Shopify’s Sustainability Fund: How We’re Investing to Reverse Climate Change

One year ago, we launched Shopify’s Sustainability Fund to address a hard, irrefutable truth: there’s too much carbon in the air.

Our planet is in crisis. Humans are emitting too much pollution and we’re not yet doing enough to slow it down. Even if we stopped all emissions tomorrow, there’s still too much carbon in our atmosphere—so we need to remove some of it. As a company with a 100-year vision, Shopify has a vested interest in making sure the next century is worth reaching.

Today is the day we open our notebooks and share our progress from the fund’s first year.

We’re revealing how we spent the fund’s first $5 million on the most promising and innovative solutions fighting climate change—and the visionary entrepreneurs behind them.

We identified 10 industries we believe have the potential to reverse climate change, and we’re investing in each of them. None of them can do it alone—we need to invest everywhere: in solutions that are ready to go right now and in technologies that are still in their infancy but could have a massive impact in the long term.

Specifically, we need to invest in carbon removal. Not just emission reductions and not just offsets. We need to pull carbon directly out of the atmosphere and store it away permanently. That’s where we spent the bulk of our 2020 fund, and we’ll continue to do so in future years.

Kickstarting the carbon removal market

I thought it would be easy to spend the money. I thought it would be gone in the blink of an eye. Turns out, it’s not as simple as you’d think to effectively invest in ground-breaking technologies to reverse climate change.

Many low-cost nature-based solutions are available, like forest protection and coastal restoration projects. They’re important, and we’re investing in them, but they only reduce or temporarily store carbon—they’re not permanent removal solutions. Permanent removals ensure that stored carbon is not re-released into the atmosphere before we’re done reversing climate change.

The carbon removal market is brand new. There are precious few companies in this space. Most are in the research and testing phases. Even the ones that are ready to go have limited quantities of carbon removal available, and they’re expensive.

This brave new frontier still has tumbleweeds. There is so much open landscape ripe for development, ready for hungry entrepreneurs who are keen to change the world, and begging for brave investors willing to fund the process.

If you take one thing from this article, I hope it’s this: the world needs more carbon removal entrepreneurs and investors to support them.

Our approach

Instead of issuing a traditional request for proposals, we tried something different to select our investments. We did our own research, consulted with the team of scientific experts at Carbon Direct, and had lengthy discussions with dozens of businesses. This took a lot of time and effort, but it meant we got to meet high-potential companies in such early stages that they may not have felt ready to submit a proposal.

We invested in pilot projects. We bought unverified credits. We overpaid, significantly in some cases, for carbon removal. Since most removal technologies haven’t scaled yet, the process is expensive and so is the purchase price.

The only way to allow the industry to scale and bring down costs is to invest now, regardless of the price.

We chose to take risks, to bet on the entrepreneurs behind the companies, giving them the funding they need to innovate, perfect, scale, and show the world what their technology can do. In cases where we’ve purchased carbon removal methods that don’t work (and it’s bound to happen), we will have helped fund the research disproving it. That research will persist even if the company does not, and could lead to iterations, improvements, and breakthroughs.

Our goal is to:

• kickstart the carbon removal market
• allow new companies to prove their impact and scale
• generate demand when there previously was none
• drive down prices for future buyers looking to make a difference

How we spent the fund

We chose 10 industries that we believe can help reverse climate change and divided our investments into two portfolios.

Frontier portfolio

Groundbreaking technologies and companies that permanently remove carbon from the atmosphere. Our goal is to spend most of the fund in this category each year.

Read a case study profiling each of our Frontier investments:

• Direct air capture
• Product
• Ocean
• Biomass
• Mineralization
• Collaboration

Evergreen portfolio

Key solutions that temporarily remove or reduce carbon emissions. We need to invest in options like these so we can put them to use right now, while other permanent carbon removal technologies begin to scale for the long term.

Read a case study profiling each of our Evergreen investments:

• Forest
• Soil
• Renewable energy
• Transportation

We made 13 purchases across nine of our chosen industries. For more details around each, head to our Sustainability Fund page.

We’ve created an educational primer for each industry, outlining their potential and our investments within them.

View them all

Case studies

We’d like to introduce you to two of our investments: one promising engineered solution that has proven technology ready to scale and one wildly creative nature-based solution that we’re placing a bet on, helping to fund its research and experimentation.

1. Carbon Engineering

Location: Squamish, BC, Canada

Founded: 2009

Harvard professor David Keith founded Carbon Engineering to investigate direct air capture (DAC), because it was becoming increasingly clear that even bringing global emissions to zero would not be enough.

Carbon Engineering now has proven technology that can suck CO₂ right out of the air. Their goal is to work with partners to build facilities that capture one million tons of CO₂ per year—the equivalent of annual emissions from 250,000 cars or the work of 40 million trees.

The fundamental value of our technology is that it can eliminate any carbon dioxide emission from any place and any moment in time.

Currently, Carbon Engineering is building an Innovation Centre in Squamish, BC, to refine their CO₂ capture process, with plans to build the world’s largest DAC facility in the Permian Basin in the coming years. Their technology can be located almost anywhere. That means they can build facilities in ideal locations that have low-cost clean energy to power the system or in spots where it’s easy to permanently store CO₂ underground. Even if natural gas is used to power the plant, all CO₂ emissions from the combustion process are captured and stored underground along with the atmospheric CO₂.

Essentially, Carbon Engineering’s technology pulls in air, uses chemical reactions to extract CO₂, then puts the rest of the air back into the atmosphere. It’s like a human-made tree but faster, taking up less land and delivering pure, compressed CO₂ that can be stored underground or reused.

Shopify has agreed to purchase permanent carbon removal from Carbon Engineering’s Innovation Centre as a demonstration of our belief in this method and to provide them with a new revenue stream so they can keep scaling their technology.

Read more

2. Running Tide

Location: Portland, ME, USA

Founded: 2017

Marty Odlin grew up on offshore boats near Portland, Maine. He saw firsthand the impact of climate change on the fishing industry, so he started Running Tide to help ocean aquaculture.

Running Tide grows oysters: a zero-carbon superfood that naturally stores carbon within its shell. But oysters are only the beginning.

Marty’s grand plan is to use the ocean as a lever to solve the climate crisis, and he believes one of the most powerful tools to do this with is kelp, a type of seaweed. Running Tide grows kelp specifically to sequester carbon and sink it deep into the ocean.

Kelp is a powerful CO₂ storage system with the ability to grow many times faster than trees. Kelp forests can store up to 20 times more carbon per acre than land forests.

Running Tide plans to attach kelp to a biodegradable buoy with a timer. After six to nine months, the timer pops the buoy, flooding it with water and sinking it to the ocean’s depths. Marty calculates that kelp sunk 1,000 meters deep will store CO₂ for at least 1,000 years.

All work is important in carbon reduction, but some people have to try to kill the monster. Everyone should try to slow it down, but we should pick 15–20 technologies that might be able to stop the whole thing all by themselves. That’s what we’re trying to build.

Marty’s ambitious plan involves scaling this project quickly to grow as much kelp and store as much CO₂ as possible. The goal is one billion tons of CO₂ by 2025. He’s testing his technology with a pilot project later this year, with plans for verification in mid-2021. Shopify’s purchase enables Running Tide to recover and monitor research data from the ocean to assess the success of this innovative approach. We’ll also fund future deployments when the time is right to scale.

Read more

Calling all entrepreneurs & investors

If there ever was a market ripe for disruption, it’s the carbon removal industry.

The tidal wave of large companies and governments looking to invest in ways to reduce their carbon footprint has begun. Not only because it’s the right thing to do, but because it’s a competitive advantage as a business. There are so many untapped solutions in every industry that have the potential to be brought to life with the right combination of entrepreneurship and investment.

Right now, that combination doesn’t exist. We need so many more entrepreneurs in this space. And we need more investors that are brave enough to get involved early to help them scale.

We can't wait until everything is proven and economically feasible. We have to invest now, in the earliest stages, to make sure that these promising technologies become mainstream and don't die at the pilot stage.

Our next steps

With our first year’s investments signed, we have established industry connections with experts across multiple fields. We’re excited to continue learning as we move toward spending Shopify’s 2021 Sustainability Fund.

There is more to accomplish. We’re sure there will be failures along the way. But we know what direction we need to go in, so we’ve started moving there and we’ll figure it out as we go. Not knowing what the end game looks like should never be a reason to avoid taking action.

Stay tuned for more news about our environmental investments and the most high-potential companies we discover along the way.

Illustration by Borja Bonaque