The consequences of climate capitalism

Food waste alone is estimated to be responsible for emissions of between 88.50 and 102.20 Gigatons of CO2e between 2020 and 2050 with roughly one third of all food globally going to waste. Halving food waste is ranked as Project Drawdown’s top solution to keep within a 2˚C temperature rise by the end of the century. Waste from plastics, metals, paper, and other industrial materials is estimated to be responsible for emissions of between 17.47 and 28.22 Gigatons of CO2e for the same time period.

This is emissions, including from landfill. But there’s more.

Wasteful food production and consumption negatively impacts soil health, forest cover, water use, biodiversity, and chemical runoff. Low-nutrient and low-quality food from industrial production is correlated with ill-health and obesity even while its unequal production and distribution leaves vast swathes of the global population underfed. Industrial materials come with other considerations: mining, air pollution from industrial processes, more water use, toxicity, and, increasingly, the microplastics problem. Additionally, as most of these items are extremely energy intensive to produce, they serve to prop up the fossil fuel industrial complex.

Clearly an area ripe for implementing impactful solutions. Enter climate capitalism.

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As we saw in the first article of the series, climate capitalism attempts to apply the venture capital model to startups that can potentially deliver positive climate impact. Typically along the lines of reducing, avoiding, or sequestering emissions and, more importantly, also promising to deliver the standard outsized return on investment of 50 to 100 times the initial amount. 

A popular point of entry for climate tech investments in this space is recycling. 

They correctly identify that recycling is flawed: prone to human error, laborious, and heavily reliant on whether households, consumers, and businesses even separate waste correctly in the first place. Modern startups approach the problem with a combination of data, robotics, and artificial intelligence, thereby significantly improving the operational efficiency of recycling processes.

There are obvious advantages to this. More efficient recycling decreases the overall amount of stuff that goes to landfill unnecessarily, resulting in fewer emissions, reduced ground toxicity around landfill sites, and more reuse. Examples abound. Eslando sells recycled textiles; Cirplus and Epoch recycled plastics. AMP automates entire waste facilities and Safi automates a recyclables marketplace. Circular11 and 17Cicada create new feedstock and products from hard-to-recycle plastics. 

Taken in isolation, most of these startups are doing useful work. But there’s a catch. Two as a matter of fact. 

The first is that these are all efficiency plays and an efficiency play only results in an overall net benefit if it is also coupled with behaviour change. Unchecked, an efficiency play will always tend towards a higher total resource use in absolute terms. This is not new information: energy researchers and economists have known it since 1865. We know it from our everyday urban lives as well. When a road prone to traffic congestion is widened (made more efficient) traffic flows more smoothly for a while (reduced negative impact) until more people are incentivised to take that route, oftentimes even opting to drive where they previously wouldn’t have (increased absolute negative impact). This phenomenon is known as Jevon’s Paradox or, more commonly, as the “rebound effect”.

This leads us to the second catch: efficiency without behaviour change spreads the negative behaviours. 

A company like Safi, who has raised almost 20M USD to make recycling more efficient, is actively dis-incentivised from working towards reduced waste generation in the first place. As their business model is predicated on selling waste, and as their underlying motive is to create outsized financial returns, they are now actively undermining anyone dealing with the root causes of waste. Things like unnecessary packaging, low-durability of products, use of virgin materials, fast fashion, and consumerism. 

Behaviour change is, in other words, unprofitable. 

This goes some way to explain why we see so few VC investments in the “reducing food waste” sector, despite it being one of the most potentially impactful interventions. (Instead, such activities are left to non-profits like Educated Choices, Local Futures, and ReFED (to name a few) because meaningful solutions in this space rely mostly on education and behaviour change.) But it doesn’t go all the way.

To do that, we need to head to low earth orbit and look at the case of Space Forge.

Space Forge recently closed a record-breaking $30 Million funding round led by the NATO Innovation Fund and supported by World Fund to manufacture next-generation materials (like semiconductors) in space using returnable satellites. The pitch is that doing so can deliver an emissions reduction of up to 75% in the production process. They also claim to reduce energy consumption by up to 60% when these materials are used back on Earth in infrastructures like EV charging networks and data centres. According to the company, “the technology offers a promising pathway to strengthen supply chains for semiconductor production, reducing dependence on vulnerable Earth-based manufacturing systems.” As a specific example of their application they go on to say: “In automotive applications [the materials] could halve electric vehicle charging time.”

This case is instructive not just because it is so clearly a massive efficiency play which will, as discussed, inevitably result in a larger total footprint undoing any short-term gains. It is also very clearly and unashamedly designed to stimulate growth and prop up the supply chains and industries it aims to serve: electric vehicle production and use, large data centres, and military technology. 

Put more bluntly, this is an investment in the status quo. Not in system change or new economic models.

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The question then is whether this is a one-off or, perhaps, a minority. Good data is not readily available. So I set out to get some.

To do this I analysed the portfolios of some of the most prominent generalist climate venture funds all of whom claim, with paraphrased language, to be unf*cking the planet: Lowercarbon Capital, Carbon13, Pale Blue Dot, Planet A Ventures, Climate VC, WorldFund, Zero Carbon Capital, MCJ, and Future Planet. At the time of my initial research, carried out in early 2025, these nine funds had collectively made 310 investments.

Of these, 224 (72.25%) are direct efficiency plays. Only 9 (2.9%) take a social or ecological approach and of those, only 4 (1.29%) are attempting to create some form of behavioural change through education. Just 6 (1.94%) are engaged in direct regeneration work, be it environmental or social. A staggering 259 (83.55%) are unproven solutions, still in early stages of technological readiness.

This paints a picture that is almost the complete opposite of system change. 

Large amounts of capital is flowing into uncertain solutions which, if technically and commercially successful, will deliver vast efficiency improvements, strengthening existing economic infrastructures, without at all addressing the underlying economic behaviours causing our environmental problems in the first place. 

Defenders argue that at least some short term efficiencies will buy us time to unf*ck the planet later. Apart from being a classic case of kicking the can down the road, is that even happening?

We don’t know. 

Very few climate tech funds report on their impact. Of the 167 funds I discussed in my introductory article only 22 publish some form of impact report. Of those, only nine make any mention of real numbers when it comes to avoided or sequestered emissions. Many however are very happy to report on investments made, follow-on funding, valuation, headcount, diversity, and, of course, exits.

One can draw one of two conclusions: either climate impact is not being measured or the results are disappointing.

So what then are the consequences of climate capitalism?

On the one hand we are seeing an efficiency play of systemic proportions while failing to deliver, in the short-term, on the promise of “buying us some time”. And on the other we are seeing an abandonment of any meaningful investment into proven, education-based, and behaviour-based solutions without which system change is not only unlikely, but impossible.

This article is the second in a series on the topic of Reclaiming Entrepreneurship. 

In the first three parts we are looking at the consequences of venture capital to the climate and understanding why impact capitalism refuses to invest in creating equality, be it of humans or other-than-humans. This will lead to understanding venture capital’s Achilles’ Heel, a leverage point we can use for genuine system change.

We will then look at several antidotes founders can apply to reclaim entrepreneurship as a tool for genuine positive impact and much needed system change. 

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