It doesn’t have to be one or the other, says Ramanan Raghavendran, managing partner of venture capital firm Amasia
After growing substantially for decades, global greenhouse gas emissions plunged by 6.4 percent—or 2.3 billion tonnes—in 2020, as the pandemic forced the world economy to a standstill. There was an important silver lining for climate advocates: the drop showed us that individual actions, when adopted at scale, can have a powerful impact in the fight against the climate crisis.
Although carbon emissions rebounded to record levels in 2021, the pandemic served as a wake-up call. Research shows that 70 percent of respondents are now more aware of the impact of human activities on the climate and environment than they were before Covid-19 hit.
But awareness alone is not enough to tackle the climate crisis. Current projections of its effects are alarming: millions could perish or be displaced and global GDP could be slashed by nearly one-fifth by 2050 if no climate action is taken.
Despite the urgency, we have a massive investment gap, estimated at US$3.7 trillion. But there is good news: it is clear that climate-impact businesses can be both economically interesting and societally impactful. In other words, climate investors can “do well by doing good”.
Green is the new black
Encouragingly, there has been a widespread desire to lead more sustainable lives. A study found that over three-quarters of respondents consider environmental problems as concerning as health issues. This opinion, the study revealed, has little to do with age, gender or financial status, busting the myth that only young people are concerned about the climate.
This heightened awareness has been the key catalyst in the rise of the climate-conscious consumer, who is determined to shift their lifestyle and consumption habits. People are actively avoiding certain products and increasingly willing to pay a premium for more responsibly produced products, in some cases as much as 50 percent more.
This creates business opportunities, and firms that ignore it will likely lose out in the battle for market share.
Businesses must understand that we are creating a new world with enormous new markets where doing good for the environment is necessary for keeping up your business. Larger companies need to either participate or run the risk of quickly becoming obsolete.