Let’s face it. Technology is part of our everyday life. We can’t avoid it. Technology’s obvious and sometimes less evident presence in our world is worth examining further. For asset owners and investors who value impact as well as financial returns, it is even more important that we examine technology’s effects and its potential – both positive and negative.
In this short blog, I will examine a couple of areas that we have explored with our investor communities at Katapult Future Fest and the Nordic Impact Investing Network (NIIN) Carbon Markets Series, as well as our work with wealth holders through our Impact Investing Academy more generally.
In the venture capital community (including our sibling organisation Katapult VC), there is always great excitement about the potential of technology to help solve societal and environmental challenges.
Tech lends itself to scalability and it’s natural that impact investors are excited about its potential to create impact at scale. As of September 2021, climate tech has grown 5x in the last 5 years1 and account for 14 cents of every VC dollar2 – demonstrating investor sentiment and how the market views its potential.
As the race to get to net zero becomes more urgent, we have seen exciting developments in green hydrogen with investors and governments around the world homing in on its potential. At Katapult Foundation, we have hosted webinars to distil the most impactful opportunities in carbon markets, many of which are tech enabled, including carbon removal and better management and modification of natural environments. So, there’s little doubt that new climate tech has a crucial role to play if we are serious about moving towards net zero, but I am ever mindful of our over-reliance on future technologies to save us from ourselves and the problems we are creating now. Bill Gates, one of climate tech’s biggest proponents and investors, has said that plenty of climate tech won’t last but the dozen that do succeed will make a significant contribution in the fight against climate change.
Much of the VC dollars going into climate tech have been in “impact lite” areas such as apps tracking emissions; for investors serious about impact, emission reduction and climate adaptation in hard-to-abate sectors such as shipping, cement and steel production need a lot more attention and capital, not to mention the drought of climate investments in the Global South, where the effects of climate change are felt most acutely.
Unintended consequences of the rise of tech
Technology has undoubtedly improved our daily lives in remarkable ways – from learning with others from the other side of the world, to accessing information quickly and easily, to seeing medical professionals on your phone. But it would be remiss to dismiss the serious unintended consequences of technology. Or to assume that tech is neutral. In fact, the alarm of concerns and consequences are increasingly being raised by tech insiders, from the hollowing out of our communities to actively disconnecting individuals.3
In Shoshana Zuboff’s book The Age of Surveillance Capitalism, she argues our personal autonomy and democracy is being eroded through the continuous and relentless drive towards data extraction and continual experiments on users and customers by tech companies for profit. Since then, we have seen how the use of black box algorithms played a significant role in election results in the United States and United Kingdom as rivetingly told by Christopher Wylie in Mindf*ck: Inside Cambridge Analytica’s Plot to Break the World.
Optimism for the future?
So, what can we as impact investors do? A lot!
From coming together to learn about the effects of our investments – intended and unintended, to allocating capital in early stage innovation that is seeking solutions to the new challenges that have been created by tech, as well as putting our capital into tech for good.
Power of convening and learning
Investors have convening power, and with that, the ability to share and learn from past experiences and failures. Being mindful of the limitations of investing and technological solutions alone, as we have seen in our systems change IMP+ work, many investors – in particular, wealth holders – are taking a holistic approach to their investments; encompassing investing through an impact lens, advocating for change as well as really listening and bringing in stakeholder voices. It may often involve a technology component because of how effective it is as an accelerant. Tech is not a panacea, but it is a tool like many others.
Allocating our capital – financial and human
Impact investors are funding innovative future technologies and broader tech-for-good opportunities. We have an important role to play in ensuring tech is more responsible. For example, Katapult Foundation has joined other impact focussed investors in funding Rainfall, a start-up focused on empowering data sovereignty and giving individuals control of their data. Katapult VC, of course, had a rich portfolio of impact tech building solutions in climate, ocean and Africa.
Tech Optimism and Realism- the beauty of diverse opinions
Technology is here to stay whether we like it or not. We need both Tech Optimists and Tech Realists. The optimists shoot for the moon and achieve what we thought would be impossible and the realists point out the potential risks and problems associated with emerging technologies. As investors, we can and must play a role in shaping our tech future.
Note: In our Impact Investing Academy, we have developed a tech-for-good learning module for wealth holders. We hope more wealth holders will join our community so we can learn, share, and explore solutions together.
2 PWC State of Climate Tech 2021
3 Tech causes more problems than it solves by Emily A Vogels, Lee Raine and Janna Anderson. Pew Research Center, 30 June 2020