Top stock broking firm Zerodha takes climate change fight to grass roots

What sets its dedicated fund apart is that it doesn't back large greenfield projects but offers grants to early-stage innovation in areas like renewable energy and sustainable farming

The Kamath brothers, Nithin and Nikhil, are storied business elite. Their firm Zerodha has catapulted to become the largest stock broking platform, going past traditional brokers such as ICICI or IIFL. The Kamaths are now top of the list of self-made billionaires with a combined wealth of Rs 24,000 crore, all from a business that has never raised external capital.

But there is more that puts them apart from the regular tycoons. The founders profess that businesses have a debt to the society, and must direct their wealth at philanthropic causes, particularly the environment--not just as CSR grants, but as a way of doing business. That’s why Zerodha’s offices and servers run on architectures that consume as little electricity as possible in order to create a smaller carbon footprint.

Last week, Nithin Kamath, the chief executive, announced that Zerodha will invest $100 million, as grants and equity investments, to fight climate change. In a phone interview, Kamath told Business Standard that the focus is not just to fund projects in isolation, but to create large ecosystems of ecological projects that can become models for sustainable change and also provide livelihood, that is, in his words, “green-jobs”.

“Most of India does not reside in the top metros such as Delhi, Mumbai, Bengaluru and Kolkata. They are in tier-two towns and villages. Real development will not happen unless jobs are created in small towns,” said Kamath. He also envisages a model where city folks relocate to their natives to help those district economies; he says, Zerodha is considering permanent work-from-home for certain employees.

The Climate Change fund is different from some of the large philanthropic initiatives like the Aziz Premji Foundation and Infosys foundation, says Kamath. Instead of funding large greenfield projects, Zerodha is looking at grass-root level early-stage innovation. “Think of it as seed capital for risk takers in the development space,” said Kamath. The successful grantees will be the ones who’s solutions are aimed at fixing the issues of climate change, be it through renewable energy, sustainable farming, or tech solutions.

A few years bets cast some light. Zerodha has invested in Terra, which is an online education portal to learn about climate change, and Blue Sky Analytics, which crunches satellite and other data to provide value assessment of ecological assets like forests and rivers. Zerodha has also funded swaYYam, which is creating a farmers collective in Maharashtra, with the goal to scale that model to farmer community in other regions.

Zerodha’s climate initiative is housed in the newly created Rainmatter Foundation, led by Sameer Shisodia, a long-time technology executive turned sustainable farmer.

Before Zerodha, Shisodia managed a large farm in Krishnagiri, 70 kilometers from Bengaluru. It was a chance meeting between him and Kamath, who had come to the farm with a potential interest. Kamath not only bought the farm, but also got Shisodia to lead the climate change initiative at Zerodha. Also, Zerodha is “re-wilding” the farm.

“We are trying to take the learning from each of these projects, not just the ones we are funding but from anything that has succeeded in the last couple of decades. And see how we play an amplifier and enabler to see how those ideas get adopted as well,” says Shisodia.

The Zerodha management also upholds the values of sustainability internally. One of the key proponents is Kailash Nath, the CTO of Zerodha, who has made them more cognizant of their daily habits in terms of how they affects the climate. 
 

“Now people think twice before buying expensive cars, thinking what Kailash might say,” chuckles Shisodia.