Creating Climate Wealth ~ A Dispatch From SXSWECO

climate_wealthMost of us usually don’t use wealth and climate change in the same sentence. Jigar Shah and the Carbon War Room’s Ann Davlin were at SXSWECO yesterday to convince us things are changing. Their session,”Creating Climate Wealth,” showcased how individuals and businesses can capitalize on the climate chaos.

Davlin, who worked with Al Gore and at The Pentagon, started the discussion by reminding the audience that our society, even business, has had climate opportunities teed up before.

“This really isn’t all uncharted territory,” said Davlin. “A lot of today’s climate wealth environment was established by the success of the Carter administration.”

Most of us can associate the administration with solar panels on the White House, but Davlin highlighted the other policy and infrastructure decisions which helped set up many of the standards still used today.

“Everything from energy efficiency and vehicle emissions to power purchase agreements (PPAs) and the adoption of the Renewable Portfolio Standard (RPS), has some connectivity to the efforts of lawmakers decades ago,” said Davlin.

“All the pieces are coming together, and we’re at a point where we can move forward. Carter won bi-partisan support for favorable policies and it lead to job creation and clean energy momentum.”

Davlin cited the residential PACE market, aimed at funding energy improvements, as another engine of growth and carbon reduction. She urged the group to think about the balance between an economic and ecologic argument.

“The capital is there, it’s more about how do we go in and approach a particular investor segment,” said Davlin. “We need to think about describing the impact in either financial terms or climate terms,” she added.

Shah opened up with a dig at our obsession with technology, questioning the value of the next new app.

“We have this weird fascination about technology,” said Shah. “The reality is that new technology is not fascinating in our industry.”

Instead, it’s about “infrastructure.” Shah noted that even with a seemingly unending technology cycle, energy costs for the average American family have increased about $4000 per year per family.

“Nobody tells they’re mom that I work in infrastructure,” he joked. But it’s easier to understand the notion of infrastructure when he describes it in the context of how the solar industry built out its own processes and practices. He mentioned how early power purchase agreements (PPAs) drove demand and led to more stable and innovative financing models that have continued to spur along the solar industry.

The conversation also addressed the opportunities in the electric vehicle (EV) industry and more broadly, the transportation industry.

“So what’s the climate wealth strategy for getting people in EVs,” asked Shah.

He mentioned recent data from Triple AAA that shows U.S car owners spend about $900 per month to own a vehicle. Besides more predictable maintenance costs for EVs, Shah thinks transportation companies and manufacturers will continue to move towards a cost per mile model.

“What you’ll see is an increase in “cost-per-mile” entrepreneurs as more time transfers to that model,” he said. “Then the question is what do you do with all the wasted space, like unused parking spots and emptier garages.”

The parking spot problem is in the industry’s headlights, sometimes referred to as one of the last mile problems in transportation. He was asked about what cities can do address it and some of the other planning challenges.

“Basically, 1000 entrepreneurs need to be knocking on doors and getting contracts, and then those need to get financed” he said.

Once autonomous vehicles are factored in, things get more interesting. Both panelists said the insurance industry is already adapting to that, preparing for the increasing loads of data from vehicle-based systems. They imagined a scenario that’s not so different from what healthcare providers might glean from health trackers to adjust our premiums.

Davlin also mentioned how microgrids, small-scale stations that can operate independently, are getting pushback from municipalities. Drawing from her pitches to Wall Street and private equity firms, Davlin reinforced how assumptions can’t be made that stakeholders understand the bigger picture. She described some scenarios where energy efficiency funding had to be reframed around a more resilient and risk-based approach.

Shah was then asked about the value proposition for solar, and how it plays into more climate opportunities.

“Solar is now an $80 billion a year industry with rooftop systems being added about every three to four minutes,” said Shah. “The industry needs to take responsibility for creating the next model for utilities.”

The panelists were also asked what city officials could do to spark more business-driven climate strategies.

Shah singled out transportation and waste management as two of the biggest pieces looming for cities. To magnify the cost reduction opportunity, he said the the average U.S. city transports its waste roughly 350 miles for disposal.

He also used the recent food waste ban in Massachusetts to show how waste reduction can create growth. Because of that policy, says Shah, 1200 anaerobic digesters will be built over the next five years, which will create jobs and reduce transportation costs..

Waste water management is also a part of the portfolio, especially with many treatment facilities across the U.S. nearing capacity. Things like pre-treatment, desalination, and other filtering applications are spurring the water management sector.

“A lot of these solutions have two year payback periods,” said Shah. “At that point, you’re basically forcing people to save money.”

As the session closed, a Nike representative in the audience asked the panelists to share specifics on the top things corporations could do to impact these climate wealth strategies. Davlin cited what Nike itself was doing as a member of the Sustainable Leather Working Group.

“Nike is actually dictating how the life of an animal is managed, everything from how it is fed, to how it is slaughtered,” said Davlin.
“What that means is more job creation, and a more visible and sustainable supply chain, ” she added,

Shah jumped in on the supply chain piece, saying the “greening of supply chains” is the toughest challenge for multinational corporations.

“You have to change the contracts and configure them to reward your best suppliers,” he said.  Part of the challenge is that adjustments to supplier agreements can impact short-term profits. But Shah urged companies to look past contracts and get more creative to drive growth, saying a company’s strategic partners can be rewarded in many ways.

“There’s still constraints to being driven through the Chief Sustainability Officer (CSO). But you have to make some financial commitments before any long-term strategy can really materialize,”said Shah

“The question becomes, how do we it home runs?” he told the group.climate_wealth

 

 

How Green Trends Will Impact Your Business In 2013

solar_panels_american_directThe term “green”  evokes a wide array of meanings, spanning political ideology, lifestyle choices, and climate change. So when businesses hear the term green, it’s no wonder there’s so much confusion.

Here are three trends where green is a key element, but not the key driver.

Sharing Is Changing Consumption and Commerce

The sharing economy permeates nearly every facet of every industry. From cars to the driveways left empty when they’re gone, the Internet has made it easier than ever to sell idle resources. Lisa Gansky, one of the catalysts helping companies tap into sharing, describes a perfect storm of accessible data, the open Web, and connected communities as a “cocktail” being tested by businesses in every vertical.

Companies should be looking inward at their own idle resources and figuring out how to provide that information to other businesses, or municipalities. New revenue streams will come from services that can be reconfigured or modified to operate within these sharing communities and networks.

“Data is a kind of connective tissue and when we liberate data (between communities, companies, investors, governments), we play better, faster,” Gansky said in a recent interview. She says that sharing is being accelerated by the next big social network, and it’s not Facebook. It’s the neighborhood.

The Economist built on that notion in a recent profile of the sharing economy’s impact: “The idea of renting from a person rather than a faceless company will survive, even if the early idealism of the sharing economy does not.”

Tapping Into Greener Transportation

Businesses are finding ways to tie into the rise of walk-able communities. Marketing opportunities are everywhere as smartphones become more connected to the open data available on the Web. Companies like RideScout can now deliver multiple transit options to its users, whether they prefer pedicabs or Car2Go.

The transparency of transit data has much larger implications, especially when it comes to cities. That’s one of the areas where opportunity exists for small business. Faced with rising populations, traffic congestion and parking woes, city officials are taking matters into their own hands.

Portland is a prime example, highlighted in a recent CitiWire article: “It has a 35-year-old urban growth boundary to curb sprawl, plus America’s only regional governance structure. It leads in transportation – not just regional light rail but America’s first streetcar service of recent times.”

That’s an approach that should buoy businesses in every sector, certainly ones that adapt their products and services to complement the urban density model that continues to develop. It’s an obvious step to see all sorts of businesses eventually appear alongside the bus routes on RideScout’s app.

The nation’s capital has similar initiatives for which sustainable transportation is the centerpiece of economic development.

The CitiWire article goes on to report, “[Washington D.C.] Mayor Vincent Gray has just unveiled proposals to create the ‘healthiest, greenest and most livable’ city in America with a raft of measures to curb energy use, reduce traffic and boost use of fresh fruits and vegetables. By 2032, a quarter of all commuter trips would be by bike or foot and at least half by public transit. Major chunks of energy would be delivered from nearby wind farms.”

Other cities are sure to follow as fuel prices rise, populations increase, and better infrastructure emerges. Businesses that capitalize on these trends will reap the early awards.

The Built Environment and Boosting Your Profile

Improving productivity and differentiating your business are constant challenges. An easy way to boost both is by plugging into the green building movement. Aligning with local providers that can help with energy rebates can easily spur some economic gains. Beyond the numbers, productivity can also be lifted through smarter and more efficient design. Healthier employees are happier and more productive.

recent New York Times article highlighted research from an affordable housing community in Seattle that showed how small changes can have big effects. Spurred by medical research, a local coalition of architects, designers and citizen-led groups were able to impact asthma rates within 60 “Breathe Easy Homes” with better air filters, less carpet, and low-allergen landscaping.

The Times reports, “A study in 2010 performed by the University of Washington School of Public Health found that the Breathe Easy residents had reduced emergency room and urgent care visits by 67% and that symptom-free days had increased by 61%. As designers, that was the first time that we had really seen a direct relationship shown between the built environment and the health of residents.”

It’s easy to see how that could translate to your workplace.

Another project that promotes healthy work sites is the Sustainable Sites Initiative (SITES), an organization started to accelerate best practices in sustainable land development and management. It has pilot projects across the country that are taking green spaces beyond atria and waterfalls.

By using SSI’s framework for “healthy ecosystems,” commercial businesses can cut costs and drive efficiency with better land-use decisions. Whether it’s a restaurant, corporate campus, or small business, standards are emerging to address everything from native landscapes and irrigation, to zero waste and air quality.

The U.S. Green Building Council (USGBC), an SSI partner, says it anticipates certain guidelines and benchmarks might be included in future iterations of the LEED(Leadership in Energy and Environmental Design) Green Building Rating System.

USGB’s commitment shows how the big picture is starting to play out for businesses in every industry. Companies of all sizes are being judged not only by how much they’re growing, but how that growth impacts surrounding communities.

This article first appeared in Forbes.