The Tragedies That Await
Contemporary climates have already reached 1 centigrade above preindustrial levels. If this trend continues, tides will continue to rise. The first impact will be beachfront properties going under water. Miami beaches will retreat miles. Eventually, Bangladesh and the Maldives will be swallowed by the Ocean entirely. “Hot house earth,” with 3-4 centigrade further warming, is expected to trigger a series of events resulting in human extinction.
For well-read, science-believing folk, this is not new information. But, the climate change news simply has not gotten better from the last time you learned this. In a landmark article in BioScience this September, scientists found that critical parts of the Earth system – including the West Antarctic and Greenland Ice sheets, warm-water coral reefs, and the Amazon rainforest – are nearing, or have already crossed, critical tipping points.
As the charts above highlight, in recent years, we have actually seen an unprecedented surge in climate-related disasters:
- Greenland and Antarctica showed new year-to-date all-time record low levels of ice mass.
- Ocean heat content and sea levels set new records.
- The Brazilian Amazon annual forest loss rate reached a 12-year high of 1.11 million hectares destroyed.
- Carbon dioxide, methane, and nitrous oxide set new records for atmospheric concentration in 2020 and 2021.
- All five of the hottest years on record have occurred since 2015.
With governments unwilling to act, the onus to address the potential existential threat to humanity has fallen on businesses and individuals.
Business Needs to Sign On to Solve Global Warming
Think back to the last time you ordered a small thing from Amazon – that power strip. It probably came in a giant box that could fit a 2-liter bottle of Coke. E-commerce has grown to be a fifth of US commerce, and it has done so at the expense of the climate. Instead of bulk shopping in centralized locations, goods have been split into small packages delivered out to the furthest nodes of the network: our front doors.
E-commerce companies face a reckoning. While they have amassed great power in American commerce, that comes with great responsibility. Consumers increasingly expect brands to enact climate-friendly policies.
The good news is that many have responded. Tech players like Apple, Microsoft, and Google have pledged to be carbon neutral or negative by 2030. More real-world players like Amazon and GM pledged to by 2040. Oil & gas players like Shell, BP, and Total by 2050. But, despite the record number of corporate pledges, they still fall well short of preventing 1.5 degree centigrade warming:
The reason is that what humanity does in the next 5-10 years will be critical. Most of the pledges are “too little, too late.” Informed, moral consumers are left with no other choice but to take action on their own.
A Checkout Solution to Save The Day
What if you had an option to make your next e-commerce order have a neutral impact on climate change for a few cents or dollars?
That’s the vision of EcoCart, a startup which has pioneered a new business model to help e-commerce merchants. I spoke with the company’s founders and recent Forbes 30 under 30 inductees to get you the low-down.
A Personal Problem
Peter Twomey and Dane Baker met on the campus of the University of San Diego. Both were pursuing undergraduate business degrees. They started a company called Toyroom together. It was an online peer-to-peer rental marketplace to connect people who own action items – like Kayaks, drones, snowboards, and paddleboards – with people who desire to use those items.
In their own business, they struggled to be climate friendly. They were constantly using gas to travel, paying for data centers run on dirty fuel, and buying the cheapest, dirtiest products to stay on their startup budget. Eventually, the business ended, but the friendship and learning did not.
Peter would go on to do M&A advisory for a mattress company using carbon offsets to go public. The solution he and Dane were looking for had already been created. Like many, they just had not known about it.
The Theory of Offsets
By purchasing offsets consumers support projects that actively remove, reduce, or prevent future carbon emissions. These projects span the gamut from planting trees to replacing dirty-energy sources. It is a simple concept with a fancy name.
Offsets gets its fancy name from Economics. The theory is that offsets can help correct the world’s biggest market failure: global warming. The market is expected to grow to $100B by 2030. It has experienced the hockey stick growth readers of this newsletter are used to seeing:
EcoCart is making this growing market more accessible to consumers on their everyday e-commerce purchases.
The Innovations: Measurement & Fractionalization
This is where product innovation comes in. Any good software business relies upon solving some core tough problems. EcoCart is no different.
Its first innovation is measurement. How does one actually quantify the climate change impact of a single power strip e-commerce order? EcoCart’s calculator helps brands and consumers understand that order’s precise impact.
The second innovation is fractionalization. For the vast majority of consumers who live paycheck to paycheck, donating to a carbon offsets project seems too far from their reality to be a regular occurrence. As a result, they delay or batch their contributions. But as climate scientists emphasize, each and every day counts. By fractionalizing the carbon offset donation to the exact amount of purchase, EcoCart offers otherwise out-of-reach consumers to donate to help combat climate change.
Evolution to Product Market Fit
But what do brands think about this? Spurred by Peter’s insight, Dane flew to CES in January, 2019. He asked the vendors what they thought about a measured, fractionalized offsets checkout check box? To his surprise, 4 in 5 vendors not only liked the idea, they wanted to integrate right away. The duo had a successful hypothesis test in hand, and went to work on development.
The company has learned a lot in the intervening years. From a handful of merchants in 2019, it has grown to over 10,000 today. Across all that data, 28% of consumers opted in to make their order carbon neutral. Features like a dynamic counter and product page injection have, in particular, juiced growth and consumer adoption. As a result, the company raised a $3M round in April.
Most recently, to enhance its offering, the company has added the ability to have an opt-out checkbox. Initial results show a 70% rate for this, if merchants choose to use it. This could be a great step change in the use of offsets if widely adopted.
Creating a Market
Interestingly, EcoCart does not see competitors in most of its deals. Some solutions exist – Cloverly and CarbonClick the most notable among them. Brands can either integrate with a featured solution like those three or go straight to APIs like Patch, Pachama, and South pole.
For the most part, all six of those companies are creating the category. There is hockey stick growth in the offsets market, and this is one way consumers and businesses will play more in it.
Selling to CMOs
One of the company’s closest investors is Brian Sugar, founder of PopSugar. He is a wartime investor and advisor. He helps Peter and Dane navigate tough problems and situations. They go to him for strategy stuff.
When the duo was working on trying to secure a deal with one of the largest e-commerce payment solutions companies, Brian had a genius idea: have your customers vouch for you – directly to the CMO.
Hordes of customers actively volunteered to vouch for EcoCart. It was a symphony of support. EcoCart is that kind of product. It engenders devout fandom from its customers.
Personal v Corporate Offsets
If any shade has been thrown at EcoCart in the press to date, the main has been that of the impact of consumer offsets. As TechCrunch asked in April, after the fundraise:
Consumer offsets, while well-meaning, don’t have nearly the same impact as having the companies themselves actually rein in their greenhouse gas emissions and decarbonize their operations. In fact, the whole notion of the consumer carbon footprint and the personal responsibility of consumers for planetary pollution was dreamed up by advertising executives at the behest of oil and gas and consumer goods companies pushing products.
It is true that consumer purchasing of offsets is low. And further, voluntary offsets amongst corporate offsets is also low. S&P Global estimated the voluntary market to be $300 million in 2018, versus a $44 billion compliance market. People opting in to offsets is not solving warming right now.
That is fair, but EcoCart is trying to change it. Voluntary consumer purchasing of offsets is low because of a lack of awareness and transparency. Most do not know about carbon offsets. Or, if they do, they do not understand that small donations now matter.
That will be the challenge for EcoCart. Can it help change the world? Here’s one writer sitting next to his little one who sure hopes so.
Reminder: I am just a newsletter writer. This does not represent my employer.
