“Where Are the Opportunities and Risks in Sustainability?

”
A Yale SOM Alumni Panel Discussion

Nancy Pfund ’82 Terry Kellogg ’00

Managing Partner Executive Director
DBL Investors One Percent for the Planet

Marc Daudon ’82 Jesse Johnson ’01

Principal Co-founder and CEO
C
Cascadia
di Consulting
C lti Group
G QCCollection
ll ti & Q Collection
C ll ti Junior
J i
 Where Are the Opportunities and Risks in Sustainability?

Or

Taking the “Stain” Out of Sustainability

Inaugural Yale SOM Webinar Panel

June 17, 2010

Nancy Pfund, SOM ’82

Managing Partner, DBL Investors
(with special thanks to Sarah Ham, SOM ’11)
DBL Investors: A Double Bottom Line Venture Capital Fund

DBL Investors has developed a differentiated and

successful “Double Bottom Line” approach to venture
capital investing

„ Commitment to achieving venture capital top-tier financial

returns
„ Proprietary approach to assisting portfolio companies in
deliveringg social, environmental and economic benefits to our
region
„ Investments primarily in clean technology, health care, and IT

1
Sustainability Remains Elusive

„ As Q7 eloquently demonstrated
demonstrated, sustainability
remains elusive
„ It
It’ss hard to define
„ It’s often controversial

„ It
It’ss seen as expensive
„ It’s subject to green washing

2
A Mindset to Make Sustainability Possible

Professor Robert Mendelsohn discusses the

economists’ belief that sustainability is achieved when
the marginal
g cost is set equal
q to the marginal
g damage
g

But, to borrow from Professor John Crowley’s utopian

and dystopian-themed article-

It’s not just about making the marginal cost of

avoiding
idi environmental
i t l dystopia
d t i accessible
ibl

It’s about marginalizing the mindset that says the

upheaval of a carbon-centric economy is utopian

3
Balancing Dystopian and Utopian Sustainability Notions

D t i
Dystopia Ut i
Utopia

„ Oil Spills „ Locavores

„ Floods & Hurricanes „ Farmers’ Markets
„ Toothless Climate Talks „ Solar-powered Everything

Sustainability is about finding a way to balance these two extremes

4
 Clean Technology: An Emerging Industry Built on Sustainability
Power Conversion Green Bldg and Clean Tech Project
Power Generation Transportation
and Storage Energy Efficiency Finance
• Fuel cells (Bloom • Electric vehicles
• Solar
S l (BrightSource, Energy, Backlight
Solaria, Solexant, (Tesla, Trexa, Coda) • Modular • Large-scale
Power)
Sunmodular) • Biofuels construction project finance
• Advanced (Renewable Fuels (ZETA, Project
• Wind batteries (A123, (Solargen,
Techs, Livefuels, Frog)
(
(Garden Energy,
gy, Amprius, Prieto Suntrough)
Propel Biofuels) • Energy
E efficient
ffi i t
Frontier Wind) battery) • Distributed PV
• Combustion and recycled bldg.
• Waste to energy • Power firming (SolarCity, SunRun)
(Environmental
engine materials (Calera,
(Primus Power, • Small-scale
Biomass Energy, Demand Energy
improvements Serious Materials,
Powerhouse Energy,
gy, (Zajac Motors, Vetrazzo, SSPco) project finance
Networks)
Clean Recovery) Transonic • Lighting (Adura, (Renewable funding,
• Mechanical: Combustion) Metrus)
• Wave/Tidal Superbulbs,
flywheel, Lumiette)
(Hydro Green
compressed air
Energy) Water • HVAC
(Pentadyne)
• Geothermal (Ram (Groundsource,
Core4 Systems) Smart Grid
Power) Green Indust Mats &
Manuf. Process • Water • Consulting
conservation (Ennovationz,
Carbon Mgmt & (Hydropoint) Recurve)
• Chemicals
q
Sequestration • Wastewater
(Bi Ch )
(BioChem) • Utility
Utilit (eMeter,
( M
• Carbon analytics • Packaging treatment (Blue GridSpeak, Viasyn)
Water Technologies, Recycling & Waste
(Planet Metrics, (Tesselated Group, • Commercial
Climate Earth, CSR Ecologic) BioPetroClean) Management (Dhaani Systems)
ware) • Semiconductor • Water • Consumer
• Carbon manufacturing purification (Zuvo • Recycling (eCullet, (roc2loc, Breezeplay)
sequestration (Nanogreen Water, Exergy PET Recycling,
(Carbon IQ) Technology) Systems) Cloudblue) 5
3
Age-old Complaint: Relying on Policy

„ Risk:
„ The Policy will never be perfect and is fluid

„ Opportunity:
„ Use consumer and investor pull to push policy in a sustainable
direction
„ Build on projections of energy shortfalls and recent events as
policy is driven by crisis
„ Make sustainable products “too cool to fail”

„ Examples:
„ Tesla’s $465 million Department of Energy Loan

„ BrightSourceEnergy’s $1.4 billion Department of Energy Loan

Guarantee

6
Building a Brand Tied to Social Movements

„ Risk:
„ We can’t make a sustainable dent–we can’t build significant
companies or powerful brands

„ Opportunity:
O t it
„ “Overnight successes” are exaggerated
— Cell phones, Netscape, Google
„ Audacity of entrepreneurs
— Elon Musk, Steve Jobs, etc…
„ Brands that tap into social movements are more compelling
— Sustainability’s “Facebook” is around the corner
„ Examples:
„ Revolution Foods
„ SolarCity
„ Tesla

7
Cost Savings Opportunities Driven by Sustainability

„ Risk:
„ Only the big companies can afford to be green and profit from it

— GE: ecomagination

„ Opportunity:
„ Start green, grow green and stay green

„ Example:
„ Labcyte
— Cost savings
— Increased sales

8
Technology and Talent to Build Sustainability

„ Risk:
„ We can’t make sustainability cheap enough

„ Opportunity:
„ We’ve only begun drawing talent from IT and other sectors into
green technologies
„ Examples:
„ Electric Vehicle Batteries-
Greater energy density:
— More range
— More scale
— Lower price
„ Solaria: Low-concentration crystalline silicon photovoltaic (PV)
modules use half the cell material for 30% cost savings
„ Solexant: Thin-film PV modules- nanopartical CdTe ink printed
in a roll-to-roll p
process for very
y low production
p cost/watt

9
Conclusion

„ The risks of not pursuing sustainability have never

b
been more apparentt

„ All sustainability investments may not work, but…

„ Once we get a few successful brands we will move

the carbon needle while creating business icons

„ This will accelerate the transition to a lower carbon

economy

10
WherearetheRisks&Opportunitiesin
Sustainability?YALESOMWebinar,June17,2010

MarcDaudon
Marc Daudon
CoFounder&Principal
CascadiaConsultingGroup
YaleMPPM1982
ProvidingSustainabilitySolutionstoPublic&PrivateClients

SServices
i
Strategy/Policy Sustainability
Research/Analysis
SocialMarketingg
ProgramMgmt ReducingGHG
emissions&adapting
toclimatechange

Minimizing Investing
Waste &
Waste& inClean
Toxics Energy PrivateClients
PublicClients Starbucks
WA,OR Kimpton Hotels
California BNBBuilders
ld
CO,WI,HI, Conserving Foundations
Seattle Biodiversity&Water Universities
King County
KingCounty Wastehaulers
LA,NYC,CHI IndustryAssociations
ActionPlansto
DriveChange
Toolsto Measure&TrackProgress
ProgramstoChangeBehavior
 Towardsamoresustainablefuture…
EarlyActionsTransitionMoreSustainable

Recycling &reduction Organicsrecovery Zero/BeyondWaste

50%by1995 Producer Responsibility
Pollutionprevention Toxicsusereduction GreenChemistry

SSustainabledesign
t i bl d i
Greenbuilding
Conservation&Solar
GHGemissioninventories
LEED
BuiltGreen
EnergyEfficiency
Renewable Portfolio Standards
RenewablePortfolio
ClimateActionPlans
LivingBuildingChallenge
Li i B ildi Ch ll
Netzeroenergy &wateruse
CleanEnergy/CleanTech
CarbonNeutral Strategies

Eco/resource
/ efficiencyy
Leanmanufacturing
Regulations/Mandates
CSRreporting;Supplychain
p g; pp y CradletoCradle
leadership;fulltransparency
Incentives Pricing&taxpolicy –
internalizingexternalities
 TheCascadiaSustainabilityIndex
Sustainability
related
RFPs,inquiries,
projects,
projects
competition

1990 2000 Thegreat 2010

9/11 recession BPoilspill

TheNatural Cradleto An Natural

LEED LEED LEED
Step Cradle; Inconvenient Capitalism
developed 1.0 Truth 3.0
Bi i i
Biomimicry

World Copenhagen
Bruntland Earth Kyoto
Summiton Climate
Commission Summit sustainable
sustainable C f
Conference
development
LessonsLearned

• Thekeyquestion Howtomakesustainabilitypay?

• Needed:Standards,metrics,tools,data.
d d S d d i l d

• Buildingmomentumandachievingsuccessrequiresaligning
i
incentivesandsignals,findinghorsestoride,andtargetingleverage
ti d i l fi di h t id dt ti l
points forchange.

• Business
Business,environmental,labor&communitystakeholdersoftenfind
environmental labor & community stakeholders often find
commongroundonsustainableoutcomes;butstalemateinthe
politicalarena onneartermactions.

• “Sustainability”intersectspolicy,politicsandbusiness– it’sthe
quintessentialYaleSOMlivecasestudy.

• Wehavealong,longwaytogo.
GoingForward– Risks&Opportunities

Risks “Dystopia” Wecan’t

affordunsustainability Opportunities– Unbounded…
• ApplyingITtoachieve‘factor10’
resourceproductivity
The Path We Are On
• g
Unleashingcleantech
• Establishingecosystemmarkets
Resource
Capabilities • Partnershipstocreate“greenjobs”
(Diminishing)
& efficient infrastructure
&efficientinfrastructure
AMOUNT
T

CHAOS

Demand
Ifweaddressthe basics…
(
(Increasing
i
Exponentially)
• Apolicyframeworkthat
TIME rewardssustainability
Adapted from The Natural Step, 1996, used courtesy of EKOS
• “Gettingpricesright”
• Caponcarbonemissions
• Ethics/culture
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PEOPLE SAFE. PLANET SAFE.
c h i l d r e n ‘s f u r n i t u r e & b e d d i n g
PEOPLE SAFE. PLANET SAFE.
prohibited chemical list local & certified wood
external review & approval made in the USA
3rdd party certification 100% biodegradable packaging
FORMALDEHYDE - FAR EXCEEDING THE STRICTEST STANDARD

The U.S. does not regulate

formaldehyde in furniture. Q Acceptable formaldehyde levels:
Collection Junior relies on 3rd party, - CA’s regulated maximum level < 0.21 ppm
health-based criteria developed by - Greenguard - safe for adults < 0.025 ppm
Greenguard Environmental Institute g
- Greenguard - safe for children < 0.0135 pp
ppm
- Q Collection Junior cribs < 0.001 ppm

Q Collection Junior's cribs are the first and only

cribs certified to be
‘free of indoor air pollution concerns’.
concerns’
LEAD - FAR EXCEEDING THE STRICTEST STANDARD
High
g levels of lead exposure can cause
coma, seizures and death. Even a little
lead can make children slower learners. CPSIA regulation goals for lead in children's
products:
- today 600 parts per million (ppm)
- by end of ’09
09 300 ppm
- by 2011 100 ppm

Q Collection Junior's cribs do not register lead in independent testing…

onlyy children’s home furnishingsg companyp y making g this claim
and backing it up with 3rd party testing.
CERTIFICATIONS & ENDORSEMENTS
 1% for the Planet exists to build and support an
alliance of businesses financially committed to
creating a healthy planet.

©2008 1% For The Planet

1
 1% is for the planet what Komen is to cancer and what
(RED) is to AIDS: a brand that inspires loyalty and action
action.

©2008 1% For The Planet

2
 The 1% movement has grown rapidly.

©2008 1% For The Planet

3
 Members
M b iinclude
l d bbrands
d th
thatt h
have consistently
i t tl sett th
the standard
t d d ffor
responsible business practices. Large companies like Johnson and
Johnson, Diageo and Volcom currently participate at the brand level.

©2008 1% For The Planet

4
 Awareness off 1% has
A h been
b driven
di by
b a wide
id range off sophisticated
hi ti t d
marketing initiatives in addition to support from these media partners

©2008 1% For The Planet

5
 1% for the Planet: The Music, Vol. 1

More than 40 artists contributed rare or exclusive tracks to produce

the first album dedicated to a healthy planet. It debuted in 2010 at #1
on Amazon’s
A ’ MP3 chart.
h t

©2008 1% For The Planet

6
 Award
A d winning
i i ads d have
h broken
b k the th mold
ld for
f sustainability
t i bilit messages and
d
helped drive increased levels of awareness and support for 1%
©2008 1% For The Planet
7
 O film,
Our fil ((one percent)
t) off th
the story,
t will
ill see widespread
id d on-
line and offline distribution in 2010

©2008 1% For The Planet

8
©2008 1% For The Planet
9
 Thank you for joining us.

This discussion will be posted online at:

alumni.som.yale.edu for SOM alumni
qn.som.yale.edu for other visitors

Please send any comments or questions to yalesom@som.yale.edu