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We need to talk about Climate Inc.

I’m wary about startups putting climate goals ahead of a business model. Can a legendary climate entrepreneur change my mind?

We need to talk about Climate Inc.
[Source photo: Eugene Mymrin/Getty Images]

I’m a biotech founder, and folks often assume my company is part of what I call the “Climate, Inc.” movement. By that, I mean startups that put the fight against climate change at the center of their value proposition, searching for investors and customers to support their mission.

My company certainly does have an environmental impact. We develop plants that communicate their needs, letting farmers use fertilizers and pesticides more sparingly. The result: better crop yields, and less reliance on environmentally damaging chemicals.

While I’m proud of my company, I don’t see sustainability as central to our business model. In fact, I’m convinced that Climate Inc. is a dead end. My customers are in the business of growing crops, not fighting climate change. To grow my business, I need to make yields, rather than sustainability, our core goal.

Still, I’m open to being proven wrong. That’s why I reached out to climate entrepreneur Nick Halla, an industry legend known for helping build Impossible Foods. Nick is a powerful advocate for climate-forward businesses, and I knew that if anyone could change my mind, it would be him. Here’s what we’ve been discussing over the past few weeks:


I believe Climate Inc. often means trying to convince corporations to pay for things that don’t benefit their bottom line. That’s why many climate startups struggle as they look for revenues: Corporations want concrete benefits, not the more diffuse value of helping the planet. Over-indexing on sustainability helps founders raise capital from climate investors, but they are the only group willing to allocate capital to the cause.

Nick, by contrast, believes climate action drives real value for corporations. “Climate is now a key priority in almost every industry—about two-thirds of Fortune 500 companies have made significant climate commitments, and they’re spending money to meet their targets,” he says. “Most wouldn’t be making these commitments if they don’t see prioritizing climate as benefitting the corporation in the short and long run. The benefits could be to adapt to regulations, mitigate risks, improve or maintain their brand, drive increased revenue, or reduce costs. One commonly hot topic is carbon markets. Carbon markets can act as both sticks and carrots as corporations pay to emit or offset carbon. Cleantech and climate businesses can be the most affordable way to meet commitments and become a real revenue driver for a business.”


My customers are pragmatists. Ask a farmer to pay extra for green technology and they’ll ask—quite rightly!—what’s in it for them. Nick, though, says pragmatism doesn’t mean short-termism. “Farmers understand the need for long-term investments,” he explains. The key, he argues, is giving farmers the information they need to make smarter decisions about how to invest in their land and business.

It’s much the same when it comes to consumers. A growing subset of shoppers will buy products because they’re green. But like farmers, consumers won’t compromise on the basics: If an eco-friendly shampoo leaves their hair filthy, they won’t keep buying it. “If you’re asking customers to make a major trade-off, it’s going to be an uphill battle,” Nick acknowledges.


These questions speak to my biggest objection: Given the limited pool of people willing to pay for climate benefits, putting Climate Inc. at the center of your business means deprioritizing your core customers. You might wind up serving climate investors, or even the oil and gas companies who buy the carbon credits you’re generating. Either way, you’ll shortchange your primary customers and limit your growth potential.

Nick is more upbeat, arguing that it’s possible to serve multiple customers as long as you deliver value throughout the value chain. Wind and solar companies, for instance, succeeded by serving the governments who subsidized them (to achieve their commitments and goals) and the customers who bought their energy. Many of these customers have paid more for renewable energy because it is good business for them, lowering the risk with upside branding potential. “Renewables didn’t start out able to compete with fossil fuel companies, but by serving multiple customers effectively, they quickly became directly competitive and have handily overtaken fossil fuels in new installations,” Nick says.


Nick makes some great points, but I remain skeptical about Climate Inc. The ag-tech sector is littered with the corpses of companies that promised climate solutions, but failed to deliver value for farmers.

Nick and I agree, though, that solving the climate crisis requires durable and scalable businesses. To do that, startups have two main levers available to them:

  1. Build a killer product. A green product that’s hands-down better than the “brown” alternative has a clear path to success. The key is making sure your definition of “better” aligns with your customers’ needs. If you’re selling eco-friendly mousetraps, they need to trap as many mice as the market leader. In agriculture, that means technology that delivers higher yields. You can’t expect customers to pay more or accept worse results simply to help the planet.
  2. Let governments tip the scales. Government intervention makes a big difference: Japan’s plastic bag ban made paper packaging companies more profitable, and America’s Inflation Reduction Act is driving a cleantech boom. Still, in today’s political climate, it’s a brave founder who bets on specific policy interventions—or counts on those interventions lasting far into the future.

Of these levers, the only one startups can fully control is the quality of their product. And it’s the most critical lever. Building a winning product isn’t easy—but creating real value for your customers is the only reliable way to drive lasting change at a meaningful scale.

Shely Aronov is cofounder and CEO of InnerPlant.

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Shely Aronov is cofounder and CEO of InnerPlant. More