IBITDA, amortization, price discrimination, stocks, bonds, capital… As an engineer and non-profit manager, all this is wonderfully new to me. The Saïd Business School at Oxford University has all this plus Shakespeare, Sartre, genomics, international intrigue, mathematical physics, speakers from around the world and more and more. The depth of academic firepower, cutting edge thinking and variety of geniuses, experts and eccentrics of all types leave you with the impression that the world of smarts is sloped and smartness rolls downhill to Oxford (civil engineers see everything in terms of gradients and flows…). It’s truly a humbling and unbelievable honor to be able to study here. And equally and energizing one. As Sabre outlined earlier, every day we are presented with a hundred opportunities to connect with amazing individuals, partake in events that expose us to fields new to us or expand our understanding of those we know. We are engaged now in an exercise of choice: how do we spend our time here? Where do we focus our efforts and what doors do we fight to open and which do we close?
I’ve been an entrepreneur my whole life – at a very early age I remember selling “magical bouncing pine cones” with a friend to others in the neighborhood. Just as fervently, I’ve always been an environmentally focused person – I remember at four cursing out the developers who leveled the woods I used to play in behind my childhood home to put in a sub-division. In my undergraduate schooling and subsequent career I married these two as much as I could delving into renewable energy and green building. At Sherwood Design Engineers, we built a truly 21st century engineering company, founded on the pillars of solid engineering, collaborative design and ecologically sound solutions. We did this through a series of day-to-day choices to not just serve our client’s engineering needs, but to educate them and work closely with them to push as much environmental thinking into each project as we could. To extend our mission further, we formed a non-profit, Sherwood Institute, through which we spread the gospel of sustainable infrastructure. While Sherwood Design Engineers wasn’t specifically created to solve the world’s environmental problems, these certainly became true social enterprises; businesses that made a substantial difference (as well as a profit in SDE’s case).
At Saïd, I’ve now been formally exposed to and will have the chance to study social entrepreneurism: businesses created to solve specific societal problems from the word go. In some particularly exciting examples like Bridges Ventures, market gaps, like insufficient low cost elder care housing or social issues like prisoner rehabilitation are specifically targeted and businesses are either found or created to fill them. These purpose-built, for profit businesses are what I’m starting to see as a second type of social venture – a step more deliberate than the co-missioning of an existing venture.
The next type I’m curious about is the large businesses that weren’t built for sustainability but might be turned the way Sherwood turned full force into sustainable design, making it a core tenet. I couldn’t be more excited to work through the Skoll Centre and the host of professors, peers and contacts who have worked in that capacity at various companies to learn more about this type.
The final type of for-profit social company I see as the Holy Grail that doesn’t yet exist: a fortune global 50 leviathan built specifically to solve a major global issue – and make a profit doing so. Imagine the Exxon of carbon-sequestering energy. With the amount of motivated, brilliant, truly excited people I’ve met here in the last few weeks from every sector, from finance to operations to field warriors, who have flocked around the Skoll flame so far, I now feel that the coming of this type of company is a when, not if, and I couldn’t be happier for it!
It’s interesting to me that when people sit down to talk about a socially entrepreneurial solution, pill there is always some initial discussion about what exactly social entrepreneurship means. Sure, it can be nebulous and complex, and the clarifying discussion is important.
But for me (who believes social entrepreneurship boils down to purpose, market orientation and system disruptiveness), I’d rather just dive straight in with the entrepreneurs getting things done.
After our most recent Skoll Centre Speaker Series, I think it’s fair to say Tim Helweg-Larsen would agree. Tim, the founder of EnergyBank, shared his personal priorities of combating climate change through renewable energy. It was great to see how Tim has put those priorities to work as the driving force behind EnergyBank.
EnergyBank envisions a Europe-wide market in energy-bonds, backed by renewable assets and owned by the people and businesses that use them. In short, customers are turned into investors/owners and capital is unlocked for renewable energy sources.
Why this make sense
1) When customers become investors/owners they future proof the costs of their energy. Production costs charged by traditional systems are avoided. This makes a big difference when you think about monthly average energy consumption and rising costs! Plus any extra energy produced by customer-owned renewables can be sold for profit.
2) Do you know how much an off-shore wind farm costs? Trust Tim, it’s a lot. EnergyBank’s system could raise enough capital to help build such renewable infrastructure. (It’s great for the average Joe who wants to fight climate change, but doesn’t have 1 billion pounds lying around.)
3) It’s good for the environment (more renewables mean less fossil fuels), customers/owners, and business.
With so much common sense embedded in EnergyBank, it seems simple. It makes me think, “why haven’t we just done this already?” But I think we all know (including Tim) it’s going to be very challenging to change the existing energy system. All the “wrong” things are incentivized. Plus it’s complex, multi-faceted and been functioning “happily” for several decades. Think about the “people factor” and it becomes even trickier. For every one of someone who thinks like me, I’m sure there are 100 of those who say, “why should we do this?” Pile on the fact most energy users probably don’t even think about the system to begin with, and you’ve got an idea of how much work needs to be done.
Nevertheless, it was great to hear Tim’s commitment, priorities and progress thus. With a strong purpose, market orientation and serious potential for disrupting the system, I’m sure EnergyBank will have us all saying “why didn’t we do this sooner”.
Meteos, through its EnergyFutures project, is working to map perspectives on how to change our deeply embedded energy system. How do you compel businesses and their investors to reconceptualise what the future of their industries- and their investment portfolios- will look like in the next 20-30- years?
EnergyFutures, an investor-led dialogue, brings together companies from across the energy, utility and automotive sectors to explore the long-term value drivers that will reshape their industries. This space for discussion brings to light some interesting themes, and often conflicting views.
Most interesting to me was how Becky and her team frame the dialogue not about climate and environmental responsibility per se, but about financial bottom line. For example, a company is valued at x, but in pratice, if a climate policy caps the production of one of their assets, then their full valuation can never be realized. Fund managers, then, are taking a second look at the reality of their investments and valuation, which clearly have a trickle effect into changing the system. The context that sticks with fund managers and senior company executives is around maintaining stable and predictable returns from energy investments in an uncertain operating environment. Ultimately though, this translates into significant impacts for the future of energy, conceptualised both equitably and sustainably.
Becky shared humbling facts and posed challenging questions:
We are struggling to meet milestones of current International Energy Agency (IEA) climate scenarios. If we keep doing business as usual, we’re looking at a 6 degree (!!) increase in temperature worldwide
The cost of energy is rising. Who carries the burden of this cost? And who has access to begin with?
Climate change is impacting infrastructure, which is under extreme pressure to meet demand and may be on the verge of collapse. Impacts in infrastructure in turn impacts investment portfolios.
Reinsurers are requiring insurers to have more cash on hand to cover a 1 in 200 year catostrophic event. Investors are waking up to the reality of climate change.
What are the game changers? What is helping move the system in the right direction?
Safety and insurance requirements
Removal of oil and gas subsidies
Public investment in energy efficiency and innovation
With all the complexity surrounding the issue, we’re glad to see the major players coming together in dialogue. It seems that change is imminent, but the question is how will happen? Admittedly, Energy Futures is just one player in the wider ecosystem of climate change agents, but as Becky says, EnergyFutures is giving companies and investors the “wind in their sails” needed to transition our destructive system into a sustainable one.
It’s not a topic you would usually think elicits much inspiration. (Nor be a fitting topic for a discussion over lunch!)
But last week, order Albina Ruiz opened up our eyes to the incredible potential of leveraging this dirty business into transformational change.
Albina Ruiz, ailment the Executive Director of Ciudad Saludable, buy visited us from Peru. She shared valuable insights on how Ciudad Saludable has helped small micro entrepreneurs build a community-based waste management system whilst improving the social and environmental status quo of communities.
So what is the key to their success? Obviously, there are many factors. But her main insight: you need a holistic approach.
Almost a decade ago, Albina and her team saw a large problem: public- sector solid waste disposal services in Lima were not functioning. But they realized if they could flip this gap into an opportunity, they could create employment for local citizens whilst providing a public service for the community at large.
Today, Albina works across the board with social leaders, local and national governments, waste collectors, teachers, the media, and communities at large. (And of course don’t forget the ever important change agents at even the smallest levels, e.g. mothers.) In the process, Ciudad Saludable has changed national policy around sanitation and waste collectors rights, provided educational training (about waste, health and the environment), and generated serious profits, for government and families alike. What started as a small initiative in Peru has now been scaled to several countries in Latin America and most recently in India.
With an approach like this and tremendous results in scaling successfully, it’s no wonder that Ciudad Saludable has won several international awards. It’s a model, I believe, that has the potential for even greater adoption. As mega-cities around the world continue to boom, Ciludad Saludable shines a light on how to build sustainable cities, in terms of its public, environmental and financial health.
There is no denying the prevalence and prominence of the impact investing discourse these days. A hot topic? Absolutely. A brand new conversation? Not even close.
So, when you can hear from one of the early pioneers of the industry, it is always insightful.
This week we hosted Tammy Newmark and Michele Pena of EcoEnterprises Fund who joined us as part of the Skoll Centre Speakers Series. They have been investing growth capital in sustainable businesses in Latin America for over a decade – and have the battle wounds to prove it.
Not that it’s been all setbacks and scars — but because they simply are open and transparent about the challenges they (and other risk-taking impact investors) have faced over the past 10 years.
Set up in 2000, EcoEnterprises Fund provides long-term investment capital and business advisory services – one without the other would be ineffectual and downright bad business, they say. The Fund has invested in 23 companies from ecolodges to organics, sustainable forestry to aquaculture. Most of these investments have been wildly successful (20 companies still in operation, 11% p.a. return, and most importantly, measurable social and environmental impact) but of course, there have been challenges.
Which is no surprise, seeing that they are injecting risk capital into companies that are, well, risky. They bet on the companies that are first-movers and market makers, whose products and services have yet to gain market acceptance. As such, they are cultivating new demand and a vibrant marketplace that moves these eco-enterprises from the outskirt to the mainstream.
What’s next for EcoEnterprises Fund? Be on the look out for their book this fall called “Portfolio for the Planet”, which is an open playbook to their tools, indicators and investment cases. Also, they are currently raising $30 million for a new fund EcoE II, which will target 10-12 small and growing community-based businesses via mezzanine investment instruments.