Unsustainable
Sustainability will always lose in an ecosystem that demands infinite growth.
Why? Because sustainability is, by definition, a need based, finite, system—one that cannot exist in a system that demands infinite growth & resources.
You can make the argument that circular systems solve for this, and to a degree they can, but they will - by and large - be slower & more expensive than their non-circular counterparts—you can make a chair out of compressed peanut shells, but you’re always going to be competing against a system that already has the infrastructure in place to source & harvest wood in unethical and anti-environmental ways. And let’s face it, the average consumer isn’t in a financial position to be able to afford the additional cost of infrastructure being folded into the production of their chair when they can easily purchase something at 1/10th the cost made out of harvested wood.
There’s also the volume issue. Compressed peanut shells are likely abundant, and can be sourced at a low cost and are a byproduct of existing industry—we have to feed the elephants. But, at a critical mass, growth steps in and demand requires additional resources. So now, to keep up with demand, the company - keep up with demand - is growing peanuts, and disposing of the nuts themselves in order to produce enough shells to fulfill the orders in their pipeline.
The cost of production is also not the only limiting factor—capital is a major barrier to entry & sustainability. I recently met with a non-profit organization dedicated to prison reform—a noble cause for sure. It’s an arbitrary example, but it’s likely similar across all use cases.
The non-profit was operating at a budget of $21M per year; not no money, but also not a lot on a wide enough scale. For comparison, the US prison industry operates on an annual budget of $445 billion per year—with an annual revenue of $5.5 billion. Beyond the question of why something like the prison system is generating revenue, the number itself is unfathomable. And while not alone in the landscape of prison reform, the behemoth that they’re up against generates 261 years of their annual operating budget, per year—and that number is likely going to continue to go up.
Which brings us to Venture Capital.
During this week’s Climate Week in NYC, there was an infrastructure investment session on sustainable and renewable energy—wind, water, etc. This session was headed by a number of people within various VC funds and the “vibes were high” according to a post on Instagram—don’t check my sources.
You could say this is a good thing, but—it’s likely not.
The privatization of wind is alarming. And yes, money going into sustainable utilities is great. But, entering those utilities into the free market is not.
Many reports like to quote metrics like 80% of US energy & infrastructure is domestically owned & operated. But, like so many things, that’s not entirely the truth. Local & regional energy infrastructure is often owned & operated domestically by companies incorporated in the US, but the parent companies themselves are not always US owned.
Beyond making the argument that utilities should be nationalized and regulated, Venture Capital can and will own & commodify everything it touches—we’ve seen it with housing, food, healthcare, beauty products, clothing; the list goes on. It’s not unreasonable to predict that the privatization of renewable energy will likely lead to the same pricing & distribution practices that we’re currently observing in the oil market. Because, after all, if the current geopolitical environment that is destabilizing fossil fuels is the only driving factor in Venture Capital’s interest in renewables—it’s likely because they’re watching their bottom line slip away and are on the hunt for a new cash cow and not leading with altruism.
Beyond seeking the opportunity to market a finite resource in a system that demands infinite growth, Venture Capital also stands to limit growth & competition—making success in the sustainability field near impossible outside of an organization's ability to self-sustain.
Growth, as we’ve come to call it, at certain points becomes necessary. You need more infrastructure, you need more labor—you just need more. And, in a lot of cases, the need for more outpaces capital. You’ve proven your product, you’ve proven demand, but your current infrastructure can’t keep up with demand—or projected demand.
So what do you do? Well, you raise capital. But we all know that there’s no such thing as a free meal, no free ticket, no dollar given without a caveat—but you need the money.
In these instances, degradation tends to begin. Corners begin to get cut to optimize returns, core values begin to degrade to serve private interest, and the north star begins shifting slightly south in order to serve growth—because $100M came with the terms that required selling $150M in the next year, a goal all parties recognized and acknowledged wasn’t achievable while retaining the sustainability standards that the organization was founded on.
The alternative, however, is acquisition—a far worse fate. You build the thing, prove it, prove demand, and then exit. You take a check, hand it over, and then it’s out of your hands. Lines get blurred, standards fall to the side, and sustainability moves from the headline to an asterisk at the bottom of the page. Reporting metrics are all but an afterthought, case studies on impact cease to be made, and AI is pumped into supply chains without care or consideration for their impact on carbon metrics. The organization is gutted and sold for parts.
The solution? Owning limitations. While founders & CEOs love the dog & pony show of the PR run of fundraising and investment, or their newly inked enterprise agreements with businesses that are - frankly - the antithesis of sustainability—it’s unsustainable. The true trail blazers in sustainability will be the ones who are able to recognize limitations, understand and operate within scarcity, and hold the line to their values without giving into the temptation of capital.
While it’s easy to look at $20M in revenue in a year and give in to the impulse of projecting $30M the following year—true innovation is going to be with those organizations that reject this impulse & operate within the confines of the boundaries that they’ve built for themselves. Because there can be no infinite growth within a finite system—and sometimes that’s what winning looks like.
