Solving climate change depends, to some extent, on technological innovation.

The world’s leading climate authority, the Intergovernmental Panel on Climate Change (IPCC), published a landmark 2018 report highlighting the urgency of limiting warming to 1.5 degrees Celsius. The report outlines four potential pathways for reaching that goal. The pathways are vastly different, but one thing they have in common is a central role for new technologies, all of which fall under the growing category known as climate tech.

Relying on emissions-reducing technology isn’t the same as blind techno-optimism. New technology needs to complement existing solutions, deployed immediately. But the IPCC pathways make clear that the route to mitigation goes through innovation.

So, what does it take to turn a societal need into a functional reality? Scientific breakthroughs are only part of the challenge. After that, there’s a long road before solutions can be implemented at scale. They require funding through multiple stages of development, facing many financial and operational risks along the way.

There’s a parallel here with the response to COVID-19. Even if a working vaccine is developed, it must go through trials to determine efficacy and the logistical challenge of distribution to billions of people. But a key difference is that effective climate solutions are more varied than a single vaccine and usually more complex.

At a webinar last week hosted by Yale, Stanford and other groups, Jigar Shah, co-founder of clean energy financier Generate Capital, noted that climate technologies, unlike medical breakthroughs, must compete with systems already in place.  

“In the biotech industry, which I think folks herald as a well-functioning market, once companies reach a certain validation of their technology and approach, there’s a payoff there,” he said. “And in [climate tech], there really isn’t one [in the same way], largely because there are a lot of incumbent technologies that provide electricity, energy, water, food, land and materials.”

The period when a new technology is costly to develop but too early-stage to produce commercial revenue is often called the “Valley of Death” because even promising technologies often fail during this period. Success requires the collaboration of a wide set of partners and investors.

As an Environmental Innovation Fellow at Yale, I’ve helped compile insights for investors on overcoming the unique barriers faced by nascent climate technology. Fortunately, many investors are already tackling this challenge. 

The new wave of climate tech investors

In the early 2000s, there was a well-publicized boom then bust in clean energy investing. According to Nancy Pfund, founder and managing director of impact venture capital firm DBL Partners, much of this interest was from “tourists” looking for an alternative to the dot-com failures earlier in the decade. On a GreenBiz webcast last week, she observed that the current interest in climate tech is markedly different. “Today there’s such a high level of focus, commitment and knowledge on the part of both the entrepreneurs and investors,” she said.

Pfund said the interest in climate tech is partially due to the compelling economics of renewable energy compared to alternatives. “There’s been a stunning cost reduction over the past decade,” she said. “This brings in mainstream investors who are just making dollars and cents. They’re not even necessarily waving the climate banner. They want to rebalance their portfolio for the future.”

During the same webcast, Andrew Beebe, managing director of Obvious Ventures, noted that an additional factor in the rise of climate tech has been the overwhelming public demand for climate action. “There’s been a societal shift as well,” he said. “In entrepreneurs today and investors, I see an urgency like we’ve never seen before. People are not that interested in doing yet another social media company, unless it has a real impact.”

In entrepreneurs today and investors, I see an urgency like we’ve never seen before.

It’s important to note here that climate tech takes many forms. There are software solutions that can help reduce emissions and that don’t face the Valley of Death I mentioned earlier. But some of the most critical solutions are physical technologies that require a lot of time and capital to succeed.

“You can’t spell hardware without the word ‘hard,’ and everyone knows that,” said Priscilla Tyler, senior associate at True Ventures, at the Yale-Stanford webinar. “Hardware is hard, which isn’t to say it’s impossible. And if anything, in my opinion, it begets more impact and more opportunity.”

There are promising signals that climate tech is here to stay. Tyler is part of a group of venture capital investors called Series Green, which meets regularly to discuss climate tech opportunities. Additionally, multiple weekly newsletters share the latest deals in climate tech, and in a recent open letter, a long list of investors confirmed that, despite the COVID-19 economic downturn, they remain committed to climate solutions.

Going beyond traditional venture capital

A notable climate tech deal that happened last week was the $250 million investment in Apeel Sciences. The California-based company has developed an edible coating for fruits and vegetables that can help to preserve some of the 40 percent of food that normally gets thrown away. Investors in this round included Singapore’s sovereign wealth fund and celebrities such as Oprah Winfrey and Katy Perry.

A company such as Apeel doesn’t start out raising hundreds of millions of dollars from large institutional investors and celebrities. At the early stages, many new technologies depend on government grants and philanthropy. Apeel got started with a $100,000 grant from the Gates Foundation in 2012.

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Prime Coalition is an organization that helps foundations deploy philanthropic capital to climate solutions through flexible funding structures that allow for long periods of technology development and multi-faceted risk. It calls these funding sources “catalytic capital,” because they can help unlock other forms of finance further down the line. 

In addition to helping others deploy catalytic capital, Prime also makes its own catalytic deals directly through an investment arm called Prime Impact Fund.

“We’re looking to support companies that have specific things to be de-risked before they will be attractive to follow on funders, and then we can be the source of that de-risking capital,” said Johanna Wolfson, principal at Prime Impact Fund, at last week’s Yale-Stanford webinar.

By collaborating with one another, investors such as Prime can help technologies move through the stages of innovation, until they’re ready for more traditional investment structures. Catalytic capital invested today could help create the next Apeel Sciences several years from now.

At each stage, investors serve not only as sources of money but also strategic partners for the startups themselves. This is particularly true for corporate investors, who may have substantial industry knowledge to share and more flexible expectations than traditional investors.

There’s a lot more sophistication on part of corporate investors now than there was 10 years ago.

“There’s a lot more sophistication on part of corporate investors now than there was 10 years ago,” said Pfund. “Then, you saw the agenda of the corporation being pushed around the board table more than you do today, and that’s never a good idea.”

If their interests are aligned, corporations and startups can create mutually beneficial relationships, where each offers the other something that it couldn’t have obtained on its own.

“These corporate investors see so many different technologies, and they believe their own products are better than the startup products, so how do you actually get their support?” said Andrew Chung, founder and managing partner of 1955 Capital, on last week’s GreenBiz webcast. “Well, you need to have a widget or product they haven’t seen before or can’t build themselves.”

Non-financial support also can be catalytic

Investors such as DBL Partners often connect the startups in their portfolio to corporates and other partners. These connections can be hugely valuable for startups, especially in emerging industries where networks are largely informal.

While investors’ main role is to provide capital, they also provide many forms of non-financial support, which can be essential to advancing innovation. In addition to connections, they also can help startups to navigate dynamic policy environments at the state and federal level.

“Policy plays a pivotal role,” said Pfund. “We don’t invest in policy, we invest in people, but we know that our companies are going to have to address the changing policy landscape.”

We don’t invest in policy, we invest in people, but we know that our companies are going to have to address the changing policy landscape.

DBL Partners helps to shape the policy landscape by convening roundtable meetings, advocating for legislation and reaching out to regulators in order to help create a more favorable environment for innovation. This sort of engagement is relatively low-cost in the short term, but it can have massive benefits in the long term, especially as new technologies begin to scale up.

Shah pointed out that the challenges facing climate tech don’t end once solutions reach commercialization. Nascent technologies still need to be deployed at a large scale to have impact.

“A lot of us focus on going from zero to millions,” he said, “but then, in fact, millions to billions is still nascent.”

Reaching the necessary scale requires a careful alignment of technological development, market creation, political support and investment across a wide spectrum of capital.

“All of these things work together in tandem to really unlock nascent technologies,” Shah said.

This story was updated June 4 to correct Apeel’s funding information.

Hunting and gathering for food is taking on a whole new meaning of late. The ever-lengthening line at my local Whole Foods starts to wrap around the outside of the store before 7 a.m., as socially distanced shoppers — securely donned in gloves, masks and even plastic face shields — wait nervously to scavenge for their week’s worth of essentials along with their COVID-19 indulgences: the extra bars of Hu chocolates and Enjoy Life cookies, in my family’s case.

We once thought of foraging as an activity engaged in only by our very remote ancestors and distant “primitive” people. But the spread of COVID-19 has heightened the subsistence survival instinct in all of us. In a way, we are not so dissimilar from “primitive” people in places such as the Amazon Basin as we might have thought. 

And now, we’re all vulnerable to the same pandemic virus. Only with virtually no resistance, no access to medical treatment and a government that condones the deforestation and development of their lands, it’s far worse for indigenous people.

Companies and consumers everywhere have a role to play. In fact, COVID-19 has created an opportunity for companies to be more cognizant and compassionate in their approach — more aware of the direct and indirect responsibility for the impact they have on people in places where they operate.

So as the spread of COVID sickens and kills front-line workers in meat-packing plants across the country and suppliers are forced to curtail operations — leaving the meat section of local supermarkets looking, well, a little lean — what about the places where this meat comes from, namely Brazil, which according to the USDA is the world’s largest beef exporter?

Tribal people living in the Amazon Basin have been made even more vulnerable to the virus by the recent uptick in deforestation.

While many companies are doing right by their workers in U.S. plants, why not — in the spirit of cognizant corporate citizenship, stakeholder accountability and stewardship, let alone brand reputation — help to protect people in Brazil that are not only particularly vulnerable to the virus but whose very survival is directly linked to the protection of forests? 

While the current pandemic may be overwhelming America’s medical system, killing our healthcare workers, tanking our economy and generally frying our collective nerves, the indigenous people of Brazil — the country from which a lot of our meat as well as the soy used to feed farm animals is produced — have virtually no access to healthcare, let alone hand sanitizer.

President Jair Bolsonaro, along with slashing funding mandated to protect indigenous rights and proposing to open up oil and gas exploration and hydropower development on indigenous territories, effectively eliminated the availability of rural healthcare by driving out the thousands of Cuban healthcare providers who used to service indigenous communities prior to his presidency.

As the nationwide death toll in Brazil soars above 11,000 and reliable data on indigenous infections and deaths is hard to come by, a recent survey by the Brazilian Indigenous Peoples’ Association found the virus has reached 38 groups in the country with 446 cases of the new coronavirus and 92 deaths reported as of mid-May, mainly in the Brazilian Amazon.

Tribal people living in the Amazon Basin have been made even more vulnerable to the virus by the recent uptick in deforestation, up by nearly 64 percent in April, compared to the same month last year, according to data from Brazil’s National Institute for Space Research. Last month alone, more than 156 square miles of rainforest were destroyed — an area about the size of Philadelphia.

While indigenous people are locking down like the rest us, when they do, their lands are left even more vulnerable to brazen land grabbing, which also has been alarmingly on the rise. 

Well before the pandemic, Bolsonaro made no secret of his intention to open the Amazon to increased economic activity, and he’s been determined since the start of his time in office not to let indigenous tribes stand in his way.

As he said, “They don’t work. They don’t bring in money for Brazil, only burdens.”

Meanwhile, Bolsonaro has downplayed the effects of the virus even more than other presidents, describing it as a “little flu” and a trifling “cold” and accused the media of manufacturing “hysteria.”

Emboldened by Bolsonaro’s stance, indigenous leaders have been targeted in increasing numbers over the past year — even before the outbreak of the virus. Last year, there were at least 10 documented indigenous murders, as Bolsonaro effectively has declared open season on indigenous peoples who stand in the way of economic expansion, writ deforestation.

While the Bolsonaro administration has made its dismissive if not genocidal attitude toward indigenous people patently clear, agribusinesses operating in Brazil could, just for example, step in.

The opportunity to display corporate social responsibility has taken on new urgency as indigenous leaders call out these businesses as culprits in the ravaging of their lands and families.

“What we are asking from the multinationals is that they not buy commodities that cause deforestation and conflict and that are produced on indigenous lands. We are also demanding that bilateral trade agreements … demand respect for indigenous rights and ensure there are no products linked to deforestation coming into their countries,” declared Dinamam Tuxá, coordinator and legal adviser to the Association of Indigenous Peoples of Brazil.

While a number of soy and beef producing companies have set time-bound targets for eliminating deforestation from their supply chains, deforestation continues to escalate. 

Shoppers at Sam’s Club, Safeway and Target may notice a paucity of meat at their local megastores, but all of us have a collective responsibility to protect the indigenous people who help to protect lands and species on which we all depend. 

In addition to banning, or at least dramatically reducing deforestation, why don’t companies, while they’re at it, support communities who know a thing or two not only about hunting and gathering but about protecting the lungs of our world?

If you were to believe the mainstream business media, there would be no question whatsoever that the twin crises of a pandemic and a recession have pretty much put the kibosh on sustainable business activity. I mean, why, amid all this human and economic carnage, should companies be focused on anything besides keeping their doors open?

Last month, for example, the Wall Street Journal published a piece (“Sustainability Was Corporate America’s Buzzword. This Crisis Changes That”) proclaiming that when it comes to corporate commitments and programs, “executives have called a timeout.” It said in part:

Today, every occupant of every C-suite is trying to figure out what they’re willing to throw overboard as the economic storm spawned by the pandemic is swamping their ships. Businesses that were planning to help save the world are now simply saving themselves.

Among the Journal’s proof points: General Motors put the brakes on a car-sharing program, Starbucks washed its hands of filling reusable coffee mugs and “companies have delayed sustainability reports.”

Yes, we get it: No one wants to share a vehicle with strangers or refill an unwashed coffee mug during a pandemic. No question those programs should be “thrown overboard,” at least temporarily.

For the first time, corporate sustainability professionals are on the bus instead of being thrown under it.

All of which, my friends, is the editorial equivalent of fingernails on a chalkboard: something so dissonant with reality that it makes my head hurt. The reality is that corporate sustainability is alive and well. Unlike previous economic downturns, sustainability isn’t being jettisoned in the spirit of corporate cost-savings. It’s being kept alive as part of a pathway back to profitability.

For the first time, corporate sustainability professionals are on the bus instead of being thrown under it.

Need proof that reports of the death of sustainability are premature? Let’s begin with a few headlines:

• Southern Company commits to net-zero emissions by 2050
• Microsoft committed to protect more land than it operates on globally by 2025
• Citigroup to halt all financing for thermal coal mining by 2030
• Shell plans to achieve net-zero emissions across its product manufacturing operations
• Mattel launches latest sugarcane-based products
• Volvo and Daimler launch €1.2 billion fuel cell truck joint venture
• General Mills commits to 100% renewable electricity by 2030

All of those happened in April.

April! The Lost Month. When jobs and economic activity essentially went poof. When more than 190,000 humans died of COVID-19 globally, nearly five times the number one month earlier, and more than 20 million Americans lost their jobs. When the U.S. services sector posted its biggest contraction in more than a decade and the price of oil turned negative for the first time in history. When the global economy essentially sank like a stone as people world over sheltered in place.

April!

Okay, you say, April coincides with Earth Day, when companies traditionally strut their sustainability stuff. Thus, it’s not a good indicator.

Fair enough. In that case, here are some headlines from May:

• Total pledges to deliver net-zero operations by mid-century
• Campbell Soup to transition to 100% recyclable or compostable packaging by 2030
• Dunkin’ switches to plastic-free cups and plans to double number of green restaurants
• French corporates call for “green and inclusive recovery”
• BNP Paribas accelerates “complete coal exit” plan
• Intel’s 2030 commitments include “shared” climate and social goals
• More than 300 companies push U.S. Congress to promote climate action
• Pernod Ricard moves up ban on single-use plastics to 2021
• ADM to pioneer biofuels, more carbon capture projects
• Over 150 global corporations urge world leaders for net-zero recovery from COVID-19
• Siemens Gamesa unveils plans for “world’s largest wind turbine”
• Google to stop making AI tools for oil and gas extraction
• Half of Cargill’s sustainable cocoa now traceable from farm to factory

I could go on; there’s more where these came from. Still, this baker’s dozen of storylines provides a peek into what happened in the 31 days just ended, well before most cities and states have started to reopen.

Another data point, albeit anecdotal: The 90 or so members of our GreenBiz Executive Network — sustainability leaders at large companies — remain firmly in their jobs. Sure, there’s been some churn — both comings and goings — but that’s normal. There seem to be precious few layoffs among these professionals. That could change if the downturn drags on, but so far, so good. 

Five easy pieces

So, why is sustainability still going strong within the private sector amid this terrifying time? Five reasons:

1. Corporate sustainability is a long-term evolution. As several of the above headlines suggest, companies are making commitments into 2025, 2030 and beyond. That means they have set the wheels in motion for long-term structural change. These changes generally don’t come and go based on quarterly cycles.

2. Companies understand that sustainability engenders resilience by making supply chains more transparent, operations more efficient and, increasingly, improving the ability of operations to withstand or recover from calamities of all types.

3. Investors see sustainability as material. Largely because of No. 2 above, institutional shareholders see sustainability performance as a proxy for a well-managed company that is taking a risked-based approach to strategy and investing. And they’re not shy about letting companies know this.

4. There’s a growing call for a business-led “green recovery” to revive economies around the world and help them prepare for the next likely pandemic: climate change. While the Green New Deal isn’t yet getting traction in Washington, D.C., some of its components already are being tucked into the recovery legislation. And in Europe, “green recovery” is already a mainstream meme.

5. Companies understand that the world is watching. They want to be able to attract and retain customers and talent — to be seen as part of the solution or at least not part of the problem. True, we’ve been hearing this for years, and there is strong evidence that shoppers and job seekers have been seeking out “good” companies. But the times have ratcheted up those concerns. In a world where talent, both young and experienced, are drawn to employers that are helping address the world’s problems, who will want to work for your company?

Of course, it’s not all a rosy scenario. Clean energy jobs have been decimated. Hiring is on hold for many open corporate sustainability positions. More than a few sustainable business professionals are devoting their time these days to the pandemic, to ensure the well-being of employees, suppliers, customers and others, and that facilities will be healthy places to work once the recovery kicks in. Some are itching to get back to their “day job.”

But let’s stop and briefly celebrate the moment: Corporate sustainability continues, largely unhindered, during some of the worst moments in modern human history. Its value and importance are being seen as central to addressing the economic, environmental and social problems we face, and to increasing societal resilience to the next wave of shocks, in whatever form they take. And, little by little, companies are stepping up to meet the challenges and seize the opportunities.

Okay, enough celebrating. It’s time to get back to the hard work still to be done.

In this crazy upside-down world, the line between residential and commercial energy is getting fuzzy. 

Everything changed so quickly, it makes sense that climate and energy teams have yet to figure out how to account for the shift. But as companies such as Mastercard, Facebook and Twitter look at long-term remote work policies, working from home (WFH) is adding a new dimension to corporate carbon accounting. 

And it’s not too soon for climate-forward companies to think about how to incentivize employees to make their home (office) run off clean energy. 

It’s still early days for companies thinking about WFH energy usages as part of their own greenhouse gas footprint. Right now, commercial energy use is still high, and it’s not clear when or which workers will head back to the office. 

It’s not too soon for climate-forward companies to think about how to incentivize employees to make their home (office) run off clean energy.

According to Noah Goldstein, director of sustainability at Guidehouse, there also aren’t great calculations for what the GHG impact of working from home would be. The guidance is that the company is only responsible for “additional” energy use, but that is hard to determine without baseline calculations. 

“I can foresee some companies accounting for WFH in their 2020 or 2021 footprint, but very, very few in number,” said Goldstein in an email. 

Five companies with residential energy programs for the COVID era

With people hunkering down at home as we enter a hotter than normal summer, residential demand response will be critical to keep energy affordable and clean(er). 

The pandemic began in a shoulder month — meaning a time of year where heating and cooling demands are low as most of the country experiences temperate weather. With restrictions on movement still in effect, grid operators are preparing for air conditioners alone to strain our energy infrastructure.

Demand response is a promising solution. According to an analysis by Wood Mackenzie, residential demand response would unlock more than 10 gigawatts of additional energy capacity. This would help utilities and states stay on track for clean energy goals and reduce energy bills at a time when households are struggling more than ever to make ends meet. 

Here are five companies with updated offerings tailored to the COVID-19 era, designed to make residential energy use smarter as our homes become our office (and bar and restaurant and concert venue and movie theater…)

1. Google Nest partners with utilities

Google recently announced its partnership with Consumers Energy to bring smart thermostats to up to 100,000 households in Michigan. According to its release, those who receive a thermostat will be enrolled in the utility’s Smart Thermostat Program, which shifts energy use to off-peak hours. 

The partnership is part of Consumers’ Clean Energy Plan, which is striving to reach net-zero carbon emissions. Shifting energy use during peak times is key to staying on track. 

This is just the first in a series of Google Nest’s partnerships. The company is expected to announce three more utility partnerships at the start of June. 

Google isn’t the only company teaming up with utilities to gamify demand response. Logical Buildings launched its GridRewards campaign last month to encourage residents to reduce energy usage at key times. Logical Buildings partnered with a consortium of municipalities in Westchester, New York. 

2. OhmConnect launches AutoOhms

Last week, OhmConnect announced AutoOhms, its newest program that offers cash incentives for “timely, smarter energy use.”

AutoOhm will power down energy-intensive connected appliances in 15-minute increments during peak energy times. Customers will receive a text message when peak rates are about to kick in and can select appliances to power down through an app. Through this “gamified” experience, the customer can actively see their energy savings. 

The program is available for customers of California’s three big investor-owned utilities: Pacific Gas and Electric, Southern California Edison and San Diego Gas and Electric. 

3. Tesla Energy discusses Autobidder

Always a big dreamer, it comes as no surprise that Tesla’s energy division has its sights on becoming a distributed global utility. 

Tesla has been deploying distributed energy assets (think solar, electric vehicles, Powerwalls) while investing in grid-scale energy and storage projects. Now the company’s vision is to control these individual assets as one beast on its platform Autobidder. According to the website, Autobidder allows anyone with energy storage assets — be they EVs, solar plus storage, a home battery, anything — to engage in real-time trading and make additional money from the energy asset. 

Apparently, Autobidder already has been (quietly) around for a few years, operations at Tesla’s energy storage facility in South Australia. With Tesla talking about the software, the company is likely hoping for wider adoption. 

4. Leap Energy develops a demand response marketplace

Leap, a newer company in the world of demand response, is working to create a marketplace to better monetize energy resources. Its vision is to engage connected energy resources that aren’t currently participating in grid flexibility — which, according to its CEO Thomas Folker, is about 90 percent of energy assets.

“We are an aggregator of other aggregators,” said Folker in a phone conversation last month. “We don’t physically control any hardware, we don’t acquire any customers. We just provide the software that allows for this all to happen.”

The platform allows for end energy users to bid on resources and automatically facilitates the exchange. Its users are demand response companies — such as OhmConnect and Google Nest — and works to increase the value of distributed energy resources while providing flexibility to the grid. 

5. Span turns homes into microgrids

New on the scene with a fresh round of Series A finance, Span bills itself as a smart panel company that works to integrate a home’s solar, energy storage and electric vehicle. It’s kind of like using a home’s energy assets as a microgrid. 

Span’s selling point is energy resilience. The system works to keep power flowing to where customers need it in the event of a power outage, which, the company points out in a release, is of growing importance as California is looking at a future where shelter in place could overlap with planned power outages. (The company is initially focusing on California and Hawaii as key markets.)

This increased level of control and connected energy assets also means users can rely on their own resources when the grid has more dirty energy. 

This article is adapted from GreenBiz’s newsletter Energy Weekly, running Thursdays. Subscribe here.