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Winning the War for ESG Talent in an Era of Distrust

Claudia Baldwin

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Reprinted from GreenFin Weekly, a free newsletter. Subscribe here.

When my Grandpa Alan returned from fighting on the Western Front in World War II, the job at Campbell Soup Company was perfectly fit for purpose — solid pay, good benefits and local. So, he worked there for 30 years.

“Purpose” in the workplace was transactional then: Make a great soup, sell it, get remunerated. Repeat. It’s unlikely that 71 percent of Alan’s contemporaries would take a pay cut to do “meaningful” work, or that the same percentage would be willing to leave a job if they felt a clash between their personal values and their employer’s — but, dear reader, the current crop of your prospective employees would.

Employees’ expectation of an authentic, transparent and data-driven commitment to tackling the climate crisis is here to stay.

I’m not talking about the ranks of NGO-bound workers leaving elite universities in search of do-good work. McKinsey & Company, the white-shoe consulting firm known as a place to cut one’s teeth and make loads of money post-MBA, is feeling the pressure from its employees to take the climate crisis seriously. The human resource losses the firm is experiencing are nontrivial, both for talent attraction and retention but also for reputational integrity.

Or consider Grandpa Alan’s old employer. Campbell’s top prospects in 2022 want to learn how the company is “connecting people through food they love” and how the product “helps create a healthier, more sustainable environment” before they sign on. Less so about why it’s “M’m! M’m! Good!”

All of which has significant implications for today’s white-hot world of ESG.

Edelman’s 2021 Trust Barometer found that after years of rebuilding, the financial services sectors suffered a steep loss in trust. While business as a wider category has experienced an uptick in trust, Edelman found, financial services has not, with the asset management and digital wealth management subsectors taking the biggest hit.

The war for ESG talent is still being waged and doesn’t look likely to let up anytime soon. Gen Z and Millenials make up nearly half of the full-time workforce in the United States and elsewhere. Assuming the Great Resignation is followed by a Great Application, how is this massive talent pool gauging your firm’s ESG credentials?

Beyond blah blah blah

If you read BlackRock CEO Larry Fink’s 2022 letter to CEOs, tellingly titled “The Power of Capitalism,” you may have gotten the sense that the dominant economic system — not to mention the world’s largest asset manager with a huge stake in that system — is playing defense.

“We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients,” Fink wrote.

Sustainability is an existential necessity if the finance world is to sustain itself with a robust talent pipeline. More than half (54 percent) of Gen Z reported that they have a negative view of capitalism. And lest you think this is solely the sentiment of progressive elites, even young Republicans’ historically positive view of capitalism dropped 15 percentage points in the last three years.

There are many ways to explain this decline in faith in a system where commerce is controlled by private owners for profit rather than the state, but “blah blah blah” captures it well. When it comes to doing the right thing for people and the planet, companies have talked and talked but failed to walk that talk.

“Blah blah blah” is not just a Gen Z construct to capture the empty promises of corporate and political commitments. Before Shell CEO Ben van Beurden had the chance to begin blah-ing onstage at the TED Countdown conference in October, Lauren MacDonald, a Scottish climate justice activist, minced no words letting the oil exec know how she and so much of her generation feel.

“I just want to start by saying that you should be absolutely ashamed of yourself for the devastation that you have caused to communities all over the world,” she said to van Beurden. “You are responsible for so much death and suffering.”

While the plural of anecdote is not data, I’ve had enough conversations with talented new job seekers in the ESG space to get a sense that MacDonald speaks for more than just herself and other activists.

I’m a mentor to Oxford University master’s students in the program I graduated from several years ago, focused on the intersection of sustainability and enterprise. Their assessments of a “good” firm to work for tends to be discussed in similar terms.

As an Oxford mentee shared with me, “I’m certainly not going to be the one employed to propagate misinformation on money managers’ behalf while the world literally dies.” When I asked how he intended to make certain that he wasn’t going to find himself doing so, he told me he was well-prepared to interview his interviewer. “Why would I believe what’s on their own website?”

Or, as energy sage Amory Lovins likes to say: “In God we trust. All others bring data.”

It may be clear already, but as an employer seeking top talent you’ll need to have some pretty good stories and concomitant data points to demonstrate your firm’s ESG commitment. Pledges and promises are so 2021.

Hard conversations

Companies seek out customers’ — and future employees’ — attention where they spend their time, and social media is the principal domain of digital natives. But telling your story via social media alone isn’t enough — the TikToks, Facebooks and Instagrams — despite the fact that Gen Z spends about 4.5 hours in that world every single day. But what about out there in the real world?

I spoke on one of Andrew Revkin’s Sustain What webcasts last week and an undergrad Columbia University student in the audience asked, “Do you know of any venues where we can speak openly with these finance firms about what they’re doing in ESG, like a real conversation?” I came up woefully short on an answer (although I’m hoping our GreenFin 22 conference in June will be one place where “real conversations” happen).

Pledges, promises and other forward-looking statements about a firm’s purported progress are losing cach?. This is especially the case in a market where the interviewee is in a relatively strong position to play interviewer — that is, to grill you to see if you’re worthy of their work. Even more so in the world of finance, which hasn’t exactly proven to be egalitarian in a world of growing inequality.

As the UN Secretary-General recently put it, “The global financial system is morally bankrupt.”

The key question, then, may be whether job applicants actually trust you and your company. Stephen Covey, the guy who taught many of us how to be highly effective people, described trust as “the glue of life … the most essential ingredient in effective communication.”

So, if you want to gain trust and show your firm is authentically committed to ESG priorities, make yourself open to candid dialogue with potential employees about what they want to see from you, even if it’s uncomfortable to do so. To differentiate from competition that may be more sanitized or tight-lipped (and, therefore, less trustworthy), consider dedicating some time from your growing ESG team to do no-holds-barred Q&A’s with prospective employees.

For a generation of rising talent ostensibly more swayed by a firm’s beneficial impact than by an obscene bonus, having open dialogue can be tough but it will serve you in the long term. Employees’ expectation of an authentic, transparent and data-driven commitment to tackling the climate crisis is here to stay.

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Source: greenbiz.com

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Is Climate Tech the Hottest Corner of the VC Business in the 2020s?

Claudia Baldwin

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This is an excerpt from “Climatenomics: Washington, Wall Street, and the Economic Battle to Save Our Planet” (Rowman & Littlefield, 2022). Reprinted by permission of the publisher.

While government policies and leadership from Washington can help accelerate change, there’s another place that can accelerate change much faster: Silicon Valley.

In 2003, as a national technology reporter for a chain of newspapers, I visited the Mountain View, California campus of Google to meet with cofounder Sergey Brin. At the time, Google was still a private company, though there was widespread speculation that it would launch an initial public offering soon. The moment I pulled into the company parking lot, I got a taste that Google wasn’t a typical company. Covering many of the parking spaces were canopies made from solar panels, something that’s commonplace today but back then was pretty unusual. Even more unusual were the thick power cords hanging down from the panels over nearly every parking space, something that didn’t make sense until Brin and team later explained it to me. At the time, electric vehicles were even more uncommon than solar parking lot canopies (the first Tesla wouldn’t hit the streets for another five years). But Google knew EVs were coming someday soon, and it wanted to be ready. Google also wanted employees and other visitors to think about the possibilities that could come with solar-powered parking lots and cars that you could plug in to refuel.

Two of the forward-thinking people responsible for Google’s early solar deployment were Chris Sacca, who as the company’s corporate counsel and later head of special initiatives was involved in Google’s energy purchase agreements, and Andrew Beebe, who was chief commercial officer at solar company Suntech, which helped Google go solar.

“There really wasn’t any corporate interest until those guys stepped up and said, ‘Please build solar arrays all over our campus,'” Beebe recalled during a GreenBiz VERGE [climate] tech conference in October 2021. “But (Google executives) also said, ‘Set it up so we can have Walmart and Cisco and Microsoft and all of our competitors come over and see what we have done.’ They obviously had a hugely catalytic role in making all this happen.”

Both Beebe and Sacca would go on to become successful venture capitalists, Beebe with Obvious Ventures, the firm that helped launch companies such as Medium, Beyond Meat and electric bus maker Proterra, and Sacca with his firm called Lowercase Capital, which funded companies such as Twitter, Uber and Instagram. For about three years, Sacca also was a “guest shark” on the ABC television show “Shark Tank,” where budding entrepreneurs bid for the favor — and the funding — of millionaire investors. But it didn’t take long before Sacca was feeling unfulfilled by funding kitchen gadget start-ups on “Shark Tank” or electronic-gaming companies back in Silicon Valley. He, like Beebe, turned his attention almost fully toward clean-energy and climate-related investments.

Sacca and Beebe represent one of the hottest corners of the venture capital business in the 2020s: climate tech. Some of the companies that investors like them are backing today will likely become the Googles of tomorrow. Only instead of changing the way we search for stuff on the Internet, climate tech companies will change the way we source and store our energy, grow our food, and move from point A to point B, whether on land, water, or air. In doing so, they’ll not only transform our economy, but help save the planet.

In 2021, investments in climate tech companies hit more $31 billion, according to deal tracking firm PitchBook. That was 30 percent more than in 2020 and more than 2.5 times what it was in 2019. Those big numbers will likely only get bigger as federal, state and international clean climate and clean-energy policies are implemented. Quite simply, government policies and funding help reassure venture capitalists and other private investors to put more of their money at risk.

In 2021, investments in climate tech companies hit more $31 billion, according to deal tracking firm PitchBook.

Climate-tech and clean-tech investing is no longer just about solar or wind or even batteries anymore. Those businesses now attract plenty of mainstream investors. They’re almost like investing in restaurants or real estate — they’re too passe for venture capitalists who are more interested in finding more disruptive technologies that can scale quickly and create big returns.

“What we look at every day are energy innovations that are just insane, some of which are doing things that Einstein declared literally would not be possible,” Sacca said at the VERGE conference. “We see stuff happening in synthetic biology, for instance, that’s just nuts.”

Amid the hellish fires in the West, back-to-back hurricanes in the East and scientists everywhere warning that things were only going to get worse, Sacca in August 2021 stepped away from Lowercase Capital, quit “Shark Tank,” and with wife Crystal turned his attention specifically toward figuring out how to fund and support companies trying to do more to address climate change. The couple launched a new investment fund called Lowercarbon Capital. In a matter of days, they raised more than $800 million that Lowercarbon Capital could deploy to try to “un— the planet,” in Sacca’s terms. The fund was so popular, Sacca wrote on Lowercarbon Capital’s blog, that it had to turn investors away. “It turns out that raising for a climate fund in the context of an unprecedented heatwave and from behind the thick clouds of fire smoke probably didn’t hurt,” he wrote.

Since then, Lowercarbon has invested in companies that capture carbon dioxide and turn it into consumer products, reduce carbon emissions from livestock and fertilizers on the farm, and mine materials that are key to batteries and storage in ways that don’t destroy the environment. One such company is Twelve, a Bay Area start-up that “upcycles” carbon dioxide captured from industrial emissions and turns it into everything from jet fuel to sunglasses lenses, replacing fossil fuels and plastic. Another company Sacca was particularly excited about in 2021 was Lilac Solutions, which has raised $150 million to commercialize its lithium-mining technology. Lilac claims it can produce the essential element for batteries 10,000 times faster than conventional methods, using 90 percent less land and water. Lowercarbon Capital has also made numerous major investments in companies at the intersection of agriculture and climate, including start-up Formo, which is following the Beyond Meat and Impossible Burger model to make fine European cheeses that don’t require dairy or cows; Entocycle, which has figured out how to speed up the gestation period for black soldier fly larvae which happen to be some of the world’s fastest converters of food waste to protein; and Nitricity, which uses solar-powered modules placed around farms to literally make fertilizer out of thin air by converting and processing nitrates found in the atmosphere.

If garbage-eating fly larvae and fine cheeses bioengineered in a sterile laboratory don’t sound like appealing business models, think again. According to research group Climate Tech VC, food-and-water-related climate tech was the biggest sector for climate venture funding in 2021, followed by mobility, consumer goods, and clean energy. Tech investors’ take on food and agriculture is yielding new high-tech twists in one of the world’s oldest and most established economic sectors. Seattle-based clean-agriculture start-up Nori, for instance, got its start in 2017 when its cofounders entered a hackathon contest for coders to figure out new ways to use blockchain technology for social good. Far from the nearest farm, what they came up with was a way to use blockchain technology to monitor and track low-carbon agriculture practices and then monetize that by selling farm-based carbon-removal offsets.

In doing so, Nori is incentivizing farmers to use more climate-friendly agriculture practices that don’t just reduce carbon emissions but actually increase the ability of soil and crops to store carbon, while also creating a new marketplace for carbon removal and trading. In 2020, Nori raised more than $5 million in seed funding to launch its platform. “We call it climate-smart agriculture — thinking of carbon removal like a crop,” Christophe Jospe, a Nori cofounder, told E2.

This excerpt has been updated since publication.

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Original Article: greenbiz.com

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Walmart Begins Search for Sustainable Packaging

Claudia Baldwin

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“We don’t have time to waste.” With this imperative tagline, American retail giant Walmart launched its Circular Connector this spring.

The goal: to accelerate innovation in the field of sustainable and circular packaging, creating a bridge between companies looking for packaging that has less impact on the environment and those with new solutions to offer.

Searching for sustainable packaging

That the world’s largest retail multinational is launching an online platform to encourage the circular economy of packaging — even while accounting for some form of greenwashing — is undoubtedly great news.

After all, it’s a fact that consumers are becoming increasingly sensitive to the problem of plastic pollution and in general to any aspect related to the sustainability of products. And Walmart, the retail chain of over 10,000 stores around the world, is held accountable by consumers on a daily basis.

Hence the ambitious commitment that the multinational has set for itself by 2025: to achieve that 100 percent of packaging on its shelves would be either recyclable, reusable or industrially compostable. And hence the rush to find solutions to reach the goals.

It’s a fact that consumers are becoming increasingly sensitive to the problem of plastic pollution… And Walmart is held accountable by consumers on a daily basis.

The Circular Connector was therefore created as an online tool to connect packaging designers and manufacturers with companies in various sectors, from food to cosmetics, from fashion to toys. “Basically,” explains a statement on Walmart’s website, “it’s a platform to accelerate packaging innovation and implementation. We want to make it easier for suppliers and brands to find sustainable packaging solutions, thus enabling all of us to move faster toward waste reduction.”

How does the Circular Connector work?

The Circular Connector is accessed from the multinational company’s sustainability policy site, the Walmart Sustainability Hub. To participate, sustainable packaging manufacturers or designers must fill out a special questionnaire with a series of questions about the functions, materials and recyclability of the candidate packaging. Each proposal will then be reviewed according to Walmart’s packaging sustainability goals and, if compatible, will be posted on the site and made available to brands for possible supply contracts.

Reiterating, pragmatically, that they “don’t have time to waste,” the project leaders also made available the company’s Recycling Playbook, based on the two principles of recyclability established by the Ellen MacArthur Foundation. Namely: 1. Is there, in practice, a system for large-scale recycling of this category of packaging that guarantees at least a 30 percent recycling rate for over 400 million people? 2. Do the packaging components fit into that system?

Walmart’s handbook also contains valuable guidance on materials, such as those that are difficult to recycle and therefore tend to be excluded from sorting: metallic films, multi-layer materials, PVC or PVDC, PETG in rigid plastic packaging, oxo-degradable plastics and colored PET.

“We need to work together to promote innovative solutions on a large scale,” states Walmart. “Companies with reusable, refillable, recyclable and other sustainable packaging solutions should therefore come forward. There are hundreds of brands striving to achieve their own packaging sustainability goals, just like Walmart, and the Circular Connector is one tool available to them in this journey.”

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Original Post: greenbiz.com

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Episode 317: Conversations About Circularity

Claudia Baldwin

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This week’s run time is 1:03:05.

CONSIDERING CIRCULARITY (8:50)

Featuring a recap of interviews and stories from Circularity 22, held this week in Atlanta.

INTERVIEW: Jon Smieja, vice president of circularity and senior analyst for GreenBiz, reflects on hot topics and themes
STORY/AUDIO HIGHLIGHT: Planet vs. plastic: Three steps to solving the global plastics crisis (Featuring Keiran Smith, co-founder and CEO of Mr. Green Africa, on how to encourage decisions made at the local level.)
STORY/AUDIO HIGHLIGHT: John Warner: How to do the materials economy right (Featuring John Warner, senior vice president and research fellow of Zymergen, on how green chemistry could enable the leap to a regenerative, circular economy … if we educated chemists.)
CHITCHAT: Textile recycling tech startup triumphs in Circularity 22’s Accelerate competition
AUDIO HIGHLIGHT: Suzanne Shelton, founder and CEO, Shelton Group (On the importance of shifting context; and what that disturbing baby wrapped in cellophane image teaches us about marketing circularity.)

FEATURE
More sustainable consumer goods (47:30)

Interview with new CEO Christy Slay of The Sustainability Consortium, about priorities, circularity and engaging nimble innovators.

*Music in this episode: Lee Rosevere: “Not My Problem” and “Let That Sink In”; ItsWatR: “Awakening Instrumental”

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To make sure you don’t miss the newest episode of GreenBiz 350, subscribe on iTunes or Spotify. Have a question or suggestion for a future segment? E-mail us at [email protected].

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Original Post: greenbiz.com

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