California’s Solar Shift: Progress, and Some Challenges

This post was written by Ben Hastings ’18

Arguably, California is the country’s leader in climate action, with an ambitious goal of deriving 50 percent of the state’s energy from renewable sources by 2030. The state is on its way to achieving 33 percent by 2020 and just made a huge step toward making its goal a reality.

In 2 years, all new homes built in the state will be mandated to either have solar panels installed or be hooked up to shared solar panels that power a grouping of the new homes. New home buyers will have the option to purchase the panels outright where they are included in the price of the home or can be leased. The increasing amount of solar energy to be included in the energy mix is sure to help achieve the state’s aforementioned energy goals, but the requirement for new home owners to purchase rooftop solar has the potential to surface unintended consequences.

The requirement is expected to add $8,000 to $12,000 to the cost of a home. In a state where affordable housing is hard to come by, this mandate certainly would not help that issue. What about those who can’t afford solar?  It’s an interesting problem, as moving towards a renewable energy future is critical, but yet some will not be able to contribute to this shift. Companies like Tesla have acknowledged this issue and made it clear that they are working to make their products affordable for all but say that they must achieve adequate economies of scale before that dream can become a reality.

“…the requirement for new home owners to purchase rooftop solar has the potential to surface unintended consequences.”

Also, households that don’t have access to smart energy technology in the state could potentially be left in the dust once the new rate structure hits the state next year. Utilities will charge energy customers based on what time of day they use electricity, making it difficult for those without access to this information to know if they are using their electricity most efficiently. The energy supply does not equal demand at many points in the day, and those that have batteries, like the Tesla Powerwall, will be able to store energy until when it could be most effectively utilized. Until these technologies are affordable enough to become a part of more households, consumers may not be seeing the full savings possible from solar. Is now the time for a mandate such as this one, or should technologies that further enhance solar efficiently be developed further?

For further reading:

https://www.nytimes.com/2018/05/09/business/energy-environment/california-solar-power.html

https://www.tesla.com/blog/master-plan-part-deux

Practicum Scope Pitch Day!

The Sustainable Innovation MBA Class of 2018 is entering the home stretch.

On May 11, the cohort, faculty, and sponsoring companies gathered on UVM’s campus for what has become an inspiring demonstration of how the students have “put it all together.” Students spent the day “pitching” the scope and framework of their practicum projects — a capstone of The Sustainable Innovation MBA experience. Practicums call upon all the skills, insights, experiences, and learning the students have acquired over the past nine months.

The three-month practicum project is a full-time, hands-on experiential engagement with either existing companies or new ventures from the US and around the world focused on real challenges and opportunities in sustainable entrepreneurship. Practicum projects are composed of teams of 2-3 Sustainable Innovation MBA students each. Projects run from May until August, and culminate in a final report and presentation right before graduation.

Students pitched scoping for projects at companies such as Keurig Green Mountain, Griffith Foods, Essilor, Seventh Generation, and Caterpillar.

The deliverable for the practicum is a detailed and comprehensive business/action plan for the host organization.

Wishcycling: What Really Happens To The Stuff In The Blue Bin

This post was written by Sarah Healey ’18

What happened to that plastic bottle you threw in the recycling? Do you really have to rinse out that milk jug before putting it into the recycling? A little left-over yogurt doesn’t make a difference? Can you recycle plastic bags?

If you are like a lot of people you probably don’t, and you hope or wish that the items you put in the bin get recycled. But this “wishcycling” can actually do more harm than just throwing contaminated or non-recyclable items away. On a recent site visit to Casella Waste Systems‘ Charlestown recycling facility in Massachusetts, I learned a lot about what happens to products after they go into the blue bin.

At the recycling facility we visited, contamination was visible throughout our entire tour. Film plastic bags clogged the machines, small items fell through the cracks, and foreign metal objects damaged equipment. All of these items are not allowed in the zero sort recycling bins, but still manage to find their way in and wreak havoc.

During our tour of the recycling facility we learned more about the challenges that recycling facilities face. One of the major challenges is food contamination in the recycling stream. This can range from unwashed containers to cans still full of food. This has a massive impact on a recycling facility because items are sorted using all sorts of gadgets. To sort plastics the facility uses optic readers that read the type of plastic and send out puff of air to sort plastic. Other parts of the facility use things like magnets to sort material. Because so much of this system is automated and is carefully calibrated to deal with clean materials contaminated items don’t make it through the system.

When non-recyclable items don’t make it through the system they are sent to the landfill or to an incinerator. This includes all of those small plastics, random pieces of metal, plastic bags, and more. This is why it is really important to check with your local recycler to see what products they take in the blue bin and which have special instructions.

The trouble with recycling doesn’t stop at the facility though. The bundles produced by recycling facilities still have some level of contamination. The largest buyer of recycling was China, but they have closed their doors to recycling with contamination levels above 0.5%, which is beyond the technological capability of any recycling facility today.

Innovator-in-Residence: Donald Reed

This post was written by Kevin Hoskins ’18

As part of the Innovator-in-Residence series, Donald Reed recently visited the 2018 cohort of The Sustainable Innovation MBA program. Reed is currently a managing director in PwC’s (PriceWaterhouseCoopers) sustainable business solutions practice. Reed is also a member of The Sustainable Innovation MBA’s Advisory Board.

Reed got his start in advocacy and grassroots work in Michigan. He discussed the evolution of his thinking from an “us versus them” mentality (environmentalists versus business) to understanding business’s role in society (and the part that sustainability-minded professionals can play).

Reed then worked on economically-targeted investing focused on creating market-rate return investments that created housing opportunities for health care workers. He stressed to the cohort the need to “not be bound by what’s already been done and what other people tell you is possible.”

In order to better understand the world of finance, Reed then went back to school, getting his MBA in finance from the Stern School at New York University. He subsequently went to work for the World Resources Institute, a think tank, where he felt he had found “his people.” That experience led Reed to ask questions of himself that he posed of the class: “how do I see myself and how do I explain to others what I’m interested in and the capabilities I bring to bear on that?”

“Don’t be bound by what’s already been done and what other people tell you is possible.”

Reed is extremely well-read and stressed the importance of integrative thinking, tying these seemingly disparate frameworks that you learn throughout your life in a way that you can understand other people’s perspectives and translate them to a new area. There may always be someone with deeper expertise on a topic than you, but it’s important to understand enough of it that you can converse intelligently on the topic at hand.

Reed also discussed his role as a consultant, becoming a trusted advisor to numerous large organizations. He described the challenges of consultants face: to understand enough to analyze the situation at hand, identify the key drivers and distill that down, but then engage your clients by listening and becoming trusted, in order to help the organizations change.

His previous company, Sustainable Finance Ltd. was eventually acquired by PwC. In his current role, Reed and his team focus on what they call “Sustainability Strategy through Execution.”  They are currently focused on four main areas: cities of the future, social determinants of health, the future of reporting, and total impact and measurement.

Ecosystem Services: The Unsung Hero of the Natural World

This post was written by Robert Hacker ’18

Do you ever find yourself enjoying a glass of water, a meal, or maybe even breathing fresh air?

If you answered yes to any of the three activities above, then you may want to thank ecosystem services.

A service is the action of helping or doing work for someone.

An ecosystem is a community of interacting organisms and their environment.

Therefore, an ecosystem service can be described as a community of interacting organisms and their environment that helps to get work done. There are four categories of ecosystem services which are provisioning, regulating, cultural, and supporting services.

I will begin by explaining provisioning services. These services provide a benefit that humans extract from nature such as water, timber, fossil fuels, food and medicine. All of the provisioning services are essential for the survival of human populations and will see negative impacts as a result of climate change.

Next, regulating services provide benefits as a result of an ecosystem process that moderates a natural phenomenon. Some examples are water filtration/purification, pollination, decomposition and carbon storage. Humans have been altering the rates at which these ecosystems are able to operate, therefore increasing the rate of climate change and natural resource depletion.

Third, cultural services are non-material benefits that contribute to the development of people. Some examples include nature-based art, tourism, and recreation. Many indigenous communities have lost these services due to environmental degradation, or development of their once sacred land. Also threatened are many of the outdoor activities all people enjoy such as hiking, swimming or even skiing!

The final type of ecosystem services is supporting services and are classified as a benefit from an ecosystem process that moderates a natural phenomenon. These are arguably the most important because all life could not survive with-out them. Supporting services include photosynthesis, nutrient cycling and soil formation. The second two along with many other services have been altered and degraded since the industrial revolution.

All of these types of services are essential to the survival of human life as we currently know it. Climate change poses a threat to these important services that humans and all other species depend on. We need to begin to take care of our home, Earth!

Getting to Know the Class of 2018: Madeline Brumberg

Prior to joining The Sustainable Innovation MBA program, Madeline Brumberg ’18  spent her career in the Geographic Information Systems (GIS) field and worked as an analyst for both the private and the public sector.

Why did you choose to attend The Sustainable Innovation MBA program?

I chose to attend The Sustainable Innovation MBA program because I want to find real-world solutions for the social and environmental issues we face today. I see deficiencies in the private, public and NGO worlds that are preventing each of these sectors from properly addressing these issues. I think that business has the most opportunity to transform itself to become an engine for change in the world. I hope to be a change agent in the business world to leverage its power for good.

What has been your favorite part/element of the program thus far?

I have loved the leadership and teamwork component of this program. I was not expecting this to be such a big focus of the program but I am eternally grateful that it is. I am so excited by it because companies are nothing without their employees so to make the best companies, you need to make your employees the best. I am excited to be gaining the skill set to help employees reach their full potential.

What are three things someone considering the program should be aware of?
1. There is a huge focus on leadership and you will learn more about yourself than you knew was possible.
2. This program is not greenwashing. Sustainability is truly at the heart of the program and we are reminded of it at every turn.
3. Community is a central tenant of this program and it will serve you well. You will be supported by your classmates and you will support them throughout the year. It will be frustrating at times but ultimately you will be in it together.
How has the Sustainable Innovation MBA helped you?
The Sustainable Innovation MBA program has helped me to see a future in business that is meaningful and has impact. It is a very fuzzy path that I am beginning to see but it is a path.

Lessons and Insights from the Climate Cap Summit

This post was written by Shari Siegel ’18

Four members of The Sustainable Innovation MBA Class of 2018 — Ian Dechow, Andria Denome, Kaitlin Sampson and Shari Siegel — recently headed south to attend the inaugural Climate Cap Summit at Duke University. The Summit was a chance for our travelers to listen to and exchange views with professional investors, bankers, scientists, financial strategists and advisors, corporate executives, academics and MBA students from other schools on a variety of business, finance, political, and social issues related to climate change and other sustainability challenges.

The program opened with a keynote presentation by Scott Jacobs, co-founder of Generate Capital, and a conversation between Jacobs and Greg Dalton from Climate One.  Jacobs posited that the challenge of “clean tech” is not so much about invention as it is about infrastructure: energy, land, water, food and clean air are critical and are made available through infrastructure, which requires substantial capital up-front. Thus, while there are hundreds of infrastructure projects that it might be in economic actors’ rational self-interest to pursue, it is often difficult to get these projects funded.

For the owners/developers of the technology, the “Silicon Valley” funding model (a small investment in a small, early stage company with the potential for rapid growth at exponential returns) does not fit: these companies have proven (potentially improved) technology that requires substantial investment that will yield long-term steady, but not exponential returns. For the potential clean tech customers, investing in a large capital project with substantial up-front costs that turn what was an operating expense into a capital expenditure is a difficult decision to make, especially in the current capital markets environment where there is so much focus on short-term results rather than long-term sustainability.

The solution proposed by Jacobs and his co-founder at Generate, Jigar Shah, is to provide “infrastructure as a service” using project finance structures under which independent developers build and operate infrastructure owned by a special purpose company financed by Generate. It is, in many ways, a macro version of successful strategies studied by students in The Sustainable Innovation MBA in connection with bringing solar power, mobile phone service, and other technology to the base of the pyramid.

The opening discussion was followed by a discussion between Truman Semans, founder and chief executive officer of Element Strategies and Matt Arnold, global head of Sustainable Finance at JPMorgan Chase regarding environmental, social and governance (“ESG”) investing, the UN Sustainable Development Goals (“SDGs”) and risk management.

Attracting private investment in projects related to the SDGs requires reducing risk for the providers of capital. Among the strategies to further risk reduction is better (more transparent and standardized) disclosure relating to ESG matters.  The speakers noted the ESG disclosure scores promulgated by Bloomberg.  Another risk-reduction strategy is the one put forward in the Blended Finance, Better World discussion paper released for discussion by the World Economic Forum in 2017.[1]  It proposes using multilateral development banks to provide public money which can attract investment of private capital into major infrastructure projects in the developing world to meet the SDGs. Estimates are that investment of approximately US$6 trillion is needed annually to meet the SDGs.

Later panels returned to the subject of assessing ESG factors as part of fundamental long-term risk management.  While in the early days of ESG investing, such a strategy was thought to reflect a willingness to eschew higher returns in exchange for desired impacts, it is becoming increasingly clear that investors ignore environmental, social and governance aspects of a company’s operations at their peril and incorporating ESG factors into an investment strategy likely leads to better long-term performance.  As Ron Temple, head of US Equities and co-head of Multi-Asset Investing at Lazard Asset Management, said, it is “simply irresponsible” not to look at ESG factors in evaluating risk.

Elizabeth Lewis of Terra Alpha Investments, Mark McDivitt of State Street Corporation and Kate Gordon of the Paulson Institute agreed, particularly when talking about climate change. According to the 2017 Global Risks Report published by the World Economic Forum, extreme weather events and natural disasters are two of the top 5 global risks in terms of likelihood to occur and impact; water crises and failure of climate-change mitigation and adaptation are also in the top 5 global risks in terms of impact.[2]  The key to talking about business and climate change is to understand the pricing of climate change risk.

Fundamental risk and opportunity presented by ESG factors, especially those relating to climate destabilization, was hammered home again in a later presentation by Tiiram Sunderland of Bain & Co, who noted that climate change represents the biggest issue affecting business today.  He also noted that unless sustainability is embedded in the core of a business school’s curriculum, the school is failing its students. 

This last point was, of course, happily endorsed by The Sustainable Innovation MBA students.

[1]           See https://www.weforum.org/reports/blended-finance-toolkit.

[2]           See http://reports.weforum.org/global-risks-2017/

Wellington Management Talks About Investing in a Better Future

This post was written by Shari Siegel ’18

According to the Global Impact Investing Network (the “GIIN”), the financial markets will have to provide several trillion dollars annually if the U.N. Sustainable Development Goals (“SDGs”) are to be met by 2030.[1]  Thus far, impact investing has been mainly the realm of a small group of institutional and wealthy individual investors, but that situation is now poised for change.  The GIIN’s new framework is calling for impact investing to be “made more accessible by developing new products suited to the needs and preferences of the full spectrum of investors (from retail to institutional) and to accommodate the capital needs of various types of investees.”[2]

The Sustainable Innovation MBA Class of 2018 started Module 4 of its program with a visit from Meredith Joly, Christopher Kaufman, and Quyen Tran from Wellington Management arranged by Professor Charles Schnitzlein.  The Wellington trio came to discuss how the privately held Boston-based investment manager is making impact investing a viable option for a larger pool of investors.

First, A Little Vocabulary.  “Impact investing” differs from “ESG investing.”  ESG investing is a strategy in which investments, usually equity in publicly traded companies, are chosen because the issuers have environmental, social or governance practices that align with the investor’s values; the companies in question may or may not offer products or services that are intended to address social or environmental problems.  (For example, an ice cream manufacturer that is well known for its advocacy of better environmental practices and equality issues may be an ESG investment, but wouldn’t be an impact investment.)  Impact investing is a strategy in which the investor chooses investments with a view to addressing specific social and environmental issues.  The core businesses of the companies that the impact investor invests in are specifically aimed at solving one or more social or environmental problem.  (For example, a healthcare technology company that enables people in remote locations to have “virtual” doctor visits so that they can obtain otherwise unavailable or cost-prohibitive care could be an impact investment.)  The social and environmental issues impact investing usually attempts to address are subsets of the SDGs, including addressing adequate housing, access to education, healthcare, climate, water resources, etc.

Traditionally, impact investing has largely been done through large private investments in private companies.  Such investments would normally be limited to institutional investors or Very or Ultra High Net Worth individual investors (i.e., investors with more than $5 million to invest).  The Wellington team came to talk about how impact investing can be done through selecting publicly traded stocks, bonds and mutual funds, which are much more liquid and have much smaller minimum investment requirements than private equity, thus making such strategies more widely accessible.

The SDGs establish a common language for NGOs (non-governmental organizations), foundations, governments and private investors as they each work in their own ways to solve the world’s most pressing problems.  Supported by its large, centralized research team, Wellington has identified hundreds of publicly traded securities that provide capital for companies and projects whose core businesses and missions address SDGs in one of three impact themes: life essentials (housing, clean water/sanitation, sustainable agriculture/nutrition, and health), human empowerment (education and job training, digital divide and financial inclusion) and environment (alternative energy, resource efficiency and resource stewardship).  As the manager of its own equity and bond funds and subadvisor for third party funds, Wellington monitors and measures not only the financial performance of the securities in its portfolios but also the social and environmental impact the companies and projects are having to ensure that investor goals are being achieved.  This is an example of one more way business is being used as a force for good.

[1]           Global Impact Investing Network, Roadmap for the Future of Impact Investing: Reshaping Financial Markets (March 2018) at 9.

[2]           Id. at 49.

Four Clever Ways Packaging Changes Can Help Companies Can Reduce Their Carbon Footprint

This post was written by Kathrin Kaiser ’18

Sixty-three pounds of plastic, per person, ends up in landfills in the United States. An increased consumer demand for sustainability and the amount of waste coming from disposing packaging makes companies re-think their packaging. They start to incorporate new, sustainable materials and construction methods into their packaging to reduce their impact on the planet. Here’s four clever ideas for companies to reduce their carbon footprint by changing their packaging:

  • Reducing the ink in company logos

Big brands like McDonald’s or Starbucks might be able to save millions of dollars every year and help preserve the planet just by slightly changing their logos. “Ecobranding” is a project by Sylvain Boyer, a French graphic designer, where he demonstrates the impact of this slight change. A simplified version of the logos could save companies 10-39% in ink and result in additional secondary benefits, such as reduced printing costs and a cut in energy consumption.

  • Arekapak

That certain uses of plastic are “evil” is no longer news, not only to environmentalists but also to large corporations. But just banning plastic bags at the register might not be good enough – vegetables and fruits are often shrink-wrapped in plastic, causing tons of landfill. Especially the food industry could benefit from the idea of two female innovators: Arekapak. It is a food packaging alternative, made out of palm leafs and produced with very few water and completely without chemicals. The product is also compostable, heat- and cold-resistant and has a water-resistant surface. And like that wasn’t enough good news, Arekapak packaging serves as a dinner plate, too.

  • Edible Packaging

What if you could eat the packaging off your food instead of sending it to a thousand years of landfill doom? An Indonesia-based start-up called Evoware has developed just that. Evoware is a biodegradable, dissolvable, edible packaging wrap made out of seaweed (which is also packed with vitamins!). The company plans to create several variations of the product for instant coffee, sugar and seasonings – the packaging can then just be dumped into the hot water and dissolves. Another upside is that this product could help seaweed farmers raising their revenue and do something good for the environment: seaweed absorbs a great deal of the carbon dioxide in the sea!

  • Just eliminate packaging completely

“Original Unverpackt” (“original unpacked”) is a Berlin-based supermarket that works without food packaging. Customers just bring their own containers and have those weighed – they only take what they need and the weight of the containers is being subtracted at the register. The entrepreneurial founder- duo wants to reply to the rising demand for more sustainable products and services and alternatives to the “lavish” handling of resources. Similar concepts exist in Austin, Texas (In.Gredients) and London (Unpackaged). Furthermore, Original Unverpackt hopes to make organic food more affordable for people with lower incomes because of the removal of packaging.

Getting to Know the Class of 2018: Sarah Healey

Sarah Healey ’18 comes to The Sustainable Innovation MBA after a career in retail management. She was interviewed by Isabel Russell, an undergraduate at UVM.

Why did you choose to attend The Sustainable Innovation MBA program?

I chose to attend The Sustainable Innovation MBA program because I wanted to gain the skills necessary to have a productive role in my family’s business. The program drew my attention because of its small size and focus on sustainability and entrepreneurship.

What has been your favorite part/element of the program thus far?

My favorite element is the cohort itself. I really enjoy getting to spend five days a week in class with people who have similar interests to me. I feel like the cohort really allows you to develop strong relationships.

What are three things someone considering the program should be aware of?

1) it is very accelerated! but definitely doable. 2) there are so many support systems in place to help you through the challenging parts of the program. 3) Even when it is busy it is so much fun.

How has The Sustainable Innovation MBA helped you?

The program has helped me in ways I never imagined. It has greatly improved my emotional intelligence and provided me the toolkit to continue to improve  into the future.