologies used to wage war were rudimentary. Modern war is exponentially more violent and destructive. Modern populations are too large to permit even completely devastated areas to remain vacant. 

The worst examples lie in Europe, the starting points for both world wars (and likely the starting point for any future world war, as a glance at European history will quickly reveal even if we didn’t have the Ukrainian tragedy at hand). 

This may seem surprising for those who have visited Europe over the last three or four decades. The passage of time has effaced the visual devastation. Here is a closer look.

World War I

World War I was an extraordinary conflict for many reasons—it was staggering in scope, with more than 8 million deaths on the battlefield and around 40 million total military and civilian casualties.

The horrific conditions on the battlefield were amplified by the introduction of several new military technologies, which generated unprecedented levels of environmental destruction. The airplane was used for the first time, dropping bombs that wiped out large numbers of troops and razed entire cities. New weapons, such as improved artillery, machine guns, and flamethrowers, were also introduced. 

But the two features of World War I that were most significant in reshaping humans’ relations with the environment were trench warfare and chemical weapons.

Widespread forest logging to expand networks of trenches significantly altered the forests and soils of Europe, and particularly France, which bore the brunt of the fighting on the Western Front. According to the French Forest Service, over 350,000 hectares of forest in France alone were cut down during the war – an amount equivalent to 60 years’ worth of tree harvests (Heiderscheidt, 2018). 

Diversified forests were reduced to monocultures post-war. Digging trenches also trampled grassland, crushed animal and plant life, and caused the churning of soil (Heiderscheidt, 2018). In short, if the war had not been fought, the landscape might look very different today.

Figure 1: Deforestation of a World War I battlefield. Source: Heiderscheidt (2018)

Chemical weapons were first used in World War I and included tear gas, mustard gas (a cell toxic gas which causes severe blistering and bleeding), and carbonyl chloride (a cancer-causing gas). The UN estimates that the gas warfare of World War I was responsible for close to 100,000 deaths. 

The use of chemical weapons polluted battlefields, with many of the toxic gasses lingering in the air. It also led to soil contamination, evidenced by the increased amounts of arsenic detected in surrounding battlefields. 

The use of chemical weapons in the war has had continued effects on people and nature—one study found that soils contaminated by mustard gas have continued “for many decades to present both acute and chronic human health risks and risks to groundwater” (Meirvenne et al, ctd. in Heiderscheidt, 2018). This soil contamination led to the declaration of the “Zone Rouge” (Red Zone) in France, an area cordoned off by the government and since considered uninhabitable. 

Restrictions within the zone still exist today, with some areas just as dangerous and tightly controlled as they were in 1918 (Thornton, 2014). This is due to the vast amounts of human and animal remains, and the millions of unexploded ordnances which still contaminate the land. 

Soils in the area remain heavily polluted by lead, mercury, chlorine, and other dangerous chemicals. According to the French agency in charge of clean-up, no fewer than 300 more years will be needed for munitions removal, and likely much longer to completely clean the area (Thornton, 2014). 

Figure 2: Zone Rouge – maps of the areas destroyed in 1914-1918 in the North and East of France.  Source: Wikimedia

World War II

If World War I was damaging to the environment, the extraordinary destruction wrought during World War II was catastrophic. The war left trash and ruins everywhere in its wake, from abandoned battlefields to half-sunken ships to empty bases and bombed cities across Europe and Asia. 

Soldiers and forced laborers constructed roads, ports, and airports which brought invasive species and industrial pollution to new, previously untouched areas. After the war, mustard gas and other agents used in chemical weapons were dumped into the ocean, leading to the contamination of underwater sediment (Learn, 2020). 

New technologies and materials such as synthetics, DDT, insecticides and herbicides polluted our air and water in new ways and on a never-before-seen scale. Hundreds of military-industrial sites emitted toxic pollutants that would eventually render them Superfund Sites – polluted locations in the US which require long-term response to clean up hazardous material contaminations (Robertson, 1970).

But of all the chemical weapons developed in World War II, the most acutely damaging was the atomic bomb (for it is a chemical weapon).

Atomic Power

Robert Jay Lifton, an American psychiatrist and author who specializes in the psychological causes and effects of wars, refers to nuclear weapons as the “ultimate pollution.” When a nuclear bomb detonates, the resulting 1-megaton blast kills or poisons everything within a two-mile radius, and radiocative particles can travel from the explosion site and contaminate the land and water for miles (Lemon, 2019). This contamination remains for centuries.

The 15-kiloton bomb detonated over the center of Hiroshima during World War II destroyed everything within a 1-mile radius of the city (Lemon, 2019). The immediate effect on the environment was one of total devastation: The extreme heat of thermal radiation burned everything in its path – including animals, plant life, and buildings. Tens of thousands of people were killed either instantaneously or in the following weeks and months due to injuries or acute radiation sickness.

In addition to these immediate environmental effects, the people and nature of Hiroshima also suffered from explosive fallout – the process by which detonation creates radioactive dust that falls out of the sky and into the areas around the explosion site (Lemon, 2019). Wind and water currents carried this dust across a much larger radius than the initial explosion, where it then contaminated the ground, water supply, and food chain. Contamination has also caused genetic mutations and diseases in animals and humans (Lemon, 2019). 

Figure 4: Hiroshima destroyed by the atomic bomb – August 6, 1945. Source: The Asia-Pacific Journal (2011)

An equally devastating but perhaps lesser known example of the destructive legacy of nuclear weapons with respect to the environment is the Marshall Islands. A sprawling chain of volcanic islands and coral atolls in the central Pacific Ocean, the Marshall Islands were the site of the US’s nuclear testing program during the Cold War. From 1946 to 1958, the US tested 67 nuclear weapons on the inhabited Bikini and Enewetak Atolls, forcing exposed communities to evacuate their homelands (Rust, 2019). Thousands of Marshallese remain in exile to this day. Some have returned to their atolls, where radioactive fallout continues to contaminate the land and exposure to radiation continues to pose long-term health risks. 

One particularly threatening example is the Runit Dome (AKA “The Tomb”), a structure which holds more than 3.1 million cubic feet (equivalent to 35 Olympic-sized swimming pools) of US-produced radioactive soil and debris (Rust, 2019). The dome is now at risk of collapsing due to sea level rise and other effects of climate change. Such a collapse would, in essence, unseal a toxic bomb. Officials in the Marshall Islands have lobbied the US government for assistance, but US officials have declined, insisting that the dome is on Marshallese land and is therefore the responsibility of the Marshallese government.

Figure 5: The Runit Dome, Marshall Islands. Source: LA Times (2019)

If enough nuclear weapons were exploded in a large-scale nuclear war, large swaths of the earth would become totally unlivable. In a world where multiple great powers (US, China, Russia, France, UK) possess nuclear weapons and where there are several potential flashpoints for nuclear escalation, the human potential for total planetary destruction has grown considerably.

Climate

If you haven’t thought about the issue, by now you are likely convinced that war has a transformationally more destructive effect on the environment than it did even as recently as a few decades ago.

But war damages aren’t just in the form of toxic pollution and destruction of flora and fauna. While this damage to the environment is persistent and terrible, the ongoing readiness for war  has terrible consequences for the climate.

Why? Because military readiness – even when there isn’t a war – is sustained by gas-guzzling armed forces. And of course when a war occurs, fossil fuel consumption explodes. This is an extraordinarily important issue that gets much less attention than it should.

The most extreme example of this is the United States’ Department of Defense, which is the single largest consumer of energy in the United States and the world’s single largest institutional consumer of petroleum (Crawford, 2019). 

During the Iraq War, the U.S. military was consuming 1.3 billion gallons of oil per year for its Middle East operations alone. This is more than the annual consumption of Bangladesh, which has a population of 180 million (Ghosh, 2021). Each soldier consumed more than six times the average 2.3 gallons per capita consumption per day in the U.S. (Center for Sustainable Systems, 2021).

Additionally, the under-development, weakened governance, and lack of investment that accompanies prolonged conflict can also lead to old polluting technologies remaining in use. A prominent example of these “locked in” emissions is the practice of flaring. Flaring intensity rose substantially in Libya, Syria, and Yemen during the conflicts there. A similar trend was  observed during the war in Iraq and continued post-conflict. 

Figure 6: Annual flaring volume and intensity in conflict countries. Source: CEOBS (2021)

Ukraine

We must return to Ukraine before we finish.

There are a number of immediate environmental risks for the health and safety of Ukrainian residents. One example is hazardous air pollution exposure, which has occurred through the burning of buildings, vehicle exhaust, smoldering fuel depots, as well as the shelling of residential areas, which emits asbestos and particulate matter into the air (Hook and Marcantonio, 2022). 

Even if the conflict is resolved in the near future, those who have lived through the conflict, their children, their grandchildren, and the places they inhabit will face both personal and environmental costs for years to come.

Ukraine is a heavily industrialized country, replete with chemical facilities and nuclear power plants. If a nuclear power plant is shelled, radioactive materials could be dispersed (Hook and Marcantonio, 2022). Such a nightmarish scenario approached reality when Russian troops began shooting at the Zaporizhzhia Nuclear Power Plant last month. Besides being a piece of critical infrastructure – providing nearly a quarter of all grid electricity in Ukraine – the plant also has various hazardous materials on site, which could be released into the environment and contaminate the surrounding area (Hook and Marcantonio, 2022).

There are also several toxic and irradiated sites dating back to the Soviet Union that require active environmental management, much of which was disrupted by Russia’s first invasion of Ukraine in 2014 (Hook and Marcantonio, 2022). 

The widespread destruction caused by the Russian invasion will inevitably lead to the contamination of land, water, and inhabited environments, largely by way of these high-risk toxic and irradiated sites which have entered the crosshairs of the conflict. Heavy military presence in ecologically fragile areas, such as the Chernobyl Exclusion Zone, further heightens water, soil, and air risks. 

Note: this article on the environmental tragedy in Ukraine came out just as we were finalizing this essay, and is very useful reading.

It's Different Now

War never made much sense, but humans have waged it since we came out of the savanna and began dividing the world up into our fiefdoms. What is different now is our ability to inflict long-lasting planetary damage. 

A confluence of factors – the current war in Ukraine, the outsized environmental impacts of modern warfare and military readiness compared to earlier conflicts, the increasing number of political hotspots around the globe, among others – makes it more critical than ever to examine what happens to places that have been the site of war, and how the people, animals, plants, and landscapes there are affected. 

In addition to proximate risks to health and safety, such as air pollution and acute exposure to radiation, there are environmental effects that persist post-conflict for decades, centuries, and even millennia after the dust has settled. Both these short-term and long-term effects contribute to the acceleration of global emissions and continued environmental degradation, which are intimately bound up with the climate crisis.

There is no other home for humanity besides our biosphere (sorry, Elon). More than ever before, we need to take care of our planet.

More Reading

Center for Sustainable Systems. (2021, September). U.S. Energy System factsheet. University of Michigan. 

Cowdrey, A. E. (1983). Environments of war. Environmental Review, 7(2), 155–164. 

Crawford, N. C. (2019). Pentagon fuel use, climate change and the costs of war. Watson Institute for International and Public Affairs, Brown University. 

Darbyshire, E. “How does war contribute to climate change?” Conflict and Environment Observatory, June 14, 2021. 

Ghosh, A. (2021). The Nutmeg’s Curse: Parables for a Planet in Crisis. Chicago: University of Chicago Press. 

Heiderscheidt, Drew (2018) "The Impact of World War one on the Forests and Soils of Europe," Ursidae: The Undergraduate Research Journal at the University of Northern Colorado: Vol. 7 : No. 3 , Article 3.

Hook and Marcantonio. “Grappling with environmental risks in the fog of war.” Bulletin of the Atomic Scientists, March 10, 2022.

Learn, J. R. (2020, September 24). Chemical weapons dumped after World War II are polluting the Baltic Sea. Chemical & Engineering News. 

Lemon, K. (2019, March 2). Environmental effects of the atomic bomb. Sciencing. 

Robertson, T. B. (1970, December 1). World War II and the environment. Origins: Current Events in Historical Perspective. 

Rust, S. (2019, November 10). How the U.S. betrayed the Marshall Islands, kindling the next nuclear disaster. Los Angeles Times. 

Shivaram, D. (2021, December 18). The EPA begins rolling out billions to clean up Superfund sites. NPR. 

Thornton, S. (2014, April 30). Red Zone. National Geographic. 

Yuki Tanaka. October 24, 2011. “Photographer Fukushima Kikujiro - Confronting Images of Atomic Bomb Survivors.” The Asia-Pacific Journal.Vol 9, Issue 43 No 4.

At Amasia, we invest in companies that help build a safer and more sustainable planet. Our thesis centers on driving positive climate impact through catalyzing behavioral change at scale. Human behavior (and the resulting carbon footprint) is the key driver of climate change. It is behavioral change at scale that got us here, and it is behavioral change at scale that will help us fight the climate crisis.

Our growing globalized consumption has created the need for an increasingly sophisticated supply chain with heavier carbon footprints. More than 90% of the consumer sector’s environmental impact can be traced back to the supply chain. Transportation activities, including aviation, rail, shipping and trucking, contribute to 17% of global greenhouse gas emissions. Heavy-duty transportation (aviation, heavy road transport, shipping), critical to the world’s supply chain, produced more than 4 gigatons of carbon dioxide in 2019 and is on track to emit 7 gigatons of carbon dioxide by 2050.

While there have been important sustainability-related hardware innovations in logistics, the supply chain remains a function of our consumption choices and behavioral change at scale is the key to greater sustainability.  From taking action to offset our carbon footprint to choosing sustainable alternatives, we can alleviate climate impact along the supply chain by changing the way we consume.

Super helps us do just that.

Super is a social commerce platform in Indonesia, providing affordable access to basic consumer goods via its network of community-based agents and logistic centres.

In rural third and fourth tier Indonesian cities, where Super operates, basic consumer goods can be up to 20%-200% more expensive compared to tier-one cities. Poor rural infrastructure results in a supply chain bloated with multiple middlemen, each taking a margin, and retail stores in less populous communities are unable to buy at cheaper wholesale prices due to low volume.

Super disrupts the status quo by streamlining the existing supply chain and enabling group buying in rural Indonesian communities. Super’s agents, typically community leaders or small local retailers, collate orders from their communities and facilitate group buys via Super’s app. Aggregated orders are fulfilled via the company’s network of warehouses and Super centres (smaller, localized logistic centres), with the final local distribution managed by Super’s agents.

By reducing the carbon footprint (and resources) associated with getting goods from supplier to consumer, Super falls within our Sustainable Supply Chains theme. We look at the broader benefits as follows:

• Super streamlines the existing supply chain with direct fulfilment and removes various intermediaries between producer and consumer. The company also operates in a data-driven manner, optimizing its logistics. This eliminates unnecessary delivery miles, and reduces the carbon footprint of its products.  

• Super also improves access to basic goods, catalyzing positive social impacts including improved health and general well-being. The firm collates orders from its extensive network of agents, and hence is able to offer wholesale prices despite small individual orders. Alongside logistic savings from a streamlined supply chain, this creates affordable access to basic consumer goods (e.g. personal care products) for local communities. Super’s business model also empowers its agents, who range from local retailers to members of the community, with employment and income growth opportunities.

• Super brings a global lens to a local problem. While Super is an entirely Indonesia-focused company, it imports global best practices from its time in Y Combinator and through its partnership with Amasia and now with a great set of Series B investors.

I have written elsewhere -- and will continue to write -- about how the onus is really on the affluent West to dramatically change behavior to curtail emissions. We should be focusing on per capita emissions, not aggregates -- because in developing countries such as Indonesia, hundreds of millions of people are being lifted out of poverty and their energy consumption (and consumption in general) has to rise to get them to a position of greater well-being.

But what is not always well understood is that developing countries are engaging in “leapfrogging” behavior here, as was the case with other technology adoption cycles. Companies like Super are helping consumers in countries like Indonesia participate in supply chains that are far more efficient from the get-go. We are delighted and proud to support Steven and his team in this process.

Amasia Fellow Samantha Snedeker and I wrote recently about the recent IPCC report (or, to be more precise, the “Working Group 1 Contribution”—the IPCC could use some report naming help, I think). A key observation in that essay was that we need to focus more on local climate extremes when we think about mitigation. All climate mitigation is local, if I may coin a phrase. Sometimes by talking in averages or in terms of large geographic areas, we lose sight of the fact that mitigation is a peculiarly local item.

The bottom line is that air pollution—its causes, effects, and solutions—differs significantly from place to place. Yes, this is a statement of the bleeding obvious, but the point could use some publicity!

This line of thinking led me, with the help of my co-author and Amasia Fellow Ines Toa, to write again about air pollution, which is responsible for an estimated seven million premature deaths and the loss of millions more healthy years of life per year.

The need to act locally is pretty easily seen if we compare two examples of extreme air pollution: wildfire season in the United States and air pollution in Bengaluru, India.

Climate change worsens the intensity and frequency of wildfires. Western United States has witnessed wildfires raging across its landscape, burning hundreds of thousands of acres and forcing thousands to evacuate. Wildfire smoke contains many harmful pollutants, among which includes particulate matter. While the Western United States typically enjoys relatively clean air, this can change rapidly during wildfire events, with air quality potentially deteriorating significantly and unexpectedly. 

If confronted with wildfire smoke, immunocompromised people become more susceptible to respiratory infections, including Covid-19. Studies have shown a link between US wildfire pollution and higher Covid-19 cases. Maribel Villanueva, a daycare worker and single mom, developed a cough from inhaling wildfire smoke and eventually passed away soon after from respiratory failure and Covid-19. Maribel was just one of 1,000 Covid-19 deaths and 26,000 cases linked to high levels of PM 2.5 exposure in California between March and December 2020. 

Now, if we traveled 9000 miles to the other side of the globe to Bengaluru, India, we would also experience extreme air pollution, but with very different causes and effects. India is one of the most polluted countries on earth, with Bengaluru now possessing the very dubious honor of being the third worst city affected by air pollution last year. The statistics are jarring: Bengaluru saw an 80 percent increase in respiratory illness between 2015 and 2020, air pollution reduced life expectancy by 5.25 years, and one in eight deaths is caused by air pollution.

But if we tried to apply the same strategy for clean-up in Bengaluru as we might in California, our efforts would fail. We’re now in bleeding obvious territory, but let’s say it anyway—that’s because the city’s worsening air quality can be attributed not to wildfires, but to transportation issues. As the public transportation system failed to meet surging demand, people have resorted to expanded use of cars, motorcycles and scooters—all of which have greatly increased fuel consumption (and thus air pollution).

Existing monitoring systems are unable to provide a comprehensive view of the city’s air quality, with only 10 official air quality monitoring stations connected to the Central Pollution Control Board in a city of over 11 million. Without good data, it becomes difficult to identify the problem and develop targeted solutions—and as recently as 2018, roughly 45% of countries in the world did not report any air quality monitoring data whatsoever (WHO).

So what can we do about it? We can start by leveraging new technology to measure air quality at the local level—the scale at which it is relevant to human health.

Low-cost sensors have been deployed in both cases to provide local and real-time air pollution data. There are many benefits to having accurate data: individuals become more cognisant of air quality standards, communities are empowered to pressure the government for better policies to address air pollution, policymakers are mobilized to assess mitigation measures and develop infrastructure that delivers cleaner air, and big polluters are held accountable to design appropriate emissions cutback initiatives.

In short: air pollution, like climate change, is a global issue that requires local data, local solutions, and local behavior change. And the air quality ‘co-benefits’ of reducing fossil fuel use are generally so valuable from a public health standpoint that they exceed the cost of climate action, often many times over.

More Readings

Causes of Air Pollution

Causes of Air Pollution

Composition of Air Pollution

Carbon dioxide levels are at a record high. Here's what you need to know.

Air Quality Measurements Series: Particulate Matter

Air Quality Measurements Series: Nitrogen Dioxide

Impacts of Air Pollution

Environmental and Health Impacts of Air Pollution: A Review

Localized Cases of Air Pollution

How low-cost air sensors protect public health during wildfire season

How community-based air quality monitoring is helping Bengaluru fight air pollution

Air Monitoring

Best practices when deploying low-cost air sensors in the urban environment

Note: this essay was co-written by me and Samantha Snedeker, an Amasia Fellow in our Fall 2021 cohort. My thanks to her for exceptional work!

What’s this all about then?

The IPCC is the UN’s Intergovernmental Panel on Climate Change, composed of a group of highly qualified scientists from around the world. Every 6-7 years, this group releases a series of reports offering a comprehensive assessment of the state of climate change.

IPCC reports don’t produce any new evidence, but rather compile all the most recent data from existing scientific publications. The reports provide a birds-eye view of the scientific consensus and are our leading barometers on the state of the climate crisis. 

The IPCC recently released the Working Group 1 contribution to its Sixth Assessment Report. This contribution made available on August 7th, is the first of many to come as a part of the sixth assessment cycle, and presents a comprehensive understanding of the physical basis of climate change. This means, in other words, a purely scientific description of the current state of the climate.

There are important differences between this report and those that have come before it. For one, the information presented in this report is more accurate and reflects a newfound clarity that its predecessors lacked. As a result, the IPCC is able to state that it is “unequivocal that human influence has warmed the atmosphere, ocean and land,” (IPCC page 6).

Never before has the IPCC been able to make such a strong claim.

Nothing is perfect, so we have four critiques to offer:

1. Where is our favorite legal fiction, the “corporation” (= businesses)?

The IPCC appears to leave out entirely the corporate world in the report. We think this is a mistake, even in a report that is all about the science.

In an effort to present the physical basis for the current state of the climate, the report doesn’t contextualize the causes and contributors of climate change. Yes, human-induced greenhouse gas emissions drive climate change, but what drives human-induced greenhouse gas emissions?

Corporations are one of the main vehicles whereby our species actually drives greenhouse gas emissions. A 2019 study from the Climate Institute found that 20 companies account for more than a third of all energy-related GHG emissions dating back to 1965. Businesses (a) are substantial direct emitters of greenhouse gasses and (b) through a variety of mechanisms including advertisements, sponsorships, and branding techniques, play a large role in human buying behavior.

We know that consumption-centered human behavior greatly impacts climate change. The carbon footprints created through household consumption and clothing consumption are just two examples of how individuals and industry combined can harm the environment. 

With corporations and businesses serving as such large emitters of GHG gasses yet absent from the report, the IPCC report doesn’t quite capture the nuances of “causality.” The IPCC missed an opportunity (in our opinion) to address those individuals and institutions with some of the most critical roles to play in helping to fight warming and the fatal consequences of a changing climate.

The issue is more deep rooted — this report is primarily shared with governments and policy makers. It should be on the desk/inbox of every CEO of a Fortune 2000 company (and beyond).

2. The extremes are going to kill us — and they’re going to kill us in our cities

The IPCC report is 3,949 pages. It’s not a quick read, nor an easy one, which makes it difficult to extract the most important information presented. We thought two points should have been emphasized much more vigorously: (a) the implications of increased climate extreme events; and (b) the idea that cities will become hotspots for worsening climate effects.

Figure 1: Heatwaves in June in the Pacific Northwest, cited as impossible to occur without climate change.

From 2000 to 2019, extreme weather has accounted for more than 9% of global deaths, with the number of deaths caused by extreme heat rising. The case of extreme heat is particularly dangerous to vulnerable populations without access to air conditioning or for those who are unable to seek help in the face of such a crisis.

These are consequences that we have already felt in cities like Portland, Oregon where such high temperatures would have been virtually impossible without human-induced warming. 

The deadly results of extreme events have limited visibility in the report. As a result, the IPCC could be contributing to a phenomenon called human simplification, where individuals make choices based on the low risk of individual events, without considering changes in the overall risk distribution as a result of increasing extremes.

By nature of being an “extreme” event, these types of situations may not happen very often; however, when they do, they have consequences more intense than many people may realize.

Separately: greater than half of the global population is concentrated in urban areas and is thus susceptible to worsening climate extremes that arise as a result of urbanization. The report cites cities as areas of human-induced warming with intensified heat waves, tropical cyclone storm surges, and rainfall. The report also addresses the urban heat island effect, which explains why urban spaces can be many degrees warmer in both the day and night than their surrounding areas. 

Putting these two issues together: we thought that the report could have done more to emphasize the necessity for cities and really any impacted region to prepare for extreme events. Lacking infrastructure to properly handle even a single climate event, such as a flood, heat wave, or tropical storm, can result in devastating and long-lasting impacts. 

We’d have asked for a greater focus on explaining extreme events because our preparation for “climate adaptation” unfortunately requires being in a position to deal with the extremes, not be comforted by averages.

3. The good stuff is coming… but we should have read about some of it now

The IPCC’s Sixth Assessment Report will consist of the contributions from three working groups. The Working Group 1 contribution is titled: The Physical Basis for Climate Change (this is the piece we’ve been analyzing).

The next two working group contributions have been delayed as a result of COVID-19, and are anticipated to be released in 2022. The Working Group II contribution will be titled Impacts, Adaptation, and Vulnerability and the Working Group III contribution will be titled Mitigation of Climate Change. 

The Physical Basis for Climate Change is essentially the “what” of climate change, and presents data points like mean precipitation change and increase in greenhouse gas emissions across various regions. However, there is no mention as to (a) why these things are happening and (b) what we can do about it. That is out of scope for this report.

The later reports will focus on those other aspects of climate change, in addition to providing suggestions and solutions to fight these problems. Their outlines suggest a stronger focus on the broader, cultural basis for much of the evidence presented in the first report.

For example, Mitigation of Climate Change will have chapters dedicated to fighting climate change in urban spaces through industry and policy. Impacts, Adaptation, and Vulnerability will have chapters dedicated to exploring the impacts of climate change on different socioeconomic groups as well as addressing future risks and ways to handle these risks. A final draft of this report has already been sent to governments for comment. However, versions of these reports have not yet been made available to the public.

These later documents will bring much-needed context to the data that is presented in this first report and provide actionable items for those seeking to fight the climate crisis. But the IPCC, in our view, really missed a trick by not providing “previews” of future reports. This could have greatly reduced the sense of defeatism that we feel pervades much of the report, which brings us to our last critique. 

4. The paradox of choice and defeatism

The paradox of rational choice provides a clue as to why many people, despite (or due to) understanding the detrimental impacts of climate change, fail to individually make sustainable choices. I have written about the paradox of choice here.

Countering this paradox requires an emphasis on the tangible impact of an individual’s set of actions in the face of climate change. The IPCC report, inadvertently, does the opposite. 

The report places repeated emphasis on the notion that greenhouse gas levels and surface temperatures will continue to persist for centuries. Various articles that came out in response to the report highlighted persisting changes as one of the report’s key takeaways. This emphasis on irreversible change, amplified throughout external sources, can give rise to a sense of defeatism where individuals feel that their actions have an ultimately trivial impact on climate change. 

I confess this is especially painful for us at Amasia, because we believe that behavior change at scale is the only way to address the current state of the climate (learn more about why we think this way here: Amasia Investment Thesis).

Individual actions have never been more important as we need to act immediately to reduce the worst effects of greenhouse gas emissions. This means we need swift and widespread behavior change, at the level of the individual, to limit warming from reaching more troublesome thresholds, such as 2 or 3 degrees Celsius. 

In Closing

The IPCC is doing tremendously important work -- arguably the most important work there is --  in presenting comprehensive analyses of the climate system. We’re not complaining -- rather we offer these comments in an attempt to make future reports better.

More Readings

Amasia

In Our Hands: How We Got Here and How We Change

Amasia and the Climate Crisis, ⅓: The Facts

Amasia: Investing to Make the World Safer

IPCC Report

FAQ

Structure of the IPCC Report

IPCC Explainers

The Repercussions of a Changing Climate

What Scientists Are Saying About the UN Climate Report

Solutions

Energy is at the heart of the solution to the climate challenge

Per Espen Stoknes: What Holds Us Back From Facing The Threats of Climate Change Transcript

Lessons for climate policy from behavioral biases towards COVID-19 and climate change risks

We began our journey with a better understanding of the climate crisis, and concluded that changing human behavior is really the key. I’ve written about this both for Amasia and then again at a more personal level, but our thesis can be boiled down to this: we invest in companies that help catalyze behavior change to build a safer and more sustainable planet.

We’ve looked into most of the macro trends, but one overwhelming fact is human population growth. It was 1 billion in 1800; it is 7.8 billion now; and will touch nearly 10 billion by mid-century. Population growth of this extraordinary magnitude places great pressure on two inextricably linked ecosystems: climate and food.

The climate crisis is set to drastically alter the food production landscape, forcing us to re-evaluate the structures underpinning the global food supply chain. Waste and loss arising from food supply chain inefficiencies are massive contributors to greenhouse gas emissions. Lengthening food value chains and resource-intensive farming systems underline the need for climate-positive innovations.

We’ve written about our investigation of the food ecosystem. That effort led us to identify eight sectors that align with our behavior change thesis: quality control, energy consumption, food waste management, surplus food, food rescue, agricultural IoT, food coaching, and digital marketplaces that enhance sustainable food consumption.

In digital marketplaces, we’re not looking for companies that provide consumers with a convenient alternative to physical retail -- the environmental impact of digital marketplace giants that rely on distribution centers is mixed. The more interesting opportunity lies in harnessing technology to help consumers reduce their carbon footprint, for example by shopping locally.

Living Food was founded to address these inefficiencies -- CEO Akash Sajith was spurred by his parents’ cancer diagnoses to make fresh and organic food more widely accessible. The company started with growing its own hydroponic greens that meet its strict standards on quality, and has since evolved into a digital marketplace for sustainable sourcing. Co-founder Shikha Lakhanpal leads business development efforts with deep domain expertise, holding a PhD focussing on Climate Change Mitigation and Sustainability from the University of Illinois Urbana-Champaign. Co-founder Niranjan leads product building efforts, having previously worked alongside Akash in building hyperlocal commerce startups like Lookup. 

Living Food’s key competitive advantage lies in its ability to deliver on high freshness/quality while producing minimal food waste: 

• By sourcing locally, the company benefits from the close proximity, and is able to optimize delivery such that products reach customers “absurdly fresh” – often on the day of harvest/production. 

• Living Food procures exclusively from top local artisans using environmentally sustainable practices. These are reputable farmers, bakers, brewers, etc. who are likewise discerning -- they are willing to distribute through Living Food because they are aligned with Living Food’s commitment towards quality and sustainability.

• This creates a virtuous cycle:  the company’s current roster of artisans is augmenting its reputation for quality and sustainability, which in turn is attracting the interest of more top artisans across the country who also want to list their products on the platform.

• Finally by operating digitally, Living Food generates minimal waste, a key challenge faced by competitors operating physical stores as they balance availability and freshness, i.e. build a larger stockpile to offer a greater variety and incur more wastage; or stock a smaller variety to reduce wastage and risk losing customers to “more convenient” stores.

As I have often noted in my essays, we cannot “engineer” our way out of the climate crisis and get to a more sustainable planet. We have to change our behavior, change it significantly, and change it at scale. That is really the only lasting solution that minimizes so-called “negative externalities”, as engineered solutions often have risks and downsides that only emerge decades later.

What we love about Living Food is that it helps us change behavior -- not by preaching to us or shaming us, but by actually delivering better food. Truly a win-win. 

Part I: How We Got Here

In 1905, Albert Einstein stated that the speed of light was fixed for all time and space.

The equations of special relativity — verified endlessly since his landmark paper was published 115 years ago — imply that nothing can travel faster than the speed of light. This fact is baked into the structure of the universe in which we live. There’s no getting around the laws of physics.

So what?

NO STARS

This speed limit means, very simply, that we’ll never inhabit any other planet than Earth.

There is no other planetary body nearby that is remotely suitable for colonization. What, really, is the point of putting man on Mars, a planet that cannot support human life?

As for the stars, NASA's Juno probe reached speeds of about 165,000 mph (265,000 km/h) as it entered orbit around Jupiter last month. Ignoring all other issues, a probe going that rate could reach the nearest star, Proxima Centauri, in about 17,157 years (!).

THIS PLANET IS ALL THERE IS

The geo-limiting of our species to this planet may seem a reduction in mystery, I don’t think of it that way. We can explore other worlds within our imagination (I recommend Iain M. Banks if you want to do so).

But when it comes to this world, our world, we need to protect and cherish it for ourselves, for future generations, and for the other living beings that occupy it.

This Earth, this round blue ball, is all we’ve got. There is nothing else and there will never be anything else.

WE MESSED IT UP

Over a period of two and a half centuries, we have taken a hatchet to the well-being of our planet. Initially, this was not intentional. For the first 200 years, we just didn’t know what we were doing to our planet. Only in the last few decades have we, with horror, slowly realized that we’ve been destroying our species’ home from the inside out.

The evidence is overwhelming. I won’t repeat any of it here other than to point you to a “just the facts” piece I wrote.

Beyond the scientific evidence, plain common sense reveals what we’ve done. Think, for example, of how much of our planet is now covered with cities and roads. Our skies are filled with airplanes. Our forests have dwindled. Microplastics have been found at the bottom of the Marianas Trench — the deepest oceanic trench on Earth. The Marianas effing trench!

THE PLANET IS WEARY

The climate crisis is a symptom, not the cause. The cause is the sheer weight of voraciously consumptive humanity on the only living environment we have, and will ever have. 

The Earth’s population is now 7.8 billion — up from 1 billion in 1800 and 2.5 billion in 1950. These numbers are simply extraordinary. As David Quammen has written, “We are unique… no other species of large-bodied beast — above the size of an ant — has ever achieved anything like such abundance as the abundance of humans on Earth right now.”

We can’t change the fact that there are too many of us, although it’s beginning to emerge that population levels may be self-correcting. Prosperity appears to be inversely correlated with the fertility rate; it looks like Japan and Singapore are in every country’s future. Even in a country like India, more than half of the states’ population is now below the replacement rate.

But it is not just that there are too many of us, it is that each of us, especially the affluent, are consuming too much.

We have too much stuff. And our habit of over-consumption begins at an early age. 3.1% of the world’s children live in the U.S. yet consume 40% of the world’s toys. In the U.K., a typical child has almost 240 toys but plays with a mere 12 “favorites” per day. The average American home has doubled in size since the 1950s, and as a nation, we spend more on shoes, jewelry, watches, clothes, and shoes than on higher education. Paradoxically, we also throw away nearly 70 lbs of clothing per person per year. 

The most fundamental issue, then, is our level of consumption. That is not self-correcting.

JEVONS’ PARADOX

Cheaper and cleaner energy is essential; there is no disagreement whatsoever. But cheaper and cleaner energy is no panacea. It is completely intertwined with the effects of Jevons’ Paradox. Read this article by David Owens if you can, but the gist is this: “The problem with efficiency gains is that we inevitably reinvest them in additional consumption.”

An army of interested parties rebutted Owens’ article, some irate and others more balanced. I am in Owens’ camp, as might anyone be who examines his own current behavior compared with, say, 20 years ago.

The real answer is this: we need to consume less. A lot less. And the only way we can get there is by changing our own behavior. 

NOT THE SAME EVERYWHERE

In “emerging markets”, billions of people are being lifted out of poverty and are building better lives. For them, the path to prosperity has to involve, in the short- and medium-term, consuming more. 

But we now know the effects of voracious consumption, and in many cases these nations are achieving prosperity with leapfrogging technologies — going in a much straighter line to plentiful clean energy and rethinking processes to minimize negative effects on our planet.

The greatest onus is on the affluent West — and even more so the most affluent here. So much of our consumption is unnecessary; it is not something foreordained but simply reflects contingent patterns formed over the course of human history.

These patterns can be changed, and humanity has invented the tools to help make the changes.

THE ROLE OF TECHNOLOGY

I’m no tech partisan. I frequently rail against the deluded and messianic convictions that I see around me in the venture capital and tech worlds. I’m opposed to solutions that are positioned as a silver bullet, a magical answer. Tech of that sort is partially how we got into this mess. 

But I also believe that technology can be an instrumental force in getting us out of the abyss, as an aid to helping us change our behavior. As a catalyst for helping us consume less.

Part II: How We Change

Here is a simple vision for how behavior can be changed and help reverse centuries of unfettered consumption.

Michel Foucault once said “the things that seem most evident to us are always formed in the confluence of encounters and chances, in the course of a precarious and fragile history…”, implying that even the most entrenched things have a history and are products of circumstance. We can change much of our behavior without reducing our well-being, and here is a roadmap for thinking about it.

I give no complicated calculations about emissions (and fewer than usual hyperlinks), no soaring prose. It’s plain common sense about prosaic everyday things.

THE ZEAL OF THE NEWLY CONVERTED

I have written extensively about behavior change in the context of Amasia, the venture capital firm that I oversee with my partner, John Kim. That process has helped clarify not just our investment strategy for a more sustainable planet, but also my own actions and inactions.

It’s often said, and it’s true, that nobody is as irritatingly evangelical as the newly converted. Realization came very late to me — I’ve spent most of my life being an exemplar of unsustainable behavior — but it has struck me with great force.

If you can look past that, hopefully it will be clear that trivial actions — things that can and should strike us as “just plain common sense” or “that doesn’t sound like a big deal” — can have a planetary effect when all of us do it.

THE FOUR RS OF BEHAVIORAL CHANGE

Let me briefly lay out the Amasia sustainability framework, as it’s expressed a bit differently from other frameworks (whether in venture capital or sustainability-related thinking). While this framework was developed for our investment strategy, it has become my personal manifesto.

We call it the “Four Rs of Behavior Change”:

1. Regeneration and renewal: doing what we do in a way that helps replenish the biosphere.

2. Reusing and recycling: buying used rather than new; keeping rather than replacing; selling rather than destroying.

3. Replacing bricks with bytes: moving things out of the physical domain to the digital domain.

4. Rationalizing resources: getting to the same or better results with less stuff.

The boundaries between the Rs are blurred; this is not a perfect division. But don’t let the semantics get in the way of the bottom line: behavioral change is what it’s all about. 

R1: REDUCE AND REGENERATE

Creating a sustainable world will require that we not only reduce emissions going forward, but also regenerate the biosphere from the harm we’ve already done.

Being more intentional about our actions

I’m no mindless partisan for technology, as should be clear from much of my writing. I am also not a fan of extreme interventionist ideas such as the more speculative approaches to carbon sequestration. But there are far simpler things we can do, as individuals and as a collective, to help reduce consumption and regenerate our biosphere.

Using Joro, for example, allows you to be more intentional in reducing your personal carbon footprint. When a city uses Clarity to collect the most accurate air pollution data, it allows urban planners to think through how to design cities and reduce vehicle traffic to reduce that pollution.

And there are interventionist approaches that do make sense. Regenerative agriculture, for example. Or reforestation/afforestation.

R2: REUSE AND RECYCLE

When you buy something that has been used before or offer something for re-use by recycling it, you help the planet.

Extending the life of your electronics

An example of reuse is something that may sound a bit different: “longer use”. I used to always want the latest shiny gadget. I don’t think I’ll ever fully get rid of that trait. But I’ve moderated it as I’ve better understood the consequences of my behavior.

iPhones have extraordinary cameras and can be used for years without requiring replacement. I don’t need a great camera if I only use it once every three years. I don’t have the time to sit around playing with RAW images. As they say, the best camera is the one you have on you, and I have my phone on me nearly all the time.

I don’t need most things I own, and my small collection of cameras is on the list. So I am now being intentional about reselling them. They are best in the hands of someone who really wants dedicated cameras.

R3: REPLACE BRICKS WITH BYTES

Replacing a physical thing — for example, physical meetings with virtual meetings — with the same thing in a solely digital world helps the planet.

Virtual meetings

In the venture capital world, inordinate weight has been placed on physical meetings. Many myths go with this. Think of the “tightly-knit team working out of a garage”, or of the “weekly Monday morning partners’ meetings.” 

Much of this can be dispensed with now. As we’ve discovered over the past ten months, society reshapes itself to maximize the benefits of new norms. It turns out that virtual meetings create new opportunities, new freedoms, new flexibility, new kinds of inclusions.

Face-to-face meetings have their place, but a surprising number of these can and should be replaced with virtual interactions, using products like Dialpad and Uberconference. At Amasia, we are highly intentional about this. In 2020, we made two investments that involved no in-person meetings. And I am dialing up my internal commitment to being as virtual as possible.

R4: RATIONALIZE RESOURCES

Replacing a complex multi-step physical process with a more efficient one helps the planet. Efficiency comes in many, many forms — including, for example, reducing food waste.

Eating my own (not dog) food

I’ve learned more about food waste than I’d ever thought possible through reading, but also through two of our investee companies, Treedots and Living Food.

Food waste is an absolutely astounding problem, and one that makes so little sense. Here is one contribution that I’m now making to help solve the problem: when I sit down to dinner or lunch now, at home, I am the consumer of leftovers. I hoover up the waste. 

This is a tremendously positive feeling — try it.

PLENTY OF PLEASURE TO GO AROUND

More than two decades ago in an eloquent rebuttal to Mark Sagoff, Paul Ehrlich and Gretchen Daily wrote that “restraining the growth of consumption does not mean going back to living in caves and cooking over buffalo-chip fires.”

Like them, I am not suggesting that we all start wearing hair shirts and become minimalists. There is much about modern life that is an unalloyed improvement from even a decade ago, let alone a century or millennium. 

But my views about the “performance of consumption” have changed dramatically as I’ve read widely on both sustainability and our culture of consumption. I look at examples of what we think of as success and am aghast; I examine my own behavior over the decades and find much to regret.

These are all norms. Certainly, it is desirable to have a nice house. But do we really need to have a dozen mansions with enormous carbon footprints? We can lead happy and rewarding lives with far lower levels of performative consumption.

IN OUR HANDS

We can’t just “tech” and “engineer” our way out of the hole we’ve dug for ourselves. That’s why our thesis is about behavioral change — because “disruptions” and “innovations” aren’t enough.

We need to really change. Indeed one of our companies, Joro, was created for this specific purpose — to help us change.

Change how we work, travel, interact, eat, and make decisions. Change the goods we produce (and consume), and how we acquire them. And much more.

I quoted Michel Foucault earlier. In that interview, Foucault went on to say that “since these things have been made, they can be unmade, as long as we know how it was that they were made.”  

In other words, we can change things if we put our minds to it — even at a planetary scale. 

It is in our hands.

We began with the "4 Rs of behavior change," which we introduce here in their original form. We used the Rs as a guide for thinking about climate amd sustainability solutions, and consequently the types of companies we invested in.

We loved our nifty acronym, and felt extraordinarily pleased with ourselves. Over time, however, we realized that virtually nobody else had a clear idea as to what it is we were talking about.

So we worked to replace the 4 Rs with identical themes: AI & Data for Sustainability (previously R1), Circular Economy (R2), Sustainable Cities (R3), and Sustainable Supply Chains (R4). We did this to make our thesis more direct and easily understandable. We also introduced a fifth theme, Clean Energy Transition.

While we've made tweaks to verbiage, the essence of our thesis remains unchanged: we believe that behavior change at scale, across these five areas, is key to fighting the climate crisis.

At Amasia we invest in capital-efficient software companies that address global opportunities.

In 2019 we refined our strategy to incorporate research into the commercial possibilities that arise from finding solutions to global problems.

That research showed that the most serious global problems were environment- and climate-related. (See our prior writings on climate here.) 

We are not alone in our assessment. Environmental threats occupied the top five spots in the World Economic Forum’s global risk survey.

No other category in the survey’s history has ever occupied all five of the top spots.

Our distilled investment thesis brings together several Amasia threads:

• Our expertise in, and focus on, global themes

• Our competence in investing in early-stage software companies

• Our interest in climate and sustainability issues

• Our belief that behavior change is the greatest enabler of environmental change

Which yields: Amasia invests in early-stage software companies that catalyze changes in behavior, to enhance sustainability and mitigate global climate impact.  

We believe that changing people’s behavior, at the scale of billions of people making trillions of decisions differently, will have the greatest positive impact on the environment.

Four factors then contribute to “right now” being the suitable moment for an investment approach built around behavior change:

• Awareness: The seriousness of global environmental threats has placed sustainability, climate risk, and other environmental considerations at the front of many people’s minds.

• Access: Affordable new technologies have made it possible to share information, shape social attitudes, increase purchasing power, and influence decision-making at an unprecedented global scale. 

• Growth: By 2025, 1.8 billion more people are expected to join the consumer class due to rising disposable incomes and industrialization. The awareness and access mentioned above have resulted in a large and growing population of environmentally-minded and digitally-connected consumers.

• Entrepreneurship: That population has inspired a wave of innovative entrepreneurship and a corresponding explosion in appealing investment opportunities.

The sectors we target are determined by the behavioral changes we target. The coherence of those sectors becomes visible only when viewed through the lens of behavior change.

This is unusual, and can sometimes require squinting to see the world the way we do.

An example of the cognitive dissonance that follows from radically different taxonomies such as ours can be found in Jorge Luis Borges’ Celestial Emporium of Benevolent Knowledge.

We have sorted modes of behavior change into four categories — we call them the 4 Rs for ease of reference:

• R1 - Reduce and regenerate: Creating a sustainable world will require that we not only reduce emissions going forward, but also regenerate the biosphere from the harm we’ve already done. Here, we include companies enabling behaviors that do either, or both – everything from climate intelligence companies like Clarity and Joro to companies with more interventionist approaches such as regenerative agriculture and reforestation.

• R2 - Reuse and recycle: The creation of virtually any physical product results in damage to our natural environment. Our focus here is on companies such as second-hand marketplaces such as Swappa (for used electronics) that help people and companies engage in sustainable behavior while saving money.

• R3 - Replace bricks with bytes: Replacing physical structures with digital platforms helps reduce planetary damage. This category focuses on companies that provide those platforms—everything from online financial institutions like Wealthfront to remote work companies such as Dialpad to remote learning platforms such as Skillshare.

• R4 - Rationalize resources: Global supply chains, for almost any physical good, are massively overbuilt because of the relentless focus on consumer convenience. This category focuses on companies that help supply chains become more efficient and reduce waste, such as Nusantara/Super, which streamlines e-commerce logistics and Treedots, which reduces food waste.

Within each of the categories above, we have identified a series of solutions that tie to product or service offerings.

Our approach is inspired by, but very different from, Project Drawdown. While our schema is built entirely around behavior change, we are deeply grateful for the inspiration.

We have, over the last two years, developed a strong point of view about food and climate change — and about how behavior change should inform our investment approach. Here is a schematic overview.

Note: the text below contains brief extracts from a much longer internal report on Amasia’s food-related investment strategy. Two Amasia Fellows labored on that document, and many thanks here to Alina Goh and Chloe Chemtob, whose excellent work I have repurposed.

The Evolution of Food

The industrialization of agriculture in the late 18th century drove output beyond the reach of human labor alone.  Advances in the transportation and communications industries in subsequent centuries resulted in unprecedented supply chain connectivity. More recently, advanced robotics and smart devices have reshaped the industry, setting new standards of precision and efficiency. 

Changing cultural appetites have also played a key role in shaping the food industry, especially in recent decades. 

Health and wellness have accelerated in popularity, with health-centric products and services gaining traction amongst consumers. The clean eating trend has propelled many companies to adopt marketing strategies that double down on minimal ingredients and buzzwords like “organic” and “all-natural”. 

Food and Climate

In the coming decade, the world population is expected to grow from its current size of 7.7 billion (2019) to 8.5 billion (2030), reaching nearly 10 billion by mid-century. Population growth of this extraordinary magnitude places great pressure on two key ecosystems: climate and food. 

The two are inextricably linked. The climate crisis is already altering the food production landscape, forcing us to re-evaluate the structures that underpin the global food supply chain. 

Losses arising from food supply chain inefficiencies are massive contributors to greenhouse gas emissions. Lengthening food value chains and resource-intensive farming systems underline the need for climate-positive innovations. 

Food, Behavior Change, and Amasia’s Investment Focus

We divide tech/innovation in the food industry into four main categories (this is how we think about it — it is definitely not the only way to think about it!):

• Supply Chain: innovations pertaining to any step of the food supply chain, from blockchain-driven solutions to optimized processing equipment and smart quality control. 

• Surplus Food/Waste and Loss: minimizing avoidable food waste through marketplaces that increase transparency and efficiency, supply chain infrastructure and repurposing solutions. There is obvious overlap with the first category.

• Agriculture: this involves: (a) technological innovation in the traditional farming process, resolving existing inefficiencies through smart devices and software; and (b) novel farming processes that redesign traditional structures and techniques to optimize production.

• Consumer: any consumer-facing product or service at the end of the food supply chain. This includes product-centric innovations such as alternative protein; hardware innovations that streamline food manufacturing and delivery to the consumer; and services innovations such as app-based delivery and grocery services.

We have developed a climate and sustainability-related investment thesis targeted at behavioral change. Our expertise is in capital-efficient software and software-enabled businesses. This combination leads us to eight sectors within the four categories above.

Food Surplus Reduction

Food surplus reduction is one of those eight target sectors, and perhaps the one in which we can see the most immediate “wins” from a climate and sustainability standpoint.

This graphic shows the staggering climate effect, ecological waste, and humanitarian issues that arise from food waste.

I knew very little of this when we began our food investigation. The numbers are staggering. And fixable.

Technology companies in this sector help minimize lost and wasted food within the food supply chain (between harvesting and consumption). This opportunity is so large, in every sense, that, at Amasia, we could make the case for all of our food-related investing to be focused here. 

And so we come to TreeDots.

TreeDots

Because retailers will not tolerate suppliers being out of stock, the food supply chain has been overbuilt with massive spare capacity. Suppliers inevitably get stuck with oversupplied products that find their way to the local landfill.

TreeDots operates a B2B marketplace that matches food supply and demand in Southeast Asia -- thereby decreasing food waste and helping fight the climate crisis. 

TreeDots began as a non-profit project, a “social enterprise”, and then evolved into a business as it became clear that was the best way to build a scale operation that is world class in its team, technology and processes. But given the heritage, there is a mission-driven element to TreeDots that we applaud and support.

We like many things about TreeDots. Of course we like a hyper growth capital efficient technology business in a giant market, and of course we like a founding team that learns remarkably quickly and is hungry for advice. What’s not to like?

Here are three other things we like about the business: 

1. Network effects: this is obvious -- it is a marketplace! -- but deserves stating: both sides of the TreeDots marketplace engender network effects. More buyers lead to more sellers; more sellers lead to more buyers. 

2. Product possibilities: A B2B marketplace of this kind lends itself to many additional product possibilities — possibilities that are in themselves multi billion dollar markets. A manifest example is global sourcing which leads to...

3. ...Regional expansion: The Singapore market is in itself sizable. But this is a sector in a region in which being cross-border is both a necessity and a competitive advantage. 

One More Thing

There is a balance in small high-growth companies between: (a) “stick to your strategy” and “do one thing really well”, and (b) “respond quickly to an unusual opportunity” and “don’t let focus blind you either”. We understand that balance and are sympathetic to the push and pull from either side.

And so we love the fact that TreeDots, in keeping with its roots as a social enterprise and leveraging its technology and marketplace infrastructure, moved quickly to respond to a consumer need in the era of the pandemic. This involves using their platform to allow households to make group purchases. More here.

Firstly, bubbles aren’t completely irrational

Efficient market theory states that prices reflect all available information because of the actions of rational actors. After you’ve stopped laughing hysterically, you can join me in playing along by asking the obvious question: how can bubbles even exist? The answer is that for large swathes of time, participating in a bubble can be economically rational.

Essentially this equates to the Greater Fool Theory (which appears again below): “the idea that, during a market bubble, one can make money by buying overvalued assets and selling them for a profit later, because it will always be possible to find someone who is willing to pay a higher price.”

For investors who are not betting on momentum for a living, watching a bubble from the sidelines while you’re playing Cassandra can be rather dispiriting. And if you are in the bubble, FOMO (more on that below) causes a complete warping of reality.

The causes of bubbles are really well understood

Quite a bit of behavioral economics is focused on bubbles as these are entirely a function of human psychology. I’ve written elsewhere about my admiration for Daniel Kahneman and even simplistic algorithms being better than much-vaunted intuition. But Kahneman and his main collaborator Amos Tversky noted that while heuristics or rules of thumb are usually helpful, they can “sometimes lead to severe and systematic errors” (quoted in Mansharamani’s Boombustology):

There are five primary (and interrelated) heuristics that bias our decision-making:

1. Quantitative Anchors: People usually believe that higher previous prices justify higher future prices and are therefore reluctant to make drastic, contrarian bets. This encourages harmful recursive thinking: investors believe current prices are reasonable because they are similar to yesterday’s prices, which were similar to prices the day before, and so forth.

2. Gambler’s Fallacy. This refers to “the erroneous thinking that a certain event is more or less likely, given a previous series of events.” There are obviously many cases in real life where past outcomes do influence future outcomes (for example, there is some correlation between past and future prices), but even accounting for this, we often place excessive emphasis on the immediately preceding series of events. 

3. The Endowment Effect: This posits that people attach greater value to things they own (Mansharamani p. 76). A landmark study by Kahneman, Knetsch, and Thaler showed that a) people are loss averse because it requires more to convince people to part with items they own; and b) People are biased toward the status quo because it is difficult to ask people to relinquish ownership.

4. Overconfidence: We tend to overestimate our ability to pick investments and estimate future performance, and overrate our performance relative to that of others. We are prone to overprecision, or being excessively certain about the accuracy of our predictions and instincts. 

5. FOMO (Fear of Missing Out): This is the big one. Rational theorists assume that we value items for their intrinsic and absolute value; the psychological reality is that humans are more likely to assess value relatively. DeMarzo et al found that people care more about how their wealth measures up to their peers than the independent value of their wealth. As the economic historian Charles Kinderberger put it: “There is nothing as disturbing to one’s well-being and judgment as to see a friend get rich.” It takes a rather evolved human being to ignore FOMO.

Putting all these together, we get to a “herd mentality”.

But VC bubbles are more bubbly, for specific reasons...

Venture capital has certain characteristics that make the asset class even more prone to bubble formation. Here are four that matter: 

1. Lack of short-selling mechanisms: In public markets, if investors think a stock is undervalued, they can buy it; if they think a stock is overvalued, they can short it. Importantly, both generate profits. On the other hand, in private markets, investors can only profit if they believe a company has growth potential or is undervalued. This absence of a way to profit through short-selling in VC creates an inevitable bias towards optimism because positive thinking is the only way to potentially make money. And when the movie ends, it ends in an ugly fashion as Professors Fried and Gordon write: “A market that makes it difficult and costly to express negative sentiments is prone to a bubble and thus an abrupt collapse when negative fundamentals finally become too pervasive to ignore.” 

2. Capital glut: Investors hunting for something, anything, to drive “alpha” in our low interest rate environment have poured money into venture capital as an asset class. The horror that is Softbank’s Vision Fund is exhibit A. For VCs, having too much money incentivizes them to be less picky with their investments; for entrepreneurs, it distracts from capital efficient product development, bankrolls lavish and unnecessary advertising campaigns, and shields startups from competitive market forces that instill resourcefulness and discipline. As a result, start-ups raise too much money at too high valuations. (This is a pervasive issue for startups and I’ve written a simple guide on what to do if you’ve raised too much money.)

3. Greater fool theory: The VC-founder-tech industrial complex leads to start-ups often prioritizing achieving higher valuations over truly developing their business. An article in Barrons puts it well: startups often “focus on ‘positioning’ their companies for the next funding round—effectively playing branding and marketing roles in order to court the next group of investors or to get bought by a bigger firm, instead of properly managing their revenues, costs, and operations.” As a result, we start to see Ponzi-like situations (there, I used the word) where companies are, in effect, relying on the “kindness of tomorrow’s capital markets” to provide existing investors with returns. 

4. Silicon Valley “success” definitions: When you are being pitched and importuned 24/7, it might, it just might, lead you to see the world through rose-tinted glasses and yourself as larger than life. The very title of Forbes’ annual ranking of top VCs exemplifies this — it is the ‘Midas List,’ We forget that the original King Midas story didn’t end well… But more seriously, a hankering to be on the Midas list fuels “swinging for the fences” behavior that affects everything from portfolio construction to behavior as a board member and investor.

What does Amasia do that is different?

I wish I could write here that we are some kind of magical dream beast that operates orthogonally to everyone else. Sadly we have fallen victim to virtually every “attribute” listed above. Repeatedly. But we try learning and persevering…

A few things help us stay within guardrails (= protect us from ourselves):

1. We manage small core funds and have concentration limits, so we can’t do really stupid things

2. We take the full vintage period to invest at a slow pace, so we rarely suffer from extended “deal fever”

3. We are probably more disciplined about valuations than most

4. We are material investors in our own funds, so we’re not just gambling with other people’s money

5. We try our best to get our founders to prioritize good business building over future valuations — our view is always that if we do the former, the latter will come. This can often be difficult and can lead to tensions — it is no fun being the VC who is less focused on future valuations and “get big fast” than the founder!

The desired risk-reward profile of our funds, therefore, is quite different from most early stage VC firms. This is deliberate. A good thought experiment is: in a choice between a 1% chance of a 100x investment, or an 80% shot at a 4x investment — we’d take the latter. This is not received wisdom in our industry. We’re fine with that.

The Best of What We Read

Bubbles in general

1. What’s That You’re Calling a Bubble?: This Harvard Business Review article offers a thoughtful overview of what the term ‘bubble’ really means.

2. Irrational Exuberance by Robert Schiller: In his seminal book, the Nobel-Prize winning economist dissects the psychology behind asset bubbles.

3. The Greater Fool Theory: What Is It?: In this short memo, a Cornell professor examines the ‘strategy’ of buying overpriced stocks.

VC bubbles in particular

1. Squaring Venture Capital Valuations with Reality: In a study of 135 unicorns, researchers at UBC and Stanford offer empirical evidence to show that they are indeed relatively overvalued (the average unicorn is reportedly overvalued by 48%).

2. The Valuation and Governance Bubbles of Silicon Valley: Law professors at Harvard and Columbia examine the specific features that exacerbate VC bubbles.

3. Why Tech Startups Can’t Seem to Stop Flushing Cash Down the Toilet: This article examines the factors underlying today’s capital glut in VC.

Clarity, based in Oakland, California, provides a platform for air pollution data measurement and management. It offers low-cost and high-resolution air quality data for municipalities and corporations.

We came to our investment decision on Clarity several weeks ago and the coronavirus crisis was not a factor in our decision. However research has unsurprisingly indicated that air pollution and susceptibility to respiratory infection are highly correlated. 

We are grateful that the company has a role to play in this difficult moment. The company has expanded its opensource maps to include COVID-19 information. Their overview can be found here, and I expect more information and analyses to follow.

Clarity represents the fourth investment by Amasia in the last nine months within the framework of our climate and sustainability thesis.

We have made two each in our target geographies of the US and Southeast Asia. Two have been at the seed stage; two, including Clarity, at the A. We are not temperamentally suited to being passive investors on a cap table; in each of these four investments, we play a board role. 

We build highly concentrated portfolios and make very few investments each year. I thought it might therefore be useful to lay out how Clarity fits our investment criteria. 

Our investment thesis around climate and sustainability, because it is topical, can obscure an important fact: we are not “impact” investors. We are an old-fashioned VC firm — we just happen to believe that large companies will get built in the cause of fighting the climate crisis.

In other words our companies need to fulfill our many other criteria, including operating traction. 

In Clarity’s case, this includes growing annual recurring revenue (ARR) 21x from December 2018 to December 2019; remarkable capital efficiency (the company has raised a laughably small amount of capital relative to the oversized rounds we read about); and strong internal processes for a company at this stage.

The fit with our investment thesis, as outlined in our framework last year, is obvious. Clarity falls within our sustainable theme, AI & Data for Sustainability. It provides the precise information needed for cities and companies to assess their air pollution problems and identify potential solutions. 

Based on the data, cities and companies can understand and identify when and where air pollution is happening (i.e. hotspots), and understand who is exposed.  Customers can also use the data to measure the efficacy of emission reduction policies, justify their investments, and iterate to solutions more efficiently.

But beyond the fit with our thesis, there are three other elements that we found particularly appealing:

1. Global customer base: For a company at its stage, Clarity has an astoundingly global footprint, with the solution deployed in over 70 cities in over 30 countries. This is testament to the nature of the problem which is global — and the virtues of the Clarity product, which can be used relatively easily by customers anywhere. This is linked to the fact that it is a full stack solution (more below).

2. Full stack solution: The company provides a full stack solution including the measurement device (a “Node”). This makes it truly plug-and-play, in a difficult and complicated space. Value resides in all components of the solution — the Clarity Node, Clarity Cloud, and Clarity Insights — and customers get all of it for a single subscription price. 

3. Focus on delivering value, not on owning data: One of the most appealing things about Clarity is that the company does not retain ownership of the data. Many tech companies contort themselves to build proprietary moats around data ownership. The data here belongs to the customer while Clarity focuses on delivering value at each layer in the stack.

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If you’ve made it to this point, you’ll have noted that I have made no mention of the Clarity team. As early stage investors, so much of our decision revolves around judgment calls about a team. Here I can state that of course we are delighted to partner with this transparent, smart, and dedicated management team. 

But as the years go by, I’ve become a tad cynical about overwrought VC announcements about management teams, and vice versa. The Greeks — I am quoting Solon — believed that it was useless to speak of happiness while someone was alive. The true measure of happiness, according to them, can only be measured when a person is dead, and we can look back and evaluate how they lived.

So it is with VC-founder partnerships. Of course we are all delighted — we just began, and it would be extremely peculiar to begin by hating each other :). The true test, however, is for me and the Clarity team to come back here several years hence and talk about how the partnership was a delight from start to finish. 

I hope and expect to do so.