May the Forest be with You

Conscious Collective Journal: 4th Edition

Welcome to our VSQ Conscious Collective Journal. We bring you updates from our portfolio companies along with thematic commentary on ideas and ventures that have transformative potential. Informative and nifty, this serves as a companion to your journey as a conscious investor.

Planting more trees has been touted as the sure shot way to save the planet (throwback to all the “save trees” printed posters) but exactly how many trees would those be, who’s doing it and where exactly are these trees located? And what is the role of technology here? We explore some questions about forestation technology, also called ‘ForestTech’, which has emerged over the last few years to help us gain a better insight into trees, preservation and restoration. We also take this opportunity to showcase the remarkable work some of our portfolio companies are doing in the space.

Amidst the ‘nature is healing’ headlines, 2020 is on record to be the warmest year ever. Despite the slowdown in economic activity across the world, the first nine months of the year saw record concentrations of major greenhouse gases – CO2, methane, and nitrous oxide – in the atmosphere. Arctic sea ice extent was at record low levels for much of the summer and the summer minimum clocked in as the second lowest on record after 2012 (yes, 2020 is a gift that keeps on giving). Obviously, there isn’t a quick-fix: restoring the environment, like investing in mission-driven companies, calls for patience and intent that can deliver long-term value (and survival).


Planetary Health: Pass Me the Thermometree

First off, it’s important to understand why we need to preserve existing forests and reforest land. Think of the earth as a temperature-controlled self-sustaining ecosystem—the largest terrarium if you may. The earth after years of too hot and too cold (ice age) years has come to be just at the right temperature for a few million years for life to sustain.  The trees on the planet help maintain just the right balance of gases for life to happen by absorbing greenhouse gases from the atmosphere and churning out oxygen: they act as our collective, global lungs. While greenhouse gases are naturally occurring in the atmosphere and are in fact key to the sustenance of life, the ‘right’ balance has been put off due to excess greenhouse gases in the atmosphere associated with man-made emissions that have been on the rise for the last two centuries. Concurrently, humanity has been slashing through global forest cover at record levels, eliminating the planet’s ability to absorb greenhouse gases. All of this leads to the rise in temperatures that leads to melting of the permafrost, rising sea levels, erratic sea levels…you get the story. 

The key question though is ‘would planting more trees help reverse all of this?’ and if so, exactly how many trees would it take. NASA ran a study to arrive at a reasonable figure for exactly how much reforestation we need to undertake using new satellite-based land cover and land use maps, along with other climate and soil data and advanced techniques to arrive at their results. Their conclusions weren’t too different from the recommendations of the Intergovernmental Panel on Climate Change   (the Al Gore one), which in 2018 suggested (2.3 billion acres) of new forests could help limit the increase in global average temperature to 1.5-degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels by 2050. There’s obviously more to it but at least there’s a number to the problem. 

It isn’t just about keeping the planet at the right temperature. The loss of forest cover is also associated with the rise in pandemics. Conservationists and biologists argued at a UN summit on biodiversity earlier this September that there is clear evidence of a strong correlation between environmental destruction, changes in land use patterns as well as the exploitation of wild animals, all contributing in brewing a perfect ‘spillover’ of diseases from wild animals to human societies. Almost a third of all new emerging diseases can be attributed to said spillover. If the prospect of long-term destruction isn’t scary enough, the reality of another pandemic certainly is. 

Where Are All the New Trees?

Skimming through newspapers everyday, we see companies in a rush to go green and sign decarbonisation and carbon neutral pledges. Google has announced to be carbon-free by the year 2030, Microsoft has announced their intent to be ‘carbon-negative’ by 2030 and even retailer Walmart has set the carbon neutral by 2040 target for itself. 

In order to meet these pledges, companies must plant hundreds of thousands of trees. Companies wouldn’t directly plant trees across the world but rather rely on a set of activities that are closely tied to reforestation. We discuss them in detail below here: 

Reforesting in 21st Century

Despite all the ubiquitous advancements in technology, the process of reforesting has been painfully manual and antiquated. New ‘Precision Forestry’ companies are set to change that, these companies not only improve outcomes for planting trees but also address concerns regarding invasive species and land monitoring. The new way of forestry includes aerial and laser technologies for mapping and monitoring of forests, nurturing saplings in controlled environments to ensure better outcomes, alongwith other specialised technologies.  

Read more about our portfolio company Dendra Systems below, which is doing remarkable work in the precision forestry space.

Carbon Credit Market: Like Stocks but for Carbon

The most intuitive way to explain the carbon credits space is its similarity with stocks—the quantity traded being carbon. A carbon credit is a certification by a regulatory agency that can serve as a guarantee of decreased carbon emissions. Broadly, there are two kinds of these markets, voluntary carbon credits—where there isn’t any limit on emissions for specific companies or a central authority involved  (the whole system runs on trust between buyers and sellers) and cap-and-trade wherein governments or regulators set a limit on how much emissions a certain entity can produce with emissions over-and-above that limit needed to be either fined or be offset using carbon credits. At present, The cap-and-trade carbon credits market is active in places like California and the EU where there are set limits on emissions for each industry. The rest of the world is catching up, albeit slowly.

While carbon credits seem to be the most market-friendly way of keeping emissions in check without fundamentally disrupting industrial activity, there is also skepticism about the market being a ‘quick-fix’ solution to a much deeper problem. The fundamental flaw with carbon-credit markets is that it’s a zero-sum game, trying to cancel a ton of carbon emissions in one corner of the world with reduction somewhere else. For instance, as politicians in the EU made their respective green pledges towards climate action, the price of carbon credits soared to a decade-high since companies want to buy out allowances for emissions for the future. In the longer term, the idea in fact takes away the focus from actually developing greener technologies towards a net-zero emissions world. However, on the upside, the market has led to new creative ways of directing wealth towards improving environmental outcomes. Earlier this year, HSBC launched a ‘reef credit,’ a tradable unit that quantifies and values the work undertaken to improve water quality flowing onto the Great Barrier Reef. Similar to the carbon credit market the scheme pays landholders for improved water quality in the reef. 

Also: Read about VSQ portfolio company Pachama that is creating a smarter online carbon credits marketplace below.

Does it Have to be a Tree? : The Carbon Capture Market 

Planting a tree is not the only way to capture carbon from the atmosphere. A techno-fix Elon-Musky solution is Carbon Capture Technologies—an umbrella term that includes different technologies that keeps CO2 from power plants from being released into the atmosphere, this includes solvent filters in power plant chimneys, then piping them to locations where the carbon is injected deep underground. Basically, burying carbon back into the ground although some of the carbon can be used to make products like plastics, grow greenhouse plants or even carbonate drinks. 

Across the world there are about 22 carbon capture, usage and storage (CCUS) projects, far from being in widespread commercial use but the hype is slowly catching up.

Other Helpful Technologies

There are alternative ways to reduce emissions as well. Interesting ones worth mentioning include regenerative agriculture and algae bloom. 

Given that agriculture contributes almost 25 percent of all human emissions, there is a need to reimagine agriculture in order to combat climate change. Regenerative agriculture is a broad umbrella term that envisages a system of farming practices and soil health along with addressing issues of soil biodiversity and health with attention also paid to water management, fertilizer use, and more. The philosophy behind the practice is to look at the agricultural ecosystem from a holistic standpoint, aimed towards preservation and conservation of soil rather than a fertiliser-pesticide overkill with a timer on the soil’s health. This article from the Climate Reality Project is worth a read if you want to explore this further. 

We often read about algae as bad news for beachgoers and marine population but algae is also another up-and-coming solution for tackling emissions that is gaining popularity. The ubiquitous green algae is a predecessor to both plants and animals and has impressive abilities to sequester C02 from the atmosphere. New companies in this space like Hypergiant are using AI to create large patches of algae farms that grow faster than land plants, can cover wider areas and can be later utilised to produce biofuels. The technology is nascent but looks promising.

Is There an App for It?

Although, it will take systemic change to get our fight against climate change in order, everyone can do their bit. Many news apps have come up in the ‘personal emissions’ space that allow their users to track, manage and offset individual carbon emissions. Prominent players include search engine Ecosia, which plants a tree for every 50 searches on its platform. There’s ‘Forest’ app that gives you virtual coins for not touching your phone during key tasks and in turn allows you to use those coins to donate to a partner organisation that plants a tree on your behalf. 

VSQ Company Spotlight

Dendra Systems

HQ’ed in the UK with a footprint in Australia, Dendra Systems’ solutions help corporations and governments undertake reforestation efforts. Dendra’s products include a suite of mapping and analytics technologies that helps analyse unique geographical features of each site they work on alongside collecting data for monitoring and regulatory purposes. Dendra uses drones to plant thousands of trees in one flight, bringing costs and improving reforestation outcomes for their clients. Dendra recently raised a $10 Million Series A round. This year, Dendra was the finalist for the 2020 Pritzker Environmental Genius Prize, the World Economic Forum 1 Trillion Trees competition, and the winner of the Advance Award for Emerging Leaders.

Pachama

Based out of California, Pachama is a carbon credit marketplace that sources projects that are approved by existing certification bodies, but offers its customers monitoring and management services through access to satellite imagery and sensors that provide information on emissions and carbon capture on reforested land. Pachama recently partnered with Shopify, the leading e-commerce platform to help Shopify’s merchants and buyers to automatically offset the carbon emissions from their order deliveries. Pachama’s recent investors  include Paul Graham, Scott Belsky (Behance), Tobi Lutke (Shopify), and Tim Schumacher (Ecosia), Chris Sacca  from Lowercase Capital, Breakthrough Energy Ventures (backed by Bill Gates, Jack Ma, Jeff Bezos, John Doerr, and Vinod Khosla )as well as funds such as Social+Capital, Global Founders Capital and Serena Williams’ VC Serena Ventures.


Interview

Sonia Weymuller, Founding Partner of VentureSouq and Partner Lead for the VSQ Conscious Collective, was invited to speak at The Economist event “Investing for Impact” Supported by the Ministry of Finance Saudi Arabia and the G20 Saudi Secretariat. She joined a panel together with Amit Bouri, CEO and Co-Founder of the Global Impact Investing Network, and Johnny El Hachem, CEO of Edmond de Rothschild Private Equity. The panel was moderated by Daniel Franklin, Executive and Diplomatic Director at The Economist. You can view the panel here.


Tune In

Here’s a list of podcasts and documentaries, curated by our very own Conscious Collective Climate Warriors Lola Fernandez and Pranaav Parth. 

Netflix has released two remarkable documentaries on climate change this fall (a steady departure from an endless stream of mind-numbing shows). The first is David Attenborough’s ‘Life on Our Planet’, the famous broadcaster’s, as he puts it “witness statement” on the state of our planet. It’s majestic. It’s depressing too. On a more hopeful note, there’s ‘Kiss the Ground’, that showcases how soil health is tied to the overall health of our planet, and how innovative practices such as regenerative agriculture can help renew ecosystems and combat climate change globally.

For everyone wondering how we managed to write a whole journal post on climate change without mentioning ‘Fridays for Future’, we found a great podcast aptly titled How to Save a Planet—an inspiring story on how students walking out of school to demand more action on climate change built an international movement that was propelled forward by the pandemic. 

How a Search Engine Saves a Forest

A conversation with Hannah Wickes, the CMO at Ecosia, the tree planting search engine about how the company’s work is shrinking deserts, restoring water cycles and rebuilding wildlife habitats with their extensive reforestation projects—all funded by the revenue from their search engine. 

Doing Right by Planting Right

No conversation around reforestation is complete without talking about the Rainforest Alliance, which has done remarkable work in reforestation globally. This is a podcast interview of Richard Donovan, who spent 27 years in the Rainforest Alliance auditing forests across 40+ countries. Donavan emphasizes the need for understanding local ecosystems and indigenoous species in order to find more relevant solutions to meeting our demand for resources in a sustainable way.


There’s a long way to go in creating a more sustainable future, but as they say ‘mighty oaks from little acorns grow.

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