NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

It’s January 1, 2031. You just woke up. You walk to the kitchen and make yourself a cup of coffee. As you sit down and take your first sip, you glance over at the Co2 meter on the countertop (everyone has one at this point), and you see the reading is showing around 300 parts per million. You smile and begin to reflect: Global Co2 levels were 332 parts per million the year you were born, and just seven years ago they were somewhere north of 420. You sigh with relief knowing that the world had accomplished something no one thought was possible: We’d turned back the clock on climate change.

In today’s world, this vision for the future may seem like fiction. Much of the current conversation around climate change focuses on the obstacles that make the problem so difficult to solve. And these challenges are very real: Tackling climate change requires massive, coordinated global action. It requires people to act against their short-term interests — from politicians making brave decisions that may cost them re-election, to corporate leaders looking past their next earnings reports and bonus plans to base their actions on the long-term interests of the broader world. It requires everyday citizens to change their individual behaviours and to consent to larger societal changes as the world transitions away from using fossil fuels as a primary energy source — both in developed markets and in low- and middle-income countries (LMICs).

But despite these complexities, reversing climate change is possible, and we should not let our patchy progress in addressing the problem be a source of discouragement. Though it’s natural to feel overwhelmed by the size and scope of the issue, feeling a lack of agency over the matter and an inability to personally take action can create a sense of hopelessness. Instead, we should have faith in the ingenuity of humans to overcome this challenge, even in today’s complex geopolitical scene. And we should recognise the important role we each can play in supporting these efforts.

Through my work at Pyrpose — which aims to provide retail investors with direct access to invest in energy transition projects — I attend numerous climate conferences throughout the year. These discussions focus mostly on the mitigation of climate change, and there are many different solutions emerging across the globe which can alter the trajectory we’re currently on. I believe these technologies — combined with the democratisation of climate finance — can help us get Co2 emissions to below pre-industrial levels. Below, I’ll discuss how the world can accelerate this transition, and the key role individual consumers and investors can play in this process.

The Good News About Climate Change: A Growing Sense of Urgency

The good news is that the majority of people now recognise the need to act. In Europe, 93% see climate change as a serious problem, and a study by the Pew Research Center shows that 75% of consumers across North America, Europe and the Asia Pacific region see climate change as a major threat to their countries.

This growing sense of urgency has sparked a rise in environmental activism, as seen in Greta Thunberg’s efforts to inspire a fervent commitment among Gen Z to safeguard our planet. And this activism has extended to the business and investing sectors, as shown by Nico Rosberg’s shift from Formula One racing champion to greentech investor, and the decision of Patagonia’s owners to transfer ownership of the $3 billion apparel company to a trust and non-profit organisation focused on climate change and environmental protection. Consumer behaviours are also changing, as the next generation is developing a much deeper understanding of sustainability — a subject that was not mainstream just a few years ago.

But these signs of progress must also be reflected in a broader move towards mass tangible action. Not everyone is an expert on climate issues or has a career dedicated to the planet. We need to make it easier for regular consumers to do what we can for our planet without unnecessary obstacles. Small changes in our habits, introduced through easy and accessible means, can have a significant impact. And to that end, technology is opening doors to solutions we may not have previously considered, powered by the catalyst of the internet.

In Europe, for instance, opting for lower-emission or recycled products has become an easily achievable change, as these products are now offered by many brands. And a 2021 report from The Economist found that global online searches for sustainable goods had increased by 71% between 2016 and 2020. This good intention has translated into purchases as well, with electric vehicles (fully electric or hybrid) accounting for 48% of new passenger car sales in Europe as of November 2023.

The Impact of Climate Entrepreneurship in LMICs

In another reason for optimism, this momentum isn’t limited to the developed world. In LMICs, even though some climate-friendly products are not readily attainable, sustainable versions of many essential items are increasingly within consumers’ reach, as a growing number of entrepreneurs enter these markets. These climate entrepreneurs will be the people we celebrate in 10 years’ time, remembering how they helped us to save the planet.

Take Givewatts in Kenya. The company distributes accessible, affordable clean energy and clean cooking products to off-grid homes. In providing these essential resources to Kenyan communities, Givewatts has achieved notable milestones, reducing carbon emissions by 240,284 tons, unlocking $1,740,000 in credit for underbanked last-mile communities, and benefiting 262,790 people with its products. This demonstrates that on top of the environmental impact of the reduction of future carbon emissions in a market very exposed to the effects of climate change, Givewatts consumers also experience huge financial benefits and improvements to their general well-being. With accessible energy, a student can study after dark, hours spent collecting firewood can be replaced with other activities, and a higher standard of living is unlocked.

These impacts can also be seen in markets like South Africa, where Superpower Africa Fund is working to transition schools’ energy supplies from conventional sources to solar energy — a change that can have profound long-term effects. These schools now use reliable, clean energy, and in some cases are also able to generate income by selling energy back to the grid. That means Superpower Africa Fund is not just reducing carbon emissions by supporting a direct and measurable front-line transition away from fossil fuels, it’s also helping school systems thrive.

The social and environmental benefits of these types of businesses and initiatives are clear — as is their value to LMIC consumers and communities themselves. But for these impacts to reach their fullest potential, more funding is needed.

The Need to Democratise Climate Finance

Developing and scaling transformative climate solutions to make them widely accessible requires capital. This is a particular challenge in LMICs. According to the Tony Blair Institute for Global Change, the number of climate-responsive projects funded by private sources of capital in emerging markets has been decreasing by around 10% each year since 2015. These privately funded projects need to increase by 30% annually to meet the Paris Agreement’s 2030 targets. These markets are receiving somewhere between $85 and $114 billion in internationally sourced private investment — a small sliver of the estimated $780 billion in private climate finance LMICs require each year to limit the devastating impacts of global warming, according to the Tony Blair Institute.

However, addressing this need for greater investment is not just a matter of increasing the overall totals, but rather revamping how this finance is sourced and where it goes. To that end, we need to truly democratise climate finance, so that all the people who are able and willing to contribute directly to tackling climate change can do so. We also need to ensure that this money reaches businesses and organisations that are making a real difference on the front line — and that we can clearly track their progress.

Pyrpose is built on the belief that investments that provide a financial return while doing good for the planet should be accessible to all. Our platform empowers individuals to invest in a portfolio of carefully selected companies that offer genuine climate solutions. By investing through Pyrpose, users can trust that their money is not only generating returns but also making a positive impact on the environment. The new Pyrpose platform is currently in beta testing and is expected to go live later this summer.

There are signs that the rise of the climate-conscious investor is shifting global capital markets. ESG Exchange Traded Funds (ETFs) are now a $480 billion market globally, where four years ago, they did not yet exist as a solution to climate change. However, despite this positive shift in consumer investment choices, a considerable portion of these ETFs are blatant greenwashing and lack meaningful environmental impact. Green capital must be transparent: Every dollar invested should equal a quantifiable reduction in carbon emissions. Yet green ETFs rarely share this information with investors. There’s no doubt that the climate-conscious consumer is rising as a force across global economies and capital markets. But we must give these individuals the option to access climate capital solutions that directly support the most vulnerable parts of the world.

Our planet is sending us signals that we must make a change: For the first time, global warming exceeded 1.5C over the past 12 months. Embracing and funding the energy transition now stands as the opportunity of a lifetime to rescue the planet. Failing to do so would impact us all, but it would exact a significantly higher economic toll on emerging markets compared to developed ones. This is especially unfair when we consider that emerging markets account for less than 14% of global greenhouse gas emissions.

We face a difficult challenge, but with the right technologies — and the right funding — we can overcome it together. It’s time to give global investors the tools they need to help direct climate finance to the places that need it most.

Kevin Kyer is the CEO and Co–Founder of Pyrpose.

Photo credit: M_K Photography