Every month we’re seeing new catastrophes or natural disasters that are devastating local communities and causing billions worth of damages. This can be heart-wrenching to see and there’s little we can do in the face of mother nature. However, the question remains on how much of a role do we have in these disasters.
From climate change to food shortages, it is often the impact of a growing population that is causing some, if not all, of these issues. But can technology and innovation be the solution or a corrective measure for the region.
To find out more, we spoke to the folks at Amasia, a thesis-driven venture capital firm investing in companies that fight the climate crisis and aim to build a sustainable environment. Ramanan Raghavendran, Managing Partner at the fund, was kind enough to share some of his insights into the industry. He is a seasoned investment veteran with more than 30 years of experience as a venture capital investor.
We ask OutSized if freelance the solution for the talent crunch in Southeast Asia?
Just recently, we had the tropical storm Megi in the Philippines, and unprecedented heat waves across South Asia. Singapore is seeing record high temperatures and will be facing serious challenges from rising sea levels and heat stress as a result of climate change, as mentioned losing as much as 46 per cent of its gross domestic product (GDP) in the worst scenario. Malaysia hasn’t been spared either with a series of floods and tropical storms lashing the country.
Here’s what Ramanan had to share.
What are some of the climate crisis issues facing Southeast Asia right now and what is the foreseeable impact?
It sometimes can feel like the list of climate issues is overwhelmingly long, which can lead to paralysis. So here are two issues that can, and are, being acted upon:
- One of Southeast Asia’s worsening problems is air pollution, which has causes that also produce greenhouse gas pollution. The immense health impact includes premature deaths, reduced lung function, and loss of years of life — recent studies estimate that one in six deaths are related to air pollution. Without regulations and interventions, the situation will only get worse. That is why measuring air quality, which can inform solutions and policy changes, is an essential first step to mitigating air pollution. Many of these interventions have the co-benefit of reducing greenhouse gas emissions.
- Southeast Asia’s developing nations also present many opportunities for leapfrogging — achieving development through more efficient energy usage by skipping the fossil-fuel intensive stages of industrialization that developed countries went through. One example is in global supply chains — the ones currently in place to deliver goods are highly inefficient and unsustainable. More than 80 percent of greenhouse gas emissions from consumer goods can be traced back to the supply chain. We now have strategies to expand access to consumer products to developing areas without such an immense climate impact. For example, social commerce platforms, like Super in Indonesia, use more efficient delivery methods than what has been offered. By directly delivering goods from the supplier to the consumer through a group buying process, Super significantly streamlines the supply chain and reduces transportation-associated emissions.
Amasia is a thesis-driven venture capital firm. Could you elaborate on the thesis and how you pick your investment opportunities?
Our investment decisions are deeply informed by our unique investment thesis, which is built around the idea that it is behavior change at scale that will get us to a sustainable world. We have built a framework which we call the “4 Rs,” where each “R” represents a different climate solution.
The four areas are anchored by four questions:
- R1 – Review: “How do we help consumers, corporations and governments make better data-driven decisions about climate and sustainability?”
- R2 – Renew: “How can we turbocharge the shift in views on consumption towards re-use and recycling?”
- R3 – Rethink: “How do we help build the infrastructure required for a dramatic consumer consumption expansion in remote services?”
- R4 – Rebuild: “How do we help make supply chains for consumer consumption far less wasteful?”
This is a very different way of thinking about how to fight the climate crisis, and it has led us to a series of interesting, innovative, and high-growth companies. Our approach to investing means we invest in multiple sectors, and do so globally. In our portfolio, as examples, we have environmental data providers (“R1 – Review”), re-use marketplaces (“R2 – Renew”), remote services (“R3 – Rethink”), and companies enabling less wasteful supply chains (“R4 – Rebuild”).
Where do you see the most need for investment and intervention in Southeast Asia?
Most importantly, we need to start thinking about climate change solutions using a different lens. Engineered solutions are certainly a part of the solution but are insufficient in our fight against the climate crisis. Getting to a sustainable planet requires firstly expanding our view of climate change solutions to include those which encourage climate-friendly behaviors. 72 percent of global greenhouse gas emissions come from household consumption, and the most recent IPCC report estimates that household behavioral change could reduce our emissions by 40-70 percent. That’s a lot! We believe that behavioral solutions are absolutely crucial in our fight and deserve more investment. High-income countries should bear the heaviest burden for behavioral adjustment because they produce the most emissions, but lower-income countries in Southeast Asia (and elsewhere) can target behavior while also raising standards of living.
Could you highlight some examples of the work being done to combat the issue in the region?
Globally, one-third of all food produced is wasted, and even worse, the waste produces harmful greenhouse gases like carbon dioxide and methane. In most Southeast Asian countries, food waste makes up more than half of total waste. While some of this waste occurs after consumer purchase, a significant amount of waste is produced even before it gets to the consumers. Companies like Singapore-based TreeDots are tackling this issue by connecting suppliers who have oversupplied and aesthetically imperfect food with businesses and consumers who are willing to purchase them.
In countries like Indonesia and Vietnam where most of the population lives outside of major cities, access to consumer goods can be limited in the lower-tier cities. As an archipelago, Indonesia in particular faces logistical challenges in delivering goods. Current delivery processes involve a number of middlemen, resulting in significantly more expensive goods and unnecessary emissions from transportation. Social commerce companies like Super are helping to open up access to goods for consumers in lower-tier cities by directly delivering the goods from FMCG suppliers. As a result, the supply chain is streamlined and a wider variety of goods is available at lower prices for consumers.
What’s next for Amasia?
We host a climate interviews series and will be continuing to invite top experts in sustainability and behavior change. These interviews inform us and the public of research related to our thesis, behavior change as a means to fight the climate crisis. We have previously interviewed experts like Professor Juliet Schor on connected consumption, Professor Robert Frank on the influence of social norms on behavior, Professor Daniel Aldana Cohen on inclusive climate solutions, Professor Katy Milkman on behavior change, and Professor Genevieve Guenther on communicating for climate action.
AxBC is a cohort-based course we run together with UK-based social enterprise Behaviour Change. This free course provides climate-focused entrepreneurs the resources and tools to incorporate insights from behavioral science into their practices and products. The inaugural cohort completed the course in December 2021, and we plan to launch a substantially expanded and improved course for the second cohort later this year.
Last but not least, we are always on the lookout for innovative companies to back and are continuing to expand the climate solutions that we support. For example, we were excited to announce last month our investment in Unravel Carbon, a carbon accounting platform for SMEs in Asia.