Regeneration.VC, backed by Leo, wants climate-friendly consumer goods

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Regeneration.VC, backed by Leo, wants climate-friendly consumer goods


What do Dick’s sporting goods, HVAC systems and leather have in common? They are all getting help to reduce their emissions from companies backed by the Regeneration.VC venture capital fund.

The firm has brilliant strategic advice in actor Leonardo DiCaprio and architect William McDonough, and has big ambitions to finance retail-focused climate innovation. Regeneration.VC’s early stage fund closed its first $ 45 million round on March 28.

Michael Smith, who has a background in impact investing and as a DJ on a global tour (yes, really), is one of the company’s general partners. He said the fund’s goal is to reimagine what we buy: from what materials go into the products, to the services that use those materials, to the technology that could keep those materials in circulation. The company decides what to invest in based on what Smith describes as the “circular regenerative potential” of a project on five themes: their resource footprint, greenhouse gas emissions, material waste, toxicity and human impact.

In an interview with Protocol, Smith explained the fund’s philosophy, some of the early companies it supported, and whether its focus on consumer goods is compatible with the fact that we should probably all limit our consumption. After all, the Intergovernmental Panel on Climate Change’s newly released report found that demand-side shifts could reduce emissions by up to 70% by mid-century. For Smith, however, we will never stop consuming completely. “[W]I think there are better ways to consume, “he said.

This interview has been edited for brevity and clarity.

What is the rationale behind Regeneration.VC’s focus on the decarbonisation of consumer products?

With clothing accounting for 10% of global emissions and food and agriculture accounting for one third of global emissions, we see that there is an opportunity to focus on the supply chain underlying those activities, as well as those products that travel through various points of contact with consumers. And we think there will be a lot more funds and a lot more capital focused on this in the future. There have been some specialized funds, but we are the only fund to our knowledge that focuses on consumer applications of circular and regenerative technologies today.

It is relatively common to hear that individual actions have such an insignificant impact on the climate crisis that changing our consumption habits shouldn’t be our priority. How does Regeneration.VC contextualize its consumer-centric approach, given the enormity of the challenge?

We firmly believe that every person can have a role in the climate emergency, and each of us can change the conversation in the supply chain and vote with our wallets. The CEOs of companies, the people who vote on climate legislation: they too are individual consumers. And the more this momentum occurs in clothing or food systems, the more it sets the stage for major regulatory changes. But there are also big businesses to build and to meet the underlying needs to get there and make changes. If people are not asking for alternative packaging or food or clothing products, how can we attack integrated emissions in the supply chain with regulation alone?

We need to treat everything on the planet as vital, important and connected and find new ways to consume that look much more like our grandparents and the generations before us.

To say that our individual actions don’t matter, I think is just plain wrong. There is an opportunity to educate and be aware of how we consume things. This can guide our decision making with our families, with our communities, with the companies we work for, with the countries we belong to. And hopefully it will come up to [United Nations climate talks called] the Conference of the Parties and has real and significant impact and results.

What has been the reaction of consumer brands to your work so far?

We have been very encouraged by the reactions of the larger holdings and larger companies. Because they have made really bold claims about circularity, they are looking for options to achieve their goals, and many of our investments are well positioned to help meet those goals for larger consumer brands.

We are investing together with large corporations in a number of our companies and I would define their interest as very high and vital to their future. We think major trade deals will be announced in the next year or two; in fact, some of our portfolio companies have direct partnerships or commercial agreements with large companies.

Can you walk me through some examples of the companies that Regeneration.VC has invested in so far?

Our first investment is a company called CleanO2, a commercialized microcarbon capture company based in Calgary. The business revolves around a patented CarbinX unit, which is about the size of a refrigerator. It is installed in natural gas heating systems, where it captures emissions and converts them into carbonates. These carbonates are high-value, energy-intensive ingredients that are used in many industrial products such as soaps, detergents and fertilizers. Then we take the emissions from the HVAC systems and convert them into things like soap and fertilizer that are directly usable in those nearby buildings or buildings.

To say that our individual actions don’t matter, I think is just plain wrong.

Another example is a company called Arrive. They are accelerating the transition to the circular economy for retailers by providing turnkey rental and resale services to big-box retailers. One of their launch partners was Dick’s Sporting Goods; if you go to Dick’s site, you can buy stuff or you can rent stuff. If you rent, Arrive on the backend takes care of shipping, receiving, cleaning and packaging. And the idea here is that if a garment, tent or golf club can be reused multiple times, instead of being redone multiple times, there is great potential for carbon savings.

Most environmentalists and climate scientists say we need to buy fewer things in all. Do you think the projects Regeneration.VC is investing in could result in increased consumption in a way that could prove counterproductive?

The least viable opportunity for us is that we are an immediate replacement for something that has already been achieved and we are able to reduce associated emissions or even apply regenerative thinking and absorb carbon into the soil and make materials out of it.

The best – and what you’re getting at is something that really excites me – is getting more out of the things we have. How do we extend the life of the products? How do we make heritage products? When you and I were children, you had the pieces of grandparents passed down from generation to generation. We want to encourage it and are looking for companies that build things that are not disposable and go to landfill. We need to treat everything on the planet as vital, important and connected and find new ways to consume that look much more like our grandparents and the generations before us. Do we want to eliminate consumption? No, it is not feasible; but we think there are better ways to consume.

Is there a different time scale associated with the decarbonisation of these consumer sectors, such as leather or plastics, than, for example, heavy industry?

The good news about clothing and food is that, as they are driven by consumer tastes and preferences, we can move the underlying supply chains within them more quickly. And you have seen it happen in food, you will see it happen in fashion, you will see it happen in packaging. This kind of change can happen much faster than the decarbonisation of heavy industry, and this encourages us. This is a climate emergency we are in and we think we can very quickly bring about change on the ground in these areas.


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