“I want you to act as if your house is on fire. Because it is,” said Greta Thunberg in April 2019. Fast forward to today and our house is literally on fire. Bushfires rage across eastern Australia, razing even the areas that have historically been considered too wet to burn, killing scores of humans, more than half a billion animals, displacing hundreds of people. Not to forget the Central African fires, Amazon fires and scores of other extreme weather calamities taking a toll across the planet.
Sustainability at scale is the need of the hour. Major corporations and energy companies that have the potential, technology, and resources to scale up in that sector, have to up the game and find ways to efficiently invest in new technologies that drive AI, IoT, robotics and other digital transformation initiatives. Unfortunately, while the focus should be on the urgent need to control the unfolding climate crisis and getting on a war footing against this monstrous enemy, many governments and major corporations still find themselves (or choose to be) in a state of passivity, getting busy balancing shareholder interests.
Venture capitalist John Doerr noted for his environmental initiatives had pointed out in his 2007 TED talk how incremental efforts and changes are NOT enough. Thirteen years on, our efforts are incremental still, and NOT yet enough by alarmingly higher proportions.
Where is the passivity stemming from?
The disruptive shifts in ways companies do business and the underlying new technologies affecting all aspects of their activities leave no space for complacency. And yet, the objectivity of the board and the senior executives continues to revolve around protecting and promoting shareholders’ interests. That has to change, especially given that the inherent, sometimes tedious process of budget approval cycles and balancing the budget components is not so conducive for (let’s be honest) relatively low ROI of climate/environment/green projects. Consider how the energy and utility companies have been moving gradually from fossil to green sources over the years – even those incremental changes have led to the declining profitability (especially without subsidies) for most of these firms.
Carbon taxes and subsidies are clearly NOT enough for reducing harmful atmospheric emissions globally. Most countries still linger way below 50% of renewables in their energy mix and overall power production for one fairly obvious reason: strategic investment in sustainability projects within the framework of ‘archaic capitalism’ seems daunting and, crucially, just doesn’t bring good returns without heavy government involvement.
To save the planet, we need to redefine capitalism moving from shareholder to stakeholder interests – a theme that resonates at key conferences and forums including recently at WEF in Davos louder and louder. And digitalization of financial interests on a global scale is the perfect place to start.
Paving the way forward
Energy and utility companies and, in fact, any business looking to act beyond the compliance-driven responsibilities when it comes to addressing the climate crisis, have a few options to explore and scale.
Blockchain technology has evolved quickly in the past few years adding an entirely new set of instruments to the financial sector of the global economy – regulated tokenized shares. We now have the technology and legal framework for transforming the market chronically stifled by illiquidity. Asset tokenization is an excellent opportunity to improve liquidity in a low risk, secure and transparent manner breaking the legacy mould with an ability to quickly invest in a new innovative green technology, which might be otherwise considered risky from the traditional investing standpoint.
Over the past few years, many platforms have sprung up offering to tokenize assets, but tokenization alone, of course, does not guarantee liquidity; improvements should come from an increase in market depth and widening of the investor pool to include social groups and businesses that have not historically been granted access to institutional-level investment opportunities – SMEs, middle-class, the unbanked. This level of universal adoption can only be achieved by offering asset owners, equity issuers and investors a no-frills, transparent, secure blockchain-based platform and a digital banking ecosystem for all investor categories at minimal costs. Few platforms stand out in that respect, but the recently updated Smartlands road map reflects that strategy with unmistakable clarity.
Tarun is a strategy consultant with more than 7 years of experience across different industries including industrial goods, pharmaceutical & life sciences. He is currently based in Frankfurt and works for a German science and technology company. He is a BCG alumnus and completed his masters degree in Material Science from LMU & TU Munich. Tarun is passionate about green energy, carbon sequestration, precision agriculture related topics and regularly writes on & supports projects on these topics. He can be reached at [email protected]