Highlights from the 2009 Net Impact Conference at Cornell

For me, the best parts of this year’s conference were in the facts shared that drive home ways to profit from sustainability as well as facts that shine light on growing market needs for the future.  I will share a few:
1)    Jeffrey Immelt, CEO of GE, shared that in 1982 10% of US GDP was related to financial services and by 2001 had grown to 45%.  He said the way forward is for the US to become an exporter again, this time of high tech products that emerging markets want to buy to develop sustainably.  He also said how important venture capital is to the economy and how little VC money is being sent to renewable energy.  Perhaps his best statement was that the rest of the world isn’t waiting to innovate and now is the time when we determine if energy jobs are created here or abroad.
2)    The “getting beyond socially responsible investing panel” was the highlight of the weekend for me (at least professionally).  The lineup included:
•    Peter Knight of Generation Investment (Al Gore’s PE firm)
•    Greg Larkin of RiskMetrics
•    Bruce Kahn from the Climate Change Advisors Group at Deutsche Bank
•    Mark Fox of GS Sustain (i.e. Goldman Sachs)
•    Paul Hilton of Calvert
The moderator was my former colleague and friend, Paul Herman of HIP Investor
Some quick bullets:
• There’s a new fund from Parnassus Investments that weights the Fortune 100 best places to work in an index fund that has a 12.5% alpha, proving that the way you treat your workers affects your profit and that investors can produce excessive returns based on public information (take that efficient market believers)
• HIP Investor has a S&P 100 index weighted for sustainability (ranked with factors like transparency, environment, and level of diversity throughout the organization) with a 7% alpha.
•  75% of CEO’s refuse to take on a + NPV project if it hurts their quarterly earnings.  All panelists echoed the need for longer term thinking from both investors and management.
• The leading edge of sustainable investing is with high net worth and private wealth management because they have the luxury of long time horizons that are needed to realize the excess returns that are possible.
• 50% of the S&P 500 are now reporting significant ESG metrics according to Paul Herman.
•Bruce Kahn from Deutsche Bank said that both Calvert’s shareholder activism and other environmental/social activists deserve a big thank you for pushing the sustainable investing movement ahead by increasing transparency and forcing companies to understand that this can affect their bottom line.
• Stu Hart’s, UNC CSE alumni, new book, “Capitalism at the Crossroads” is a must read for the sustainable investor.
• Depending on the price of carbon in the future Exxon has between 8% and 30 % of their profit at risk.  They are the second least efficient refiner of oil in the United States and eventually this will hit their bottom line either with increased capital expenditures or paying for carbon credits/tax.
• A couple of other sites to check out for more info:
Trucost
HIP Investor
Sustainability Consortium

All in all it was a great event and I look forward to 2010 at the brand new LEED certified Ross School at the University of Michigan, the only place they could find that will be colder than Ithaca in November.

Lee Coker

Class of ‘11

Net Impact Conference Update

UNC Kenan-Flagler has a multitude of resources available to students, including the Career Management Center, the Business Communication Center, Peer Counselors….need I say more? Perhaps the most impressive list is the array of career clubs available to first and second year MBA students. From Golf Club to Consulting Club, you are certain to find your niche at Kenan-Flagler.

I came into the program with a very specialized interest that is not too common in the world of i-banking and finance. I chose Kenan-Flagler based on its sustainable enterprise program in the hopes of securing a role with a socially responsible organization committed to international development. There are many of “unique” students in the class of 2011…our career club of choice? Net Impact.

Net Impact is committed to providing the educational and career resources to students and professionals around the world interested in sustainable careers and continued education. Various events include speakers, career treks, and most recently, the Net Impact Conference. More than 20 Kenan-Flagler students flew to Ithaca, NY for this year’s 17th annual conference. Over 2,000 individuals from various backgrounds gathered together to connect with like-minded people, explore sustainable careers, and learn about an array of inspiring and relevant topics. For some, it was renewable energy. For me, it was social wellness and development. For all of us, it was imperative.

Understanding our global economy requires more than currency exchange rate knowledge or cultural differences awareness. While both ideas are important, none establish the reality of connectivity among a diverse population. The jam-packed two days offered new insight and perspective into subjects that are imperative to consider as we move into 2010. Whether or not you are a member of the UNC community, maintaining a keen awareness of today’s concerns will provide solution-based innovation for tomorrow’s needs.

Parker S.Wilson
Class of ‘11

Net Impact Session: What is the Smart Grid?

This past weekend, I went with about 25 other UNC Kenan-Flagler MBAs to the Net Impact annual conference, which was up at Cornell in Ithaca, NY.  Over 2000 people attended the conference, which had great speakers such as GE’s CEO Jeffrey Immelt and Grameen Foundation’s head Alex Counts.
My favorite session of the packed two-day conference was entitled, “Innovations in Electricity: The Smarter Grid of Tomorrow, Today”, and had the following three expert panelists:
•     Ted Howes, Global Lead of Energy Domain, IDEO
•     Cameron Brooks, Senior Director, Tendril Networks
•     Michael Jung, Policy Director, Silver Spring Networks

IDEO is a leading product design firm, while the other two companies are emerging firms with demand-response technologies that help make our electric grid “smart.”
Defining the “Smart Grid”
Before jumping in, the panelists defined the smart grid.  To paraphrase, the panelists described the smart grid as “the confluence of information technology into the electric sector.”  It is bringing networking technology, which already exists, think internet and telecom, to all the devices (e.g., microwaves, refrigerators, air conditioners) linked to the electric grid.  Networking technology could help utilities and customers better understand the needs of end-consumers so that electricity use can be lowered when power is not needed, and provided when it is.
Using network technology to create a demand-response system could substantially reduce future energy demand.  By demand-response, the panelists explained that when power use is high across a utility’s user area – typically during the afternoon – lights and other devices could be turned off or reduced in houses, stores or buildings.  Target, among others, already uses a demand-response system to dim lights in their stores during peak times.  According to a recent Dept. of Energy (DOE) report, building out such a system across the U.S. could reduce energy needs by about 30%.
What would a 30% reduction in energy requirementss mean for the U.S.?
With our current energy infrastructure, according to the same DOE study, energy demand/use will increase 30% over the next years, which means we would need to build 188 GWs in new generation (that’s about 188 coal plants!).  Smart grid could eliminate this need by using network technology to better gauge demand, and then respond by providing only the electricity needed by end-users.
The transformation will not be easy, because of regulatory and technical challenges (we haven’t toyed with the grid in 100 years!), but it’s doable.  Reducing the need for the equivalent of 188 coal plants sounds like reason enough to try.

- Michael Chasnow

Class of ‘11

Renewable Energy and the Wild Wild West

On Tuesday, five UNC Kenan-Flagler MBA candidates traveled to Washington, DC for Novogradac’s annual Renewable Energy Finance Conference.  I’ve wanted to transition into the renewable energy space for quite some time; however, during my experience at business school, I have learned just how important finance is to getting renewable projects off of the ground.  With this in mind, I was excited to get my finger on the pulse of renewable energy finance on Capitol Hill.
The conference was both informative and social.  I learned about the current tax credit options available and made a couple of leads that could turn into internship opportunities this summer.
The general sense of the conference was that the rules of renewable energy finance change frequently, and remain convoluted consistently.  People were not down on the industry (except for the tax equity investment folks who looked downright beaten); however, they agreed that it was overwhelmingly complex.  One quote stood out:  “The renewable energy space is like the Wild Wild West.  It’s fun, but it’s not easy.”
Three primary financial models were covered at the conference.  They include:

•    Inverted lease
•    Lease sale-back
•    Flip Partnership

It is important for anyone interested in renewable energy to understand these models since they provide substantial value to renewable energy projects.  They are complex, but must be understood.  They are a direct result of current policy; therefore, they are immediately relevant.  In short, they are necessary for anyone who wants to enter the renewable space.
Rather than attempt to re-explain them, I recommend reading more about them from the experts here.

-Joel Thomas

Class of ‘11

Careers in Sustainability

On Friday, October 23, a panel of local entrepreneurs and VCs spoke about careers in sustainability.  Cody Nystrom of SJF Ventures served as our moderator, and members of the panel included:

Robert Creighton of Windlift
Luke Fishback of Plotwatt.com
Henry McKoy of Fourth Sector Bancorp
Bret Batchelder of Cherokee Investment Partners
Tina Prevatte, NC Choices
Shawn Slome, Twig

We had an impressive panel to close out the day with several seasoned entrepreneurs that have both founded their own companies and led success at bigger businesses by thinking entrepreneurially.  Some of the highlights of what these innovative folks shared with us is below.
Bret walked us through 4 things he thought every MBA should do:
1)    Take an honest assessment of your skills and ask what your objectives are you trying to ascertain and what building blocks will you need to find success.
2)    Find and understand your passion. It doesn’t have to be the first thing you do out of school but be driving toward it.
3)    Don’t feel bad about taking a job that pays some cash, pay off your loans, and then go entrepreneurial.
4)    Don’t be afraid to take on short term projects in a down economy.
He added that if you come from a diverse career background that can be seen as an major asset in financial institutions  right now because they need the creativity and intellect that can come from someone looking at a problem with a different mindset.
Henry McKoy had equally interesting career advice:

1)    Be a T-shaped person!  Have a solid base of knowledge with a wide range of interests and capabilities in other fields. 2)    Ask yourself what you would want to do (work wise) if money didn’t matter and then do it.
Overall, all the panelists shared a deep interest in how things worked and ways to make things better, which I see as a key to successful entrepreneurship.  Be sure to check out the web sites of the companies that presented, they are all very interesting.
Lee Coker

Class of ‘11

Job Skills in a Carbon Constrained World

Last week the Energy Club here hosted another excellent event.  Kristel Dorion, a graduate of the Executive MBA program, and John Lott, a professor of sustainable enterprise at Kenan-Flagler, conducted a presentation about the always near carbon market.
Kristel’s company, Energetix Climate, produces high quality carbon offsets in Latin America.  She is originally from Guatemala City and is working on both small scale hydro and methane capture projects in both Guatemala and southern Mexico.  She has been trying to combat climate change since the Rio Summit in 1992 and has a wealth of experience working on the juxtaposition between climate and sustainable development issues.
As a person interested in both impact investing and climate change I have always wondered about the shareholder value that carbon offsets create.  I recently did a research project with HIP Investor analyzing different grocery stores commitment to sustainability and how it was proving more profitable than business as usual.  However, the one exception was Whole Foods who offset 100% of their energy use with wind energy offsets.  I asked Kristel about this and she suggested that it was an investment that Whole Foods hopes to cash in on when there is a carbon market in the United States.  She also mentioned that the recent House version of the climate bill (Waxman-Markey) included a provision that said offsets created before 2009 were invalid.  It’s not that I am anti-offset, but from a shareholder perspective I would far prefer an investment in renewable energy infrastructure or efficiency (put some doors on the freezer section already)!
Regardless, Kristel had an amazing amount of resources for us to check out, including: McKinsey’s Climate Change Special Initiative, Point Carbon, Greenhouse Gas Protocol and  Advancing Sustainable Prosperity.
Finally, my favorite point that she made: Carbon should be measured as a financial risk and required for disclosure per Sarbanes-Oxley.  For all you I-bankers out there, I learned the other day that you can now track the amount of Carbon a company puts out through our Bloombergs in the Capital Markets Lab.  I think if you don’t count it (especially for energy intensive industry) your valuation is weak.
Lee Coker

Class of ‘11

Defining Energy Independence and Causes of Global Warming

On  Oct. 30th, Brett Carter, the President of Duke Energy – Carolinas, visited UNC Kenan-Flagler for a discussion with MBA candidates around Duke Energy’s role regarding climate change.
Carter was an excellent presenter, and while I disagree with some of his positions, he guided the conversation in an incredibly skilled, productive manner.
Before digging into Duke Energy’s strategies to mitigate climate change, he raised the question, “How do we define energy independence?”  One student proposed that it means the ability for America to generate all of its energy within its own borders.  Another student expanded the definition to mean the freedom to generate energy.  To me, the second definition is a more plausible scenario; however, it sounds more like energy security than energy independence.   With this in mind, perhaps energy independence misses the boat, and we should reframe the discussion around energy security.
Carter also raised the question around climate change, and specifically, humanity’s contribution to climate change.  He polled the group whether or not we thought climate change was part of a natural global heating trend.  No one raised their hands, introducing a little tension into the room.  The awkwardness was eased a bit when one student commented that climate change could be caused in part by humanity and in part by a natural heating trend.  Following this, Carter commented that humanity was most likely contributing to climate change, but it was difficult to decipher exactly how much.
On this final point, I disagree with Carter.  Humans are the primary contributor to climate change, not a natural heating trend.  While we may not know exactly how much, it hurts the world’s ability to curtail global warming when introducing doubt regarding humanity’s impact into the equation.  Just last night, I attended a lecture by a Nobel Prize winning scientist, who depicted the causal relationship between carbon dioxide and climate change with the support of reams of evidence.  Carbon dioxide is the 800 lb greenhouse gas in the atmosphere, and it is clear that humanity is well on track to double, and most likely triple the content of CO2 content in the atmosphere before industrialization.
Duke Energy’s primary driver remains the provision of cheap energy.  And this is exactly what they are supposed to do.  First and foremost, today’s presentation reminded me that changing the world’s  carbon orientation must begin with policy, and that policy must include all countries.
On a related note to this final point:  In a presentation earlier this week, Kristel Dorion of ENERGETIX mentioned a course on systems thinking taught by Drew Jones.  During the course, students are asked to represent different nations and build a protocol for mitigating climate change.  When played out, the scenarios demonstrates that countries categorically underestimate the size and speed of the actions they need to take.  Professor Jones has been recruited by the United Nations to inform international climate policy.  Not only is UNC part of the climate conversation, we are directly impacting it.  Pretty cool stuff.

Joel Thomas

Class of  ‘11

Trends in Green Building

Last Friday was my third Career Forum. I’m not an alum called back to talk about my career path, nor a dual degree MBA student, but a staff member at Kenan-Flagler in the Center for Sustainable Enterprise. As an old hand at this, I must confess that I was blown away by the level and depth of discussion the Green Building panel of 7 was able to delve into in the hour and 20 set aside. Following is a snapshot of participants:
•         Lynn Fisher, moderator, associate professor of real estate at Kenan-Flagler Business School
•    Jessica Halvorsen (UNC MBA ’07, Duke MEM ’07), Bank of America, VP in BofA’s Corporate Workplace Sustainability Team
•    Annie Lux (MBA/MRP ’07), Pulte Homes, Strategic Marketing Manager for the southeast region
•    Gordon Merklein, Executive Director of Real Estate Development, UNC
•    Allison Moy (MBA ’07) Greenfire Development, Development Associate
•    Jonathan Philips, Managing Principal of Anka Funds and General Partner of Cherokee Investment Partners
•    Brad Wood  (MBA ’04), Progress Energy, Sr. Program Specialist
Here are my top take-aways  from the panel:
Internships and connections made during the MBA career search all have significant impact on where people land.   Jobs in this space have evolved to require both whole systems thinking as well as specialization in order to be successful
Trends from each panelist:
a.       Gordon – The US Green Building Council and LEED are refining themselves. You now see communities adopting green strategies as code. Institutions, like UNC, are committing to sustainable green building practices, and investors are starting to look beyond 10 year cash flow positions to what is sustainable for a development.
b.      Annie – During the real estate boom, green wasn’t big except in the top 5% of the wealth market who were willing to pay. Builders found that with very few changes, something could truly be green and that created a differentiated space when the squeeze hit – energy efficiencies allowed builders to compete on green standards. Up next, will be marketing and educating to general consumers on the higher quality and longer-term cost effectiveness of green standards.
c.       Jessica – Operations will take a bigger role with sustainability becoming less about building new LEED-level structures and more about retrofits and obtaining efficiencies in existing spaces.
d.      Allison – Green building has forced people to a convergence ponit.  Cities and municipalities are now giving incentives for sustainable buildings. Changes in building codes have allowed new sectors to look at green building, bringing historic codes, building codes and environmental considerations together.
e.      Jonathan – 1.) You hear about Echo-boomers moving to city centers and vacating suburbs – is it really true? Keep your eye on this. 2.) Making homes cost effective, aesthetically pleasing and with convenience. 3.) Green finance: the next step to take is for the lending industry to view green standards and sustainability as a profit center rather than something to be tolerated for the time being.
f.        Brad – The grid will have to experience significant change to address what is coming: increased capital costs, increased population, volatility of the market, huge increase in electricity demand. Energy efficiency is where it is AT right now.
My greatest complaint is that an hour and 20 minutes wasn’t nearly enough time to further explore some ideas like green finance, stimulus money and code revisions. Kudos to Net Impact for putting together a great group and the bar is sitting pretty high for next year’s event!
Tracy Triggs-Matthews

Center for Sustainable Enterprise

Sustainability Forum

On Friday, October 23, KFBS hosted the 8th Annual Careers in Sustainability Forum.  The forum consisted of a series of panels around numerous types of functional roles in the world of sustainability.  Each panel consisted of roughly six practitioners.  The roles covered by panels included:
•    Renewable Energy
•    Green Building
•    Entrepreneurship and Venture Capital
•    Sustainabiltiy Consulting
•    Corporate Social Responsibility
It was especially encouraging to see that individuals can impact environmental and social bottom lines in a host of different roles.  In other words, it is possible to get the type of job you want, and have it be sustainably focused too.  This is a hopeful proposition for anyone entering the sustainability focused.

Joel Thomas (Class of ‘11)

The State of the Nation…

Well. As you can see, we’ve been pretty quiet here, and the last 2 weeks have been interesting, to say the least. I’m extra grateful that I don’t want to go into banking, and I feel sorry for my classmates who wanted to and are witnessing “The end of Wall St as we know it.”

My big hope is that the new Wall St will be a more socially responsible one. Wouldn’t it be cool if bankers went to work thinking “How can I contribute to the greater good today?” instead of “How can I get over?”
Yesterday we had this emergency presentation on the state of the economy and finance industry, and it was really interesting. One of the key takeaways was that the market is run on greed and fear. I try not to make decisions based on fear, but when the fear of millions of other people impacts me, of course I feel compelled to join them. So maybe I’m not as brave (or as upset over a drop in equity) as some. A good analogy might be if everyone’s running out of a burning building and throwing more fuel on the fire as they leave, do I stay and have faith the fire will stop in time? Or do I join the crowd and seek a safer place to wait for the firemen to put out the fire?

Anyway, I’m not a banker, just a hippie who managed to sneak in amongst them with a dream of making business more responsible from the inside out. Our workshop on Strategic CSR (That’s corporate social responsiblity) was extremely uplifting and helpful. She asked us what our greatest passions were, and when I named mine, then flew to Indianapolis to spend one day enjoying passion #1 (motorcycle racing), I thought and thought about how I can tie in my 2nd greatest passion and make a good living enjoying both of them.

I figured it out, and turned it into an Independent Study in Marketing which I’m hoping to present to a company making this product I so want to sell more of. Stay tuned to find out how it’s received…

Susanna Schick