Impact Investing: Align Your Wealth with Your Values

A Shift in Focus: Climate Change, Tech, and Underlying Pessimism

Today’s discussion takes a brief pause from typical Exchange-related subjects – with IPO updates forthcoming – to address the critical issues of climate, climate technology, and the prevailing sense of pessimism surrounding them.

Recently, the Equity podcast team explored the worldwide consequences of our warming planet and the potential role of startups in mitigating climate change. Several promising companies were identified, notably DroneSeed, which garnered positive attention.

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The concept of utilizing drones to disperse seed pucks for forest reforestation is appealing. Considering the physical demands of traditional tree-planting initiatives, employing drone technology appears to be a remarkably efficient alternative. Personal experience with manual tree planting has confirmed its strenuous nature.

TechCrunch’s Kirsten Korosec recently published an in-depth analysis of the climate tech sector, which is highly recommended for those seeking a more comprehensive understanding of the subject.

This leads to a broader point: numerous startups are actively developing businesses that aim to generate profit while simultaneously addressing the escalating challenges of rising sea levels, increased wildfires, and more intense storms anticipated in the coming decades. Consequently, future generations may encounter more difficult life circumstances than those experienced by current generations, particularly for those already beyond my age.

It was within this context that I encountered commentary from Sam Altman, former head of Y Combinator, regarding climate change and his conversations with younger individuals.

Here are the relevant tweets:

Several points within these statements warrant consideration, but our focus remains on the element of youth pessimism.

According to Altman, college students are concerned about climate change, perceiving it as both unavoidable and urgent. Rather than advocating for systemic change to address or reverse climate change, these students are reportedly making personal choices – such as foregoing parenthood – as a response.

A Source of Irritation

Altman’s observations provoke a degree of frustration. It isn’t that encouraging optimism is misguided; rather, the focus of his concern – prioritizing students over those with the actual power to influence economic and environmental policies – feels misplaced.

Today’s college students possess limited economic influence, often burdened by debt and facing a competitive job market that doesn’t consistently reward recent graduates with high salaries.

While STEM graduates with the appropriate qualifications can achieve financial success, the companies offering substantial compensation packages are not necessarily dedicated to combating climate change. Facebook, for example, offers competitive salaries, potentially to attract talent despite ethical concerns. However, there is a scarcity of well-compensated positions that would enable college graduates to manage their debts while simultaneously contributing to environmental improvement.

This is because addressing climate change is not currently a highly profitable endeavor. Examining the major industries contributing to climate change, and contrasting them with those working to mitigate it, reveals this disparity. Expecting young people to generate optimism and confront powerful industries is a significant demand, especially considering their financial constraints and debt obligations.

My primary concern lies with the wealthy and powerful maintaining their existing operations to preserve their wealth and influence, rather than with young people facing modest starting salaries and high living costs.

Should corporations be held to higher standards? Certainly. However, they often resist actions that do not contribute to long-term earnings per share. Too often, environmentally damaging practices are justified under the guise of preserving shareholder value.

A Path Forward

A potential solution involves increased investment from affluent individuals and organizations into climate tech startups, particularly those focused on hiring younger generations who stand to lose the most from climate change and benefit the most from its resolution.

However, there is a noticeable lack of climate-focused investment funds and startups securing substantial funding to address this issue.

While investment in startups that have no positive impact on the planet is acceptable, it’s crucial to direct attention and resources towards those with the power and capital to enact meaningful change.

Smaller, individual actions – such as reducing air travel and limiting family size – will undoubtedly be taken. However, to overcome the pessimism Altman identifies, addressing the root causes of that pessimism is essential. Therefore, the world’s wealthiest and most influential individuals should invest their resources and influence, and then express concern about the well-being of the younger generation.