Why I Chose to Focus on Reducing Plastic Waste (In response to "Anti-plastic focus 'dangerous distraction' from climate change" article)

While working towards my MBA in Sustainability, I had trouble choosing which environmental issue to focus on post graduation.

First, I chose climate change because of the urgency behind it. Then, as I learned more through my masters program, I realized the importance of working to reduce plastic waste.

Partially in response to a recent article published by BBC News claiming that focusing on plastic waste was a dangerous distraction from climate change, I'm sharing why:

Nature can survive climate change (we might not)

Most people don't realize we aren't really fighting climate change to save the planet, but to save ourselves. And, our co-inhabiters. I certainly didn't realize this going into getting my masters. 

Nature is resilient. It has bounced back from billions of years of changes, including previous global shifts in climate. 

Whether we're too late for climate change is an unknown. But we know that nature will try and revive itself. So, whatever is left on this planet after the blows of climate change, I want to give it a fighting chance.

Nature has revived post climate change, but never with plastic.

Whether it's humans, minos, or mycelium — nature will need potable water and/or edible sources of energy (food) to make its big comeback. This hasn't been an issue in its previous revivals, but plastic poses a big threat to the ecosystem nature has relied on to bounce back with in the past.

If we want to make sure nature comes back as usual, we need to stop infusing it with lasting micro plastic in its water and food systems.

Companies won't innovate away from plastic if we keep using it

I don't know how else to describe this point beyond its headline, other than to reemphasize. If you get it, move on to the next point.

It's only when consumers show they want change through shopping and social behavior that companies will spend money on change. 

When we show companies we aren't OK with plastic, we encourage them to find more sustainable alternatives. 

Plastic emits ghg, just like some plastic alternatives, at least after alternatives there isn't plastic.

When anything that's organic or biodegradable — food, grain salad bowl, paper cup, etc — ends up in landfill, it emits methane — a greenhouse gas way worse than CO2. Plastic doesn't break down as quickly, so it doesn't emit as much.

The argument in favor of plastic to follow this fact is that plastic is better for the planet because it prevents more ghg emissions.  

But, this argument seems to always fail to mention the ghg emissions from plastic production.

Plastics production is responsible for 1% to 3% of greenhouse gas emissions, and that's just in the US. Switching to an oil plastic alternative, like plant-based plastics, could reduce industry-wide GHG emissions by 25% annually. Imagine how much ghg emissions would be reduced if companies keep innovating, or we curb our use.

Plastic production is expected to keep growing

I will leave my final reasoning with this excerpt from the NY Times recapping a study released last month (October 2018):

"Petrochemicals are currently the largest industrial energy consumer and the third-largest industrial emitter of greenhouse gas emissions. The report found that direct greenhouse gas emissions from petrochemicals would increase 20 percent by 2030 and 30 percent by 2050.

The main driver of the petrochemical industry’s growing climate footprint, according to the report, will be plastics."

Today, I run a company focusing on beautifully designed alternatives to single-use plastic items. Here is Silvr, our launching product.

There's a .gif of it to the left <. Would love any feedback you have.

olivia@silvrinc.com.

Rethinking VC Return Models for Investing in Mission-Driven Companies

The most popular way venture capitalists currently seek and expect returns are through as-fast-as-possible exits via acquisition or IPO. Fair enough. They give startups money and would like to get it back, and then some, as soon as possible.

Here’s the problem. These popular return models aren’t a good fit for mission-driven businesses, which is potentially keeping VC investors from investing in them.

Mission-driven companies, by ethos and definition, are not meant to rise up to then be absorbed by another company and its mission, nor dictated to by stakeholders seeking hyper short-term returns on Wall Street.

No, the very reason for starting the enterprise was to commit to bettering something —  the planet, working conditions, animal welfare etc.. This is what drives the entrepreneurs starting these mission-driven companies.

The investment return model for mission-driven companies needs to change to reflect those companies’ longer-term expectations.

Rather than returns through exit, VC impact investors should seek returns through preferred dividends that grow over time as the company, and its mission, sustain and succeed.

The best mission-driven companies realize that profit is just as important as planet or people to the company.

Without it, they would not sustain themselves, which would terminate their mission. So, while profit distribution return terms have grown unattractive to a VC world bruised by growth before profit, the dividend model is ideal for mission-driven companies.

This isn’t a new model, just an unpopular one. The crowdfunding site Kickstarter recently kick-started a dividends return model in the VC favorite sector of tech. The company shocked the market when they opted for dividends rather than an IPO or acquisition in 2016.

Many argue that this approach could hurt the growing business, as profits should be invested back into the company. But, this is only a problem for companies that had the upfront capital in the first place. With a no-exit future acting as a 10,000-foot hurdle for mission-driven companies, their problem is the opposite. They want to get to a place of profit sharing as fast as possible, because doing this is the only way that they can get the initial investment these businesses need.

What’s more, the current VC model is based on high risk, high reward, where investors bet on many and expect a few to return big investments. They generally want profits to be invested back into the company to help it grow, no matter whether it remains profitable or not. Being a financially sustainable company is not what gets investors their high returns, but being a risk-taking high-growth company that reaches a higher valuation and IPO’s or sells will. What this all means is that VC investors are not rooting for many of their portfolio companies to survive long-term, they want them to risk everything to either crash and burn or exit and deliver the desired return.

If it’s not already obvious, this doesn’t jive well with a future full of mission-driven companies. The future needs those companies to stick around to see through their mission.

The solution to this issue is to create a return model based on sharing the success of company profit growth and financial success. This could be in the form on dividends or other profit-sharing agreements.

As mentioned earlier, this model is uniquely fit for mission-driven companies. They will then focus on profit more than most other businesses because it is only through profit that their business can grow and, therefore, their mission can succeed.