Partner Profile: Julia Zhou | |
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“There are many more startups that are coming up with cutting-edge solutions to capture and reduce CO2 - we just need to find and support them in the best way possible."
This issue features Julia Zhou, Co-Founder of Tidal Impact.
Ms. Zhou is the co-founder of Tidal Impact, and serves as an executive board member of the Sigma Squared Society (previously known as the Kairos Society), a global community of some of the world's most ambitious founders in their early 20s. She also speaks four languages.
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What does Tidal Impact do?
Tidal Impact is an impact management and investment holding firm catalyzing companies that prioritize social and environmental performance. With our impact measurement and management expertise, we also support companies in achieving their impact objectives while accomplishing long-term financial outperformance.
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How did it start?
It all started when Mohannad El-Khairy, my co-founder and our CEO, approached Dima Alashram and myself about the idea of an impact investment holding company at the end of 2019. I know Mohannad through the Kairos Society (now rebranded to Sigma Squared Society). The organization created the Kairos fund which Mohannad invested in through his previous fund of funds.
We then met in person at the Kairos Europe Summit in Venice, which I organized in 2019. We started talking about today's challenges in the world of impact investing and brainstormed new models that would allow both impact and financial return to co-exist without one being compromised for the other.
When he pitched the idea of a revenue-generating impact investment holding company to me, I got really excited, and was immediately on board. Dima, my other co-founder and our Chief Impact Officer, has known Mohannad for 10 years, as he had previously advised a startup she founded. The three of us decided to found Tidal Impact together in mid-2020 which has been an exciting journey so far.
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In your YT video on “Who are the Impact SuperStars,” you talk about the importance of standardizing impact measurements. Why is it important to standardize?
At the moment, there are over 150 frameworks that could be categorized either as impact or sustainability frameworks. Everyone is trying to create that one "perfect" framework, but we believe that it's not a matter of finding the perfect framework; it's more important that impact investors use coherent frameworks and methodologies so that we can compare and benchmark data.
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If you look closely, all impact frameworks can be stripped down to the logic model: inputs, outputs and outcomes. If everybody uses different frameworks, it'll be very hard to gather meaningful data and to compare the impact of companies, so we understand what works and what doesn't.
For example, we at Tidal really like the framework that the Impact Management Project (IMP) has created (5 Dimensions of Impact), as it is highly customizable and can be applied to all sorts of industries and themes. We can also enrich it by adding specific impact metrics that we gather from other frameworks.
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In the same video, you talk about impact needing to be considered up front in the short term along with profitability. Could you explain what you mean?
At Tidal, we always say that impact shouldn't be just an afterthought; it should be prioritized from the get-go just as much as financial return. In many cases, investors claim that they are intentional about supporting impact-driven companies, but in the end, what matters most is mainly the financial/commercial success of the company. We believe that both elements need to exist in order for a company to be genuinely impactful. The better its commercials, the better its impact should be. We look for companies that have impact integrated in their business models and aim to align the impact with financial potential.
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An impact-driven company can only be successful if its impact is aligned with its financials—so the more impact the company creates, the more money it makes. If that is not the case, it shouldn't be considered a core impact company.
Not every company needs to have impact at its core, but I believe that companies, especially larger corporations, need to integrate environmental, social, and governance (ESG) factors into their businesses meaningfully (not through greenwashing). Companies carry a big responsibility in making our world more sustainable—especially those that currently have a negative impact on the world. This means that companies should all aim to operate in a sustainable way, but how they make their revenues does not have to necessarily be tied to an impact objective.
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You’ve also stated that climate change is the biggest necessity in terms of impact giving. It’s both the biggest challenge & also the biggest opportunity. Why?
I believe that climate change is the biggest challenge we're currently facing in this world—just look at the speed of global warming and the rise in natural catastrophes (floods, wildfires, droughts). Climate change is also linked to so many other areas, e.g. diseases, poverty, hunger, and much more.
For example, there is so much plastic in our oceans, that the fish and seafood we eat is contaminated with microplastics. It is already proven that plastic is detrimental to our health and can lead to all sorts of diseases. Many people experience hunger and poverty if droughts make their lands unproductive and they can't grow food anymore. This in turn leads to a host of other negative consequences. If we don't radically change something, our next generations will face terrible living conditions.
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What do you see in the future for carbon capture and utilization?
I'm coming across so many interesting and innovative solutions that can help to capture carbon. For example, there's a startup that takes carbon from the atmosphere and turns it into diamonds, the ultimate form of carbon. Another company has developed a technology to convert CO2 from plants into biochar which can then store it for 1000 years. There are many more startups that are coming up with cutting-edge solutions to capture and reduce CO2—we just need to find and support them in the best way possible.
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