Decarbonizing Commerce

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Retail, E-commerce, and Consumer Packaged Goods Is a Large Enough Driver of Emissions That a New Technology Category Is Emerging

Specialized tech and service solutions are evolving to “Decarbonize Commerce”

According to PwC’s 2022 State of Climate Tech report, more than 25% of all venture capital in 2022 was directed at climate technology.

A majority of this investment targets major root causes of emissions in sectors like energy, heating and cooling, and transportation.

But beneath the surface, a more specialized technology sector is emerging: commerce climate tech. These are not generalized, industry-agnostic climate solutions. They offer solutions exclusively or primarily oriented to helping retailers and brands reduce emissions or adapt to climate change.

Since 2018, a stunning sum of venture capital has begun to flow to these companies, a natural response to the accelerating shift among top-tier retailers and brands from far-off climate commitments to more focused planning and execution. Just as venture capital placed retail-focused bets on transformational shifts like the rise of mobile, ecommerce, and online grocery, investors are funding technologies to enable retailers and brands to evolve and adapt to another force of change.

In our preliminary research we’ve identified more than 300 venture-backed or publicly traded technology and service companies focused on decarbonizing commerce. Collectively, these companies have raised approximately $20 billion in funding (with that amount expected to grow at scale over the next decade).

[INSERT TABLE SHOWING INVESTMENT AND # of COMPANIES BY CATEGORY AND TOTALS]

These solutions are generally aimed at the most significant and challenging commerce-specific drivers of emissions, especially in areas like:

• Materials and ingredients

• Product design and development

• Packaging and recycling

• Waste prevention

• Transportation, fulfillment, and logistics

• Resale

This investment and innovation are currently happening organically. There has not been a top-down push to define these emerging technologies as a category the way there has been with the macro tailwind behind climate tech. To date, investments in solutions like these have been lumped together with industry-agnostic climate technology that responds to macro drivers of emissions.

Although it is encouraging that capital is flowing to solve these issues, there is an urgent need to continue to carve out a specific category of “Commerce” in the climate space. There are two main reasons for this.

First, climate solutions generally are a high-value proposition with massive social support. This means that there is a danger that capital and talent could be hijacked by outside forces with different interests than the players within the Commerce sub-group. This would hamper solving the problems there quickly.

Second, there are inherent advantages to having a clearly defined category.

A Recognized Category Improves Through Iteration and Defined Exploration

It is a maxim that what is tracked, improves. The idea here is that recording data provides the feedback necessary to make course corrections, which allows for better results. To gain these types of insights, however, there must be boundaries on the type of data collected as there is always an infinite amount of information available.

Defining a category limited to the environmental impacts related to retail, e-commerce, and consumer packaged goods provides a framework for solving a bounded problem. This in turn allows for the collection of data, testing of solutions, and attracting talent best suited for this goal. This is not a luxury.

Indeed, these industries will be left behind if they cannot clearly define themselves, their goals, and the best path forward. The verticals that succeed in doing this will receive the lion's share of money, talent, and goodwill.

It is critical that the first step to solving these issues is to recognize the category itself. Once that is accomplished, resources within the category can be identified for possible solutions.

For example, suppliers play a huge role in carbon emissions depending on how they approach logistics and fulfillment. Innovations in transportation and packaging are already having an impact on decreasing pollutants and energy consumption. These solutions will continue to improve both environmental efficacy and decrease production costs as well.

As the market sees that current technology allows companies to be environmentally conscious while simultaneously generating more profits, additional venture capital will be attracted to the category. This results in a positive feedback loop for both capital and results.

The Time For Environmental Education and Outreach is Over

The bulk of environmental advocates’ and planners’ efforts historically have been focused on outreach. This ‘education phase’ has resulted in the culturally accepted view that the environment is at risk and there are catastrophic consequences in our future if changes are not made.

The philosophical battle has been won, so to speak. The question now is not, “Is there a problem”, but “What is the best path forward?” How that question is answered will determine the winners and the losers for the next two decades (at least).

As businesses and governments begin to shift resources to meet global environmental threats, there is a continued danger that efforts may be misallocated due to a lack of clarity.

The ‘environment’ is a broad category. If we do not niche down to manageable groups of problems within that category, we risk diluting our efforts to the point where solving the problem becomes unlikely. It is not enough to know the risks; you must also be able to point to areas of high leverage to tackle the challenge effectively.

Decarbonizing Commerce is committed to providing the clarity required to define the path forward.

Decarbonizing Commerce’s Goal is to Help Brands and Retailers Accelerate Decarbonization With Commercially Viable Strategies and Solutions

The Retail, Ecommerce, and Consumer Packaged Goods are large enough that their operations have a sizable impact on the environment. The E-commerce market alone is projected to be at $5.9 trillion in 2023 and is expected to continue to grow at a breakneck pace in the coming decade.

The current rate of change and climate innovations is not keeping pace with the growth of these industries. Solutions that are working must be implemented faster. New ideas need to be prototyped and deployed with the goal of rapid iterations.

For these things to occur there must be as little friction as possible between retailers, suppliers, and the innovators in the space. A central marketplace of ideas where human capital meets hard capital is the space Decarbonizing Commerce seeks to fill in the coming issues. We look forward to your feedback, support, and participation to tackle this challenge.

Who Is Keith Anderson, Publisher of Decarbonizing Commerce?  

• A 20-year veteran of retail, e-commerce, CPG, with more than half spent working in and around venture-backed technology

• Background in industry analysis, strategy consulting, and product exec at venture-backed e-commerce analytics company (exited to Publicis in 2022)

• Experienced in evaluating technology through a commercial lens

• Has worked with clients including Walmart, Target, Best Buy, P&G, Unilever, Coca-Cola, Colgate-Palmolive, Nestle, and many others (ya’ll come back now!)

• Became concerned and interested in climate in 2018 after IPCC’s Special Report on Global Warming of 1.5 °C

• After his analytic software company was acquired in 2022, spent 6 months intensively questioning/studying why industry-level climate action wasn’t keeping pace with the science

• Concluded that there is a large and growing audience of retail, ecommerce, and CPG professionals eager to do climate work leveraging their current skills, experience, or role, but without a roadmap

• So, decided to establish Decarbonize.co to help empower curious/concerned professionals that aren’t experts or full-time sustainability practitioners

• And here we are . . .

Whenever you’re ready, here are additional resources to learn more:

1. Job board description - LINK

2. Premium research description - LINK

3. Directory of Commerce Climate Tech Solutions description - LINK

4. Podcast description - LINK

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