Climate Solutions and the Environment Archives - Page 2 of 2

Category: Climate Solutions and the Environment

April 23, 2019

Don’t Fall Behind – Water Is A Great Opportunity For Investors

Veris Guest Blog: By David Richardson, CFA

The theme of the UN’s annual World Water Day last month was “leave no-one behind.” This sentiment is applicable to both emerging markets and the developed world, while offering opportunities for investors in water.

The sixth sustainable development goal (SDG) from the UN is clean water and sanitation for all by 2030. The UN celebrates this day each year to call attention to this global priority and to advocate for sustainable management of freshwater resources.

February 22, 2019

How Climate Change Caused PG&E’s Bankruptcy

Veris Guest Blog: By Timothy P. Dunn, CFA

Pacific Gas & Electric (PG&E) Corporation, California’s largest investor-owned utility, which serves roughly 5.2 million households in central and northern California, filed for bankruptcy and is facing an estimated $30 billion of potential liabilities stemming from its equipment’s role in the historic 2017 and 2018 wildfires.

PG&E’s bankruptcy is indicative of how our changing climate presents real economic and financial risks for companies and investors. Prior to the wildfires that burned over 240,000 acres, PG&E included warnings that weather-related disasters could weigh on or disrupt its operations in its regulatory filings. In a statement, the company noted that the state’s most recent climate assessment “found the average area burned statewide would increase 77 percent if greenhouse gas emissions continue to rise,” and that “prolonged drought and higher temperatures will triple the frequency of wildfires.” Further, PG&E performed extensive water risk assessments, water management was integrated into its business strategy, and the company spent hundreds of millions of dollars every year in fire prevention, including pruning or removing thousands of trees. This awareness and action, though necessary and important, was not enough.

In an environment that continues to be challenged by climate change, PG&E’s situation could be a harbinger of the economic toll of spatially-related climate risk. “California is now a riskier place to do business,” said the Environmental Defense Fund’s Michael Colvin, a former adviser to the California Public Utilities Commission. “This is a statewide problem.”

The bankruptcy not only points out the danger that warming poses for many companies, it also underscores how difficult it is for investors to analyze risks linked to climate change compared to conventional business challenges. It is becoming increasingly clear that economic damage from climate change will affect a variety of sectors, and even companies regarded as forward-thinking might not be able to directly prepare for all the externalities associated with this systemic global problem.

Source: Seeking Alpha

Terra Alpha first purchased PG&E in 2015 based on the fact that it was a leading US regulated power provider with solid fundamentals and a strong record of shifting to lower carbon power generation. Nearly 80% of the electricity that PG&E delivered in 2017 was a combination of renewable and GHG free. Accordingly, PG&E was well-positioned to benefit from increased regulatory action in California aimed at furthering the shift toward renewable energy.

We sold our shares of PG&E in mid-October of 2017, after PG&E’s equipment was linked to the start of several wildfires. We had determined that the risk profile for the stock had dramatically worsened and it was no longer prudent to own. We felt that its exposure to such enormous liability, coupled with CEO Geisha Williams’ concerns about the growing financial risk for PG&E from forest fires, intensified by a changing climate, and California’s unique inverse condemnation laws, represented material undiscounted financial risk.

While PG&E may represent the first climate change bankruptcy it likely won’t be the last. Investors need to learn how to account for long-tail climate risk in their portfolios.

Timothy P. Dunn, CFA, is Founder, Managing Member and Chief Investment Officer of Terra Alpha Investments, LLC, a global equities asset manager.

*The information presented by Mr. Dunn is not an endorsement of Terra Alpha Investments by Veris Wealth Partners.

October 1, 2018

What You Can Do To Address Climate Change

By Helene Marsh, Veris Client

Climate change can be an overwhelming topic for any individual or community. So how can anyone make a meaningful difference?

That’s the question my friend, Sarah Loughran, and I had been asking ourselves for several years. Today, supported by a concerted community effort, we’ve succeeded in helping eight Marin County municipalities reduce greenhouse emissions by purchasing 100% renewable energy for their government facilities.

At the same time, we’ve helped raise awareness about how individuals can support the renewable energy market in their community by purchasing energy from renewable providers for just a few dollars more a month.

As an impact investing client of Veris, I wanted to share my experience to hopefully inspire others to think boldly and creatively in addressing climate change.

Creating Impact
Sarah and I met while serving on the Marin County Civil Grand Jury in 2013. Fast forward four years, and we were together again taking the signature Master Class of Environmental Forum of Marin, a local leader in training environmental advocates for the last 45 years.

We soon learned that the passage of climate change legislation in California requires communities to meet specific greenhouse gas emission reductions over the next 30 years. That law requires each community to produce a climate action plan that details how these goals will be achieved.

When we looked at how Marin County municipalities were meeting the intent of the law, we were surprised by what we found: Each of the climate action plans, for the 12 Marin municipalities, included residents and municipalities purchasing 100% renewable electricity as options for reducing greenhouse gases. Only 4 municipalities made the switch to clean energy for their own operations.

With the support of 19 environmental groups and members of the community, Sarah and I launched a campaign to change this in 2017.

Working together, we convinced eight of the 12 Marin jurisdictions – Corte Madera, Larkspur, Novato, San Rafael, Ross, Mill Valley, Tiburon and the County of Marin – to make the switch to using 100% renewable electricity for government buildings, facilities and streetlights.

The four other Marin jurisdictions – Fairfax, Belvedere, San Anselmo and Sausalito – had already made the switch prior to the start of our campaign.

The upshot: Marin County leads the way in California and across the country in purchasing 100% renewable power for its municipal accounts.

The whole process took only ten months!

We met with every town or city manager and many council members to understand the challenges they faced. We wrote reports and talking points to make the case for 100% renewable energy. We gathered supporters in each jurisdiction to attend public hearings. We kept jurisdictions informed of progress across the country and sent follow-up correspondence. In total, we attended 17 council meetings.

The positive results speak volumes about the effectiveness of citizen power and democracy.

How You Can Buy 100% Renewable Energy
So how did Marin County source the renewable energy?

Through the local “Community Choice Aggregation,” MCE. The non-profit company is one of many Bay Area companies providing clean energy that can be purchased by households, businesses and government agencies. (See below for a list.)

While it’s true that 100% renewable energy is more expensive than non-renewable energy, the difference is minimal. On a $200 power bill, 100% renewable electricity is less than $10 a month more.

Many of the Community Choice Aggregation companies listed below provide comparisons of buying renewable vs. traditional power sources.

MCE: Marin, Napa, Solano and Contra Costa Counties. The 100% renewable option is called Deep Green.

Clean Power SF: San Francisco. The 100% renewable option is called Super Green. Peninsula Clean Energy: San Mateo County. The 100% renewable option is called Eco100.

Sonoma Clean Power: Sonoma and Mendocino Counties. The 100% renewable option is called Evergreen.

Silicon Valley Clean Energy: Santa Clara County. The 100% renewable option is called Green Prime.

East Bay Community Energy: Alameda County. The 100% renewable option is called Renewable 100.

Sarah and I are continuing to advocate for the purchase of clean energy to reduce our carbon footprint. Our work and experience demonstrate what can be done by those committed to having impact in their communities.

* * *

About Helene Marsh
Helene Marsh is a clean-energy advocate who lives in Tiburon, California. In addition to co-leading the effort to transition Marin County municipalities to 100% clean energy in government buildings, Helene built one of the first LEED certified homes in the country and sells power to the grid from solar panels on her house. She is also an MCE Deep Green customer and drives an all-electric vehicle to further reduce her carbon footprint. Helene earned a Bachelor’s degree in Engineering and Visual Arts from Harvard University and a Master’s degree in Environmental Science & Management from University of California, Santa Barbara.

April 4, 2018

What’s Next for Climate Change Solutions in 2018?

By Jessica Lowrey, Director of Research

This perspective first appeared in Investopedia’s Impact Investing section.

Impact investing continues to be one of the fastest-growing segments of the wealth management business. The reason: More individual and institutional investors understand that it’s possible to achieve market-rate financial performance, while having positive impact with their wealth.

This epic shift in investor behavior is increasingly fueled by innovation, especially as it applies to climate change. The progress we’re seeing in delivering climate change solutions to the world is largely the result of technology and process improvement. Today more than ever, sustainability equals innovation and vice versa. This momentum has been further propelled by the historic Paris climate agreement and recognition by institutional investors of the risks of climate change.

In 2018, we expect even more capital to flow to breakthrough solutions that promote sustainability. In this first “Impact Trends” update we focus on Energy as it relates to climate. Clearly there are more key environmental issues affecting climate and ecosystems to be covered in later updates. Among the key trends we’re watching this year:

Market Movers Join Sustainability Revolution

In 2017, the world’s largest money managers began pressuring fossil fuel companies by supporting climate-related shareholder proposals. Vanguard, BlackRock, and Fidelity voted for the first time in favor of climate resolutions. They joined PIMCO, Goldman Sachs, and State Street, which have stepped up their support for climate change engagement in recent years. As a result, ExxonMobil, Occidental Petroleum, and PPL were forced by shareholders to disclose risks associated with climate change.

In a related move, BlackRock CEO Larry Fink sent a letter to the 300 largest U.S. companies declaring that “every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” Fink, whose firm manages $6 trillion in assets, asked firms to communicate their role in the community and their impact on the environment as well as the diversity of their leadership and workforces. In 2017, BlackRock also launched a suite of impact ETFs that favor companies with low-carbon footprints and support the UN Sustainable Development Goals.

Strong Signals From Nations

The global fossil fuel divestment movement picked up steam in 2017. Norway’s $1 trillion sovereign wealth fund, the largest state-owned fund in the world, indicated it would begin divesting from all fossil fuels. Sweden pledged to phase out all greenhouse gas emissions by 2045. France stopped granting new permits for oil exploration and will end oil and gas production by 2040. Fifteen of the largest global insurers have divested $20 billion. China canceled construction of over 100 coal plants and worldwide coal plant construction declined 62% last year. Twenty nations have signaled intent to end coal-use altogether while over 125 multinational companies have committed to sourcing from 100% renewable energy.

And despite U.S. withdrawal from the Paris Climate Accord, more than 2,500 business, state and local policy leaders, controlling $10.1 trillion of the U.S. economy, remain committed to the agreement. Considered collectively, these entities (which are outside the U.S. federal government) represent the third-largest party to the Paris agreement and would have a GDP greater than Japan and Germany combined.

More Clean Energy On The Way

The cost of generating electricity from wind and solar power declined 25% in 2017 and 70% from 2010 to 2016. China installed 54 gigawatts of solar last year, more than any country has in a single year. Total U.S. solar capacity has grown at an average annual rate of 68% over the last decade. Storage and distribution continues to improve. Battery producers for Electric Vehicles (EV) and solar stand to profit from the surge in demand.

In part from off-grid renewables, 1.2 billion people have gained access to electricity since 2000 – keeping the lights on for commerce, school, and family. In the U.S., job growth in the solar industry has been 17x faster than the overall economy and solar now employs more people than oil, coal, and gas combined. Energy use in buildings accounts for 39% of carbon emissions and there are now 32,000 buildings and plants in the U.S. certified by the EPA’s Energy Star program.

At the same time, more automakers are building zero emissions vehicles. GM, Volvo, and Volkswagen declared they would eventually end production of combustion-engine vehicles and shift to all-electric. EV adoption surpassed 2 million in 2017 and sales grew 30%.

Investable Opportunities

Investor demand and energy economics will continue to drive development of sustainable investment products. According to Bloomberg, global issuance of green bonds rose 67% to $163 billion in 2017. Along with increased adoption of Environmental, Social, and Governance (ESG) factors in security analysis, this has expanded the opportunity set for sustainable fixed income investment. Green bond issuers include corporations like Apple and Starbucks as well as states, municipalities, and Development Finance Institutions such as the World Bank.

More fund managers across all asset classes will continue to incorporate ESG factors, divest fossil fuels and invest in innovative environmental solutions. Companies working in pollution control, water management, energy-efficiency, non-toxic chemistry, sustainable transport, packaging, agriculture, and forestry should attract more capital. Meanwhile, new technologies such as Blockchain could enable distributed energy trading thereby reducing transaction costs, creating smarter energy grids and accelerating renewable energy investment.

The transition to a low carbon economy is not without challenges, but companies that embrace their role in the evolution will prosper from the emerging ethos of long-term sustainability.

November 5, 2017

Addressing Climate Change: The Role of Venture Capital

By Dave Kirkpatrick, SJF Ventures

Being a successful venture capitalist involves backing great entrepreneurs and helping them scale. Those activities are also important in fighting climate change.

Venture capital firms can identify and commercialize climate solutions that have an impact for the long term. That’s what my firm, SJF Ventures, has been committed to doing since 1999. We’re pleased others have joined us along this journey full of opportunity and risk.

In fact, many Silicon Valley VC funds eagerly entered the cleantech space several years ago, but stubbed their toe and exited the field. Most of these cleantech VC losses were concentrated in capital intensive companies developing solar modules and biofuels. These companies ran headlong into low-cost Asian solar manufacturers and dropping oil prices.

Yet all along the way, whether it be called ‘sustainable’ or ‘cleantech’ or ‘greentech,’ thoughtful investors have continued to place capital in companies providing climate solutions. These ventures have developed innovative business models utilizing IoT (Internet of Everything) tech, SaaS platforms, online marketplaces, and innovative chemistry and modular technology.

The Opportunities In Solar

A key focus of ours is investing in solutions that produce much higher levels of renewables, which can contribute to the resilience and reliability of the electric grid. These solutions are showing a path towards a carbon-free energy system through the combination of renewables, energy storage, smart grid, demand response, and electric transport.

We believe there is a significant opportunity in ‘downstream solar’ deployment firms that can deliver lower cost power at utility scale. For example, groSolar, an early national solar developer and installer, was one of our investments back in 2006. The company built 500 KW to 30 MW projects across the country and now leads the distributed energy division of EDF Renewable Energy. Community Energy (CEI), an early wind developer that has gone on to develop hundreds of megawatts of solar projects in many emerging solar states – NC, GA, VA, MN, CO, PA, NJ, MA, and IN – was one of our investments in 2010. CEI is responsible for the largest solar project in the Midwest, north of Minneapolis (pictured above), and in Virginia.

Through groSolar and Community Energy, we saw the potential to scale the delivery of low-cost power to states across the country with a mandate to increase renewable sources of energy, as well as utilities and corporate buyers.

In late 2014, we invested in NEXTracker, which had developed an elegant, low-cost, modular tracking system that greatly improves the power production on utility solar plants. NEXTracker went on to be acquired in late 2015 by Flex and has scaled deployment of clean power globally, with installations in Chile, Mexico, India, Australia, Jordan, as well as the US. The company has reached 9 GW of renewable energy capacity installed, including the largest North American project, a 750 MW installation in Mexico.

NEXTracker is a great example of the export opportunity for U.S. firms under the Paris Accord to assist developing countries for the low-carbon transition. Recent developments show countries like India, where NEXTracker has already sold 1 gigawatt of trackers. India has canceled plans for coal plants and is committed to scaling low cost renewable energy generation.

In October 2015, we wrote 100% Clean Energy – the new Zero Waste. Since then, many more companies have committed to 100% renewable power, including Facebook, IKEA, Apple, Walmart, Starbucks, UBS, Microsoft, Salesforce, HP, H&M, Goldman Sachs, and GM. Solar and wind are often the lowest cost power option, cheaper than new fossil fuel power. We have some threats to the US solar industry, such as the Suniva/Solar World trade dispute that may result in higher solar panel prices by later this year. Long-term, the continued trend should be towards lower cost, reliable power.

Clean power reliability will be strengthened by the recent drop in battery costs driven by electronics and electric vehicles. Low cost batteries are enabling large-scale solar, plus megawatt scale energy storage, to become competitive with peaking natural gas plants that switch online when energy demand peaks.

There is so much more to be done in combating climate change, but we’re making real progress. If we can align policy consistent with the Paris Accords along with visionary entrepreneurs and investors, we can and must accelerate that progress.

Dave Kirkpatrick is Co-Founder and Managing Director of SJF Ventures.

Photo Credit: Bureau of Land Management. Used under CC BY 2.0 license.

April 1, 2015

Sustainability Is Not A Wind Farm Or Solar Array

By Anders Ferguson, Partner

Sustainability Is Something Much More: It’s A Worldview Based On Mindfulness And Interconnectedness

Sustainability is not climate change or local organic food.

Too often, those of us who care deeply about the sustainability movement tend to talk about it as a bright, shiny object – a new technology or the latest way to make the world a better place.

This focus on concrete outcomes is certainly good, but it commoditizes and limits the conversation and analysis about this critical issue.

The dilemma is easy to understand. We comprehend our world through sight and touch. Hence, the outcomes of our creative minds and hardworking hands are the easiest to see and experience as sustainable.

In fact, sustainability is a transformative worldview that is much more than new Teslas rolling off the assembly line, recycling or promoting impact investing. It is a mindset for seeing and changing our world.

What is Sustainability?

Sustainability is a deep understanding that everything is seamlessly and beautifully interconnected. It is rooted in a mindfulness recognizing that each of us, doing our own work in our own field, is connected to others and impacts others, even if we don’t see it or realize it. It understands that the process of creating new sustainable products and services is equally as important as the products themselves. A critical Yin and Yang for innovation.

Sustainability also accepts the responsibility to act and build a thriving world for our children and many generations to come. A big task. A lot of real wisdom is needed.

Specialization has produced unprecedented knowledge that has benefited us all. But we often lose sight of the whole. Typically, one group working diligently on one problem isn’t really concerned about the broader implications to the rest of the world – and the unintended side effects.

Fossil fuel is an illustrative example of our siloed thinking. Fossil fuels were intended to help society be more productive, but more than 200 years of their use has had unintended global consequences – climate change.

Even at Veris, in our daily work with clients, we also too easily speak of sustainable products and services and the global challenges we have to solve as sustainability itself. The reality is that they are actually the results of thinking and acting sustainability.

A Unified Worldview

Sustainability, then, is about looking at the world as an interconnected whole.

It’s about connecting the dots – uniting different branches of knowledge to produce solutions that transcend an atomized world, while refusing to be blind to the negative impact that one group or industry may have on others.

Put another way, the external world is a reflection of our inner selves: “How’s your Inner Climate changing?” If we are mindful and see the interconnectedness of all things, then the animating spirit of sustainability is present.

It’s not until we are one with ourselves – that we experience life holistically – that we can conceive of new ways of organizing ourselves and society that we unleash innovation.

A New Mindset: Moving from the Tangibility of a Prius to the Open Mind of Interconnectedness

By operating with the belief that all things are interconnected, we unleash creativity and enhance the performance of individuals. In essence, we dissolve the artificial barriers that divide one branch of knowledge from another, and begin to perceive the negative and positive results of our actions and decisions.

Interconnectedness also inspires individuals and companies to build new “mindfulness-based operating systems” that nurture and cultivate both the organization’s and our well-being. The common thread in these new systems is that they fully respect and appreciate human beings, nature and their potential.

Some of the world’s most sophisticated companies are already starting to operate with this mindset.

BlackRock, the largest financial firm in the world, and the CEO of AETNA, the health insurer, are embracing mindfulness and interconnectedness as a business strategy. They are encouraging their 70,000 combined employees to think about and practice, their own work and health with mindful intent. Toyota has done the same. The Japanese carmaker imagined the Prius years before it was prototyped or the market was ready. Unilever is transforming global consumer products by putting sustainability first throughout it interconnected global brands and operating companies on the ground in nearly every culture in the world.

Impact investing is another expression of sustainability. Impact investing funnels capital to people, ideas, projects and companies whose work seeks to develop human potential and preserve the sanctity of the planet for its own sake and the sake of generations to come.

Sustainability Inspires Progress

Our world faces huge, some would say life threatening challenges. Arguably most have been created by humans. Now it is our responsibility to undo the damage and create a flourishing future. By creating systems empowering our “sustainable minds” we are giving intelligent people the freedom to create unique and world-changing outcomes.

“Sustainable minds” and systems create breakthrough innovation, holistic analysis and action. They reimagine supply chains, create products we really need and build companies creating real value for shareholders and stakeholders. They give people the freedom to act and dream big for the common good.

This is why the artist is as important to creating deep sustainability as the engineer, impact investor or the organic farmer. The multi-dimensional nature of sustainability demands everyone’s contributions.

It may be hard for us to truly believe it, but at its heart, sustainability may be as simple as changing our minds.