Connecting the Future of Climate Change
Last, Best Chance
Addressing climate change requires two key elements: immediacy and long-term perspective. The actions we take now are not disconnected from the future, particularly when considering the long term.
Focusing on the long-term aspect, the policy direction for climate change mitigation is significantly influenced by political factors. In the United States, which has two major political parties, the Democratic Party is showing a proactive stance in addressing climate change.
President Biden plans to allocate $555 billion over a decade for climate change mitigation. This includes subsidies for renewable energy adoption, support for electric vehicle purchases for companies and households, as well as investments in carbon capture technology for research institutions.
However, there is a midterm election coming up in November this year. It’s entirely possible that climate change-skeptical Republican candidates could win. If Congress fails to pass legislation to curb CO2 emissions while the Democratic Party is in power, there’s a possibility that such legislation might not pass for years to come.
When politicians, journalists, and activists discuss climate change, the phrase “Last, Best Chance” is often used. And indeed, now is exactly that time.
"From Teacher and Student" to "Everyone as a Student"
UK Education Secretary Nadhim Zahawi announced at COP26 in November last year that they would “place climate change at the heart of education.” However, the trajectory of this discussion has become uncertain, and enacting it into law is seen as challenging.
The background to this is related to the results of a survey on climate change education in the UK. In this survey of 4,690 teachers, 79% of secondary school teachers responded that they “cannot teach climate change effectively.” Furthermore, 70% of them responded that they “have not received appropriate training to teach students.”
In addition, the survey revealed that only 4% of students claimed to “fully understand climate change,” while 68% of students said they “want to learn more about climate change.”
Matt Carmichael, an English teacher in Leeds, UK, stated, “Teachers feel pressure when discussing climate change. I personally have learned about this issue, but my colleagues lack confidence and feel unprepared to teach it. However, given the abundance of information circulating mainly on social media, I believe that teaching it as part of education is extremely important.”
As COP26 has made clear, action on climate change is needed. Amidst this, it seems wasteful to progress while the underlying education system remains inadequate. Expanding the vectors directed at students to be more multifaceted is essential in building an education system.
Venture Investment and ESG
ESG investment, which demands not only profit pursuit but also fulfillment of responsibilities towards the environment and society, is becoming increasingly prevalent. As ESG evaluations of publicly listed companies advance, this trend is also making its way into venture investment.
Of course, for VCs aiming for extraordinary returns in exchange for high risks, balancing the pursuit of “economic rationality” with “solving social issues” is a challenging theme. However, institutional investors, their largest funders, are seeking positive societal change.
So, how can VCs incorporate ESG criteria? Let’s explore each element.
Information related to the “environment” needs careful interpretation. For instance, high-tech companies that focus on software development might appear carbon neutral. Yet, the more data they utilize, the more energy they consume. Therefore, evaluating carbon footprint visualization and emission reduction efforts is crucial.
The assessment of “society” and “governance” won’t differ significantly from the traditional approach. Setting ethical standards for technology utilization has always been required. Additionally, the presence of excellent governance structures is a prerequisite for investment.
ESG investment, pursuing three hares, can potentially have a negative impact on financial returns. However, improving public image might lead to long-term benefits like attracting the next generation of entrepreneurs and ESG funds.
In an increasingly competitive VC industry, “ESG” might hold the key to establishing a competitive edge.
What is the destination of my donation?
I often find myself pondering when making annual hometown tax donations.
It’s not about choosing between getting 1.5kg of meat, seasonal fruits, or a pile of shrimp as a gift (though that’s part of it!), but rather about how my donation will be used. Depending on the municipality, the usage can be abstract, leading to doubts like, “Is my money really helping people?”
When making a donation, I want it to go to places where it will have a significant impact. This idea of “Effective Altruism” is one that has emerged in recent years. In 2009, the first organization dedicated to researching the most effective use of charitable dollars, “Giving What We Can,” was established by philosophers Will MacAskill and Toby Ord, both Oxford alumni.
Of course, addressing climate change, the topic at hand, is one of those areas where societal impact is significant. However, even though it’s crucial, donations allocated to it are minimal. Out of the total donation amount of $471 billion in the US in 2020, only about 2% or $8 billion was allocated to environmental nonprofits. Furthermore, donations to organizations directly focused on reducing greenhouse gas emissions make up even less, only 0.4% of the total.
Organizations and services based on Effective Altruism are increasing in the US, estimating that for every dollar donated to nonprofit organizations, approximately 1 ton of greenhouse gas emissions can be reduced through policy measures.
Donation allocation also has an investment aspect. If allocated to the right organizations early on, it could multiply by tens to hundreds of times through compound returns in 10 to 20 years. To ensure that goodwill doesn’t go to waste, it’s important for similar services to emerge domestically.