Tag: Featured Articles

Circular Economics and the $57B E-Waste Opportunity by Heather Clancy-GreenBiz

Circular Economics and the $57B E-Waste Opportunity

By Heather Clancy, GreenBiz

Heather Clancy - GreenBizE-Waste processing photos courtesy of ERI

The plastic waste problem gets plenty of attention, and for good reason: If we continue mismanaging this material as usual, there could be 7.7 gigatons of the stuff cluttering landfills, waterways and oceans, or being incinerated by 2040.

Just as stunning: Plastic isn’t the fastest growing waste stream the world needs to deal with.

According to research released over the past 18 months by the International Telecommunications Union, that honor actually goes to various forms of electronics — ranging from mobile phones to appliances such as vacuum cleaners (the biggest part of the e-waste stream today) to refrigerators, air conditioners and other heat-exchange systems (the fastest growing part of the e-waste universe). That trend is the motivation for a “significant strategic investment” last month — the amount isn’t being disclosed — by investment firm Closed Loop Partners in ERI, the largest IT recycling and refurbishment company in the United States.

More details in a moment. First, consider the problem. “Each year, approximately 50 million tons of electronic and electrical waste (e-waste) are produced, equivalent in weight to all commercial aircraft ever built; only 20 percent is formally recycled,” write the authors of a report published by the World Economic Forum in 2019. “If nothing is done, the amount of waste will more than double by 2050, to 120 million tons annually.”

Two other data points to mull, courtesy of the Global E-waste Monitor: Researchers figure just 17.4 percent of electronics are collected, refurbished or recycled worldwide. (For comparison, the U.S. Environmental Protection Agency reported that the recycling rate for PET bottles and jars was close to 30 percent in 2019.) The value of this e-waste — including the materials that could be harvested and put to another use or the revenue that could be generated by finding them another home — is estimated at $57 billion, more than the GDP of some countries.

These realizations — along with revelations about the fragility of the electronics supply chain exposed during the COVID-19 pandemic and worries over future shortages of material such as glass, copper, gold and aluminum — are motivating a flurry of activity this year related to the circular economy for electronics.

Some key moments. In March, a group of organizations — including representatives of manufacturers and technology service providers such as Accenture, Cisco, Dell Technologies, Google and Microsoft — came together to create the Circular Electronics Partnership, focused on co-defining solutions for applying circular business practices to electronic devices, including the terminology used to describe them and trace them. The alliance has six founding members: GeSi; Global Electronics Council; Platform for Accelerating the Circular Economy; Responsible Business Alliance; World Business Council for Sustainable Development (WBCSD); and World Economic Forum (WEF). Several months later, France’s Back Market, the world’s largest recommerce marketplace for refurbished electronics with more than 5 million customers, raised $335 million to expand its services. The new funding makes Back Market a triple unicorn, valued at $3.2 billion.

Strengthening the Circular Electronics Supply Chain

The new partnership disclosed recently by ERI and Closed Loop Partners is focused on building its capacity for the collection and processing of electronics. Last year, ERI handled 118 million pounds across 1.75 million square feet of recycling and asset management space in eight states, and it’s on track to process 130 million pounds this year, according to John Shegerian, co-founder and executive chairman of ERI.

Some of those devices are mined for a range of materials, including glass, plastic, cobalt, nickel, aluminum, copper, gold, silver, lead and palladium. Others are refurbished for resale. Some of ERI’s prominent customers include Best Buy, Target and Amazon (it handles collection activities for the retailers, among other things), along with “any OEM you can think of,” as well as New York City, Los Angeles and 500 other U.S. cities.

As part of the investment, Closed Loop founder and CEO Ron Gonen will become part of the ERI board, alongside executives from other investors including LS-Nikko Copper, one of the world’s largest copper smelters; and aluminum company Alcoa. JB Straubel, a Tesla co-founder who fronts cutting-edge battery company Redwood Materials, which took a strategic stake in ERI in March, is also a director.

Shegerian said the new partnership with Closed Loop Partners will help his organization forge new relationships important for scaling the types of materials it can process and sell back into the electronics ecosystem at a time when interest in circular approaches is intensifying. “We absolutely are seeing a sea change from the next generation below me of saying, ‘Enough.’ Enough of the talk, it’s time for us to all get on board,” Shegerian told me.

ERI actually already has relationships with at least two of the roughly 50 organizations that have been funded by Closed Loop’s Leadership Fund: AMP Robotics, which is combining artificial intelligence and robots to automate processing, and Retrievr, the clothing and electronics collection service being developed by the former CEO of Homeboy Recycling, Kabira Stokes.

“There are synergies across the network,” said Martin Aares, managing director of Closed Loop’s private equity platform. What’s more, the firm will focus on helping ERI grow its asset management services for its corporate partners, which include the likes of Microsoft, Nestle and Unilever. “There is a huge market in being able to divert these materials from landfills, and in being able to extend the asset life of products or the individual components within,” Aares said.

E-waste--new partnership disclosed recently by ERI and Closed Loop Partners

Exciting New Business Models

James Pennington, manager of the circular economy initiative at WEF, said the economic imperative behind developing more sophisticated practices for recovering materials from electronics is strong. Many metals and other substances critical for accelerating the transition to clean energy, for example, can be recovered from these systems, including nickel, cobalt, lithium and rare earth metals.

Pennington points to research from the International Energy Agency suggesting that demand for these materials will explode: Within the next two decades, for example, the energy sector will account for almost 90 percent of the demand for lithium and up to 70 percent for nickel and cobalt. With fewer than 1 percent of these materials recovered today, “we need a huge increase” in recycling, he said.

As Back Market’s recent funding illustrates, interest in refurbished goods is growing. Right now, this represents about 35 percent of ERI’s business and growing, according to Shegerian. A growing number of manufacturers, especially those selling products business to business, are creating sales models that rethink the ownership of capital equipment, such as medical diagnostics systems or digital printers. These rental or pay-per-use relationships allow the customer to use a device for a certain period of time; at the end of the period, the manufacturer is responsible for collecting and processing the equipment for its next best use.

“The most efficient way to use materials is to keep them in that same use for a long time, to keep the things we have in place longer,” Pennington noted.

Carolien Van Brunschot, manager of circular economy for WBCSD, said as the e-waste issue becomes a more central concern for companies and communities, businesses should pay particular attention to understanding where electronics devices and other digital equipment will land after an organization has outgrown them. “Where possible, you should enter into agreements with your provider or supplier for take back,” she suggested.

To move toward a more circular economy for electronics, she said the industry needs to coalesce around unified terminology that describes the various options and processes available — so that both manufacturers and buyers have a clearer understanding of expectations. “A circular economy is not driven by individual companies,” she said.

That goes for how refurbished items are described. “The aim is to really make sure we treat materials at the highest level of value they can be treated at … What you need for that is transparency about where things have been in the past,” Van Brunschot said.

 

Article by Heather Clancy, vice president and editorial director at GreenBiz. Heather is an award-winning business journalist specializing in chronicling the role of technology in enabling corporate climate action and transitioning to a clean and regenerative economy. She started her journalism career on the business desk of United Press International, and her articles have appeared in Entrepreneur, Fortune, The International Herald Tribune and The New York Times.  

Clancy was the launch editor for the Fortune Data Sheet, the magazine’s newsletter dedicated to the business of technology. She co-authored the Amazon best-seller for entrepreneurs, “Niche Down, How to Become Legendary By Being Different.”  Twitter @GreenTechLady

Energy & Climate, Featured Articles, Sustainable Business

Sergei Korolko-iStock-Marisvector-iStock from FastCo

Everything From Smartphones to Housing Can Be Built Without Waste. Here’s How.

By Chris Forman and Claire Asher, Brave Green World

Above illustration: Sergei Korolko/iStock, Marisvector/iStock from FastCompany.com

To create a truly circular economy, we need to take a page from the natural world.

Brave Green World book coverThe rings of a tree tell a story. A story about the life of the tree, and the environment in which it grew. But what is humanity’s story? Will it be a blackened layer of fossilized smartphones in the footnotes of geology? Or will it be a story like the Daintree rainforest in Australia—one of the oldest surviving forest ecosystems in the world whose current inhabitants boast a direct lineage thought to be over 100 million years old? To envision a 100-million-year-long story for humanity, we must imagine a world where every generation returns the materials they use to the soil, air, and oceans in a way that enables future generations to use that material too. A world without waste or pollution. The transition to such a system—called a circular economy—depends greatly on science.

Our current way of living is destined to change fundamentally in the next few decades. Exactly how that happens is a decision that will be made collectively by all of us. The materials we use to create our new world will depend on the technology at our disposal, which will be determined by the science we perform today and the politicians we allow to govern us. Balancing the long-term prospects of other people’s great-grandchildren against our own short-term interests is not a trade-off that many people give much thought to. But natural systems suggest there is a way to provide technological luxury to us all, at the same time as guaranteeing a positive future for everyone’s children.

Imagine if our future electronic devices could grow from the buildings around us like a tree bears fruit, and throwing away an old device was more like composting a discarded apple core. Smart materials and innovative molecular manufacturing inspired by natural organisms could trailblaze the way to a fairer, more sustainable society that boasts a hyper-efficient, innovation-driven circular economy. An economy equipped to address the multifaceted challenges of climate change, biodiversity loss, and inequality, while bringing countless benefits for all of humanity.

We have a vision of a future where 10 billion people can flourish on Earth indefinitely, without exhausting our planet’s raw materials or harming the other eight million species on the planet. Such a circular economy could even drive our expansion to other planets—and that is a tale we want to hear!

Nature: The Fabric for Life

Our story begins at the planetary scale, where we look at Earth as a single system, basking in solar energy, and consider the consequences that physical laws have had for living organisms. We learn that nature has evolved some pretty sophisticated systems for capturing energy, passing it around, and squeezing as much work out of it as possible. To do this, biological organisms have developed an incredibly advanced toolkit for processing energy and matter.

In comparison to nature, humans do a poor job of maximizing our use of the gargantuan supply of solar energy that flows through the Earth. Our astonishing achievements—like the internet or exploration of space—rely instead on accumulated solar energy stored in fossil fuels. We have become accustomed to extravagant expenditure of stored-up energy as we burn through our supplies faster than they can be replaced. But in a 100-million-year-long story, oil becomes a renewable resource— provided we use it more slowly than it regenerates!

The natural world demonstrates that excellent fabrication does not require profligate energy use and this realization focusses our attention away from energy to look at materials. If we could take a leaf out of nature’s copy book and fine-tune our manufacturing processes to maximize the utility of solar energy, we could give all our natural capital a chance to recover.

 

Read the full excerpt via Fast Company from the new book “Brave Green World: How Science Can Save Our Planet” by author Chris Forman and Claire Asher (UniPress Books Ltd. 2021, published by MIT Press).

Energy & Climate, Featured Articles, Sustainable Business

The Next Steps Towards a Circular Economy

The Next Steps Towards a Circular Economy

By Lydia Miller, Dana Investment Advisors

Lydia Miller - Dana Investment AdvisorsThe concept and acceptance of moving toward a circular economy have grown significantly in the last several years. While definitions vary, most focus on maximizing the value of materials, products, and other resources (i.e., water, energy) that circulate in the economy by maintaining them in the economy for as long as possible while also minimizing the consumption of materials and the generation of waste.1

The Ellen MacArthur Foundation has been a primary source of information on and driver of circular economic principles and practices, synthesizing many schools of thought (i.e., Cradle to Cradle, Biomimicry, and more). A circular economy moves beyond our take-make-waste industrial model and works toward designing products to eliminate waste and pollution and to regenerate natural systems. It’s a tall order for our complex global economy and demands a fundamental change within and across industries and stakeholders. It is an equally tall order to imagine achieving carbon emissions reduction and a more sustainable economy without both embracing a circular economy mindset and putting it into practice.

The Circularity Gap Report

The Circularity Gap Report produced by the Ellen MacArthur Foundation quantifies the circularity rate, which is defined as recovered materials as a percentage of overall materials used in the global economy. Thus, the remainder is the “gap” and what we need to close. The Circularity Gap Report estimates that the global circularity rate remains at less than 10%.2 This may seem low, and it is. Putting circular economics into practice is challenging work, made even more difficult in light of COVID-19 impacts. The report also shows the major contributors along Resource (fossil fuels, minerals, ores, biomass, and waste), Process, Produce, and Provide stages, or in linear economy terms, “take-make-waste” functions. As investors, this breakdown helps us focus our questions and assessments on the most challenging area and/or those with the most potential for improvement on an industry and company basis. One final point is that the Circularity Gap Report for 2021 focuses explicitly on how a circular economy can mitigate the carbon emissions gap. We appreciate this work as it helps expand the potential opportunities to fix our environmental problems, in part by broadening mindsets and efforts beyond carbon reduction via fossil fuel reduction. While fossil fuel reduction is critical, we need as many doors opened as possible.

In terms of next steps for advancing the circular economy, we consider water a critical variable to add to the framework, as has been done with carbon emissions. Water, a necessity for life itself, is a key natural resource, maybe the key natural resource and input for almost everything we make and use. In discussing corporate efforts to reduce consumptive and non-consumptive water use over the past decade, setting targets and achieving or exceeding them have lowered some costs, but often it is energy cost savings that outstrip any savings in actual water costs. This is because water costs are low (until a crisis unfolds) and energy use and costs are often more significant in moving, storing, heating, and/or cooling water. Incorporating water specifically may also assist in identifying climate solutions that could actually increase risks to quality, quantity, or resilience of water in specific watersheds. If greater water usage, especially in stressed watersheds, is drawn upon to meet carbon targets, are we moving forward in our goals to achieve a greater circular economy? Clearly integrating efforts within and across companies and other stakeholders is worthwhile.

We are supportive of efforts to focus on watershed management and stewardship. This often brings agricultural and industrial entities to the table. Significant water loss due to inefficient irrigation and water-quality issues through runoff as well as extraction of freshwater above replenishment rates are critical agricultural issues. Pollution from utility, industrial, and extractive industrial activities often occur and compete within watersheds. The Alliance for Water Stewardship (AWS) is a global program that teaches and certifies best practices for watershed management and stewardship. While AWS in North America is still at early stages, it is encouraging to see the methodologies being put into practice and improved upon as more companies accept the challenges. We think that these watershed discussions and the mounting pressures for carbon reductions have the potential to move the needle on creating and adopting more circular manufacturing practices, thus achieving sustainability targets without exacerbating unintended consequences. Such discussions might also provide specific examples of balancing interests amongst various stakeholders in a particular watershed, thereby addressing social concerns. Lastly, costs of solutions need to be a part of these discussions. A focus on energy and water, particularly in agriculture, would also bring to light more cost effective, nature-based solutions. That in itself, would be a huge step forward.

 

Article by Lydia Miller, Senior Vice President and Portfolio Specialist with Dana Investment Advisors and focuses on the Firm’s Sustainability and ESG investment strategies. Prior to joining Dana, Lydia was a Managing Director at Big Path Capital (formerly Watershed Capital Group, a certified B Corporation). She was a Managing Director at UBS where she managed a global sustainability equity fund. Lydia is an advisor for Equarius Risk Analytics LLC and guest lectures at various universities on topics related to sustainability and portfolio management. Lydia graduated summa cum laude from the Pennsylvania State University and has an MBA in Finance and International Business from the University of Chicago.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

The Purpose of Business and the Circular Economy by Tom Szaky of TerraCycle

The Purpose of Business and the Circular Economy

By Tom Szaky, TerraCycle

In college, one of my professors taught a popular theory of economics that a company’s sole purpose is to deliver profit to shareholders. Since then I’ve found that, yes, of course you want a company to be profitable so it can continue to exist. But the purpose of business to me is what it does — what service it provides, what product it makes, and how it helps people, society, and the planet.

In the pursuit of purpose, I resolved to create businesses that put those things first. Twenty years later, I stand at the helm of companies that do just that. Today operating in 22 countries, TerraCycle® is known for creating first-of-its-kind recycling solutions for nearly everything the world would consider trash: empty writing utensils, plastic litter collected off beaches, even dirty diapers, cigarette butts, and used chewing gum.

Circular Economy New Business Models | Tom Szaky, 2020 ChangeNow conference in Paris

Companies work with us to sponsor collection programs for their own products, as well as entire categories of waste, to bring solutions at no cost to customers. To fill in the gaps, the Zero Waste corner of our business allows anyone to recycle everything else through turnkey, pay-as-you-go solutions that can be used to reduce waste at home, the office, in public and community spaces, and at events.

Corporations, municipalities, small businesses, and individuals bring TerraCycle’s programs to life, while manufacturers use our collection infrastructure to source unique materials for new production, driving value through this story. So far this model has diverted nearly 8 billion pieces of traditionally non-recyclable material away from landfills and towards a new supply chain of recycled content.

We also offer large-scale recycling and compliance services for facilities across the United States through our Regulated Waste division. Handling items such as batteries, fluorescent lamps, and e-waste as regulated by the EPA, we’re able to help businesses remain compliant while saving money on storage and labor costs and improving workplace safety for their employees and staff.

Safety-equipment-and-protective-gear-boxSimply put, the main function of our business is to solve problems related to waste. For example, it was estimated global waste increased 30% in the first year of the global pandemic. As part of our efforts, TerraCycle scaled and adapted its existing solutions for PPE (personal protective equipment, such as disposable masks, gloves, and face shields) to address the flurry of these discarded items.

The actions of individual consumers and citizens of course have an impact, but our main target is businesses: retailers, manufacturers, and service facilities providing a product. It is through partnership that we are able to help companies offer a better alternative to their customers, the individuals that collectively steer the market through their choices.

A couple years ago TerraCycle launched Loop, a reuse engine for brands and manufacturers to reimagine their single-use packages as durable, refillable containers. Similar to TerraCycle, companies big and small partner with us to offer a way for customers to enjoy their products without the packaging waste. Ulta Beauty, the leading beauty chain, is one brand in partnership with Loop to bring its personal care shelf into the no-waste space.

Loop courtesy of TerracycleLoop is today in an exciting growth phase as it launches in new markets around the world (most recently Japan), and building upon the success of in-store space at Carrefour in Europe, will soon pilot at retail locations across the United States. Guests will soon be able to purchase products and drop off their empty containers at participating stores.

The spirit of where TerraCycle started twenty years ago — in my college dorm room as a submission to a business competition, feeding food waste to worms to make fertilizer — carries through in our work today. We saw the value and opportunity in the things people throw away, and today use our business to change perspectives about waste, allowing businesses to drive change.

Terracycle Showroom film ball

As we continue to grow, we’re launching new models and are fortunate to have the world’s biggest brands and retailers as clients, all the while staying true to a mission to eliminate the idea of waste, which in turn furthers a circular economy.

Aligning human consumption with nature’s activities, the circular economy keeps resources in use and cycling around as long as possible, reducing the strain on the Earth’s finite cradle of resources and impacts on the environment. Recycling, reduction, and reuse are elements of a circular economy.

This is in contrast to the linear economy; simply put, it’s a take-make-waste model that extracts new resources for production and sends them in one direction: the trash.

The linear economy has long done well to drive profits, create jobs, and inspire innovation, but not only this is not sustainable from an environmental perspective, there is a real business case for being the ones to change the paradigm towards one that is regenerative and keeps responsibility for products and their impacts with the companies that produce them.

Consumers are looking to the brands they buy to make it easy for them to lighten their footprint while still enjoying the products they’ve come to know. They want it to be convenient, cost-effective, and socially valuable for them to make that switch. They already report being willing to pay more or switch brands for ones doing this work for them. We help brands do this work.

This is our purpose, to drive this change, and we cannot do it alone.

Our ability to be profitable has allowed us to seek out new partnerships, strengthen the core revenue streams of our business, and incubate entirely new lines of business. Our profitability is what supports and frees us in our initiative to address the changing needs of our customers. The world is waking up to the great problems with waste and the companies that produce it, and we’re here to help them all be a part of the solution.

 

Article by Tom Szaky, founder and CEO of TerraCycle, a global leader in collection and repurposing of complex waste streams. TerraCycle operates in over 20 countries, working with some of the world’s largest brands, retailers and manufacturers to create national platforms to recycle products and packaging that currently go to landfill or incineration.

Through TerraCycle, Tom creates circular solutions for hundreds of difficult waste streams such as cigarette butts, dirty diapers and used chewing gum. TerraCycle operates the largest supply chain for ocean plastic in the world, partnering with companies to integrate this material into their packaging.

In May 2019 TerraCycle launched Loop, a circular reuse platform that enables consumers to purchase products in durable, reusable packaging. Loop is available in Paris, France, Canada, the UK, Japan and the 48 contiguous U.S. states, and is a key step in helping to end the epidemic of waste that is caused by ‘single- use’ consumption. In 2022, Loop will become available in Australia.

Tom and TerraCycle have received hundreds of social, environmental and business awards and recognition from a range of organizations including the United Nations, World Economic Forum, Fortune and Time Magazines, and the U.S. Chamber of Commerce.

Tom is the author of four books, “Revolution in a Bottle,” “Outsmart Waste,” “Make Garbage Great” and “The Future of Packaging” and created, produced and starred in TerraCycle’s reality show, “Human Resources” which aired from 2014-2016 and is syndicated in more than 20 foreign markets on Amazon and iTunes.

Energy & Climate, Featured Articles, Sustainable Business

State of the Green Building Industry by Deisy Verdinez of USGBC

State of the Green Building Industry

By Deisy Verdinez, U.S. Green Building Council

Deisy Verdinez of US Green Building CouncilAbove: Pharmavite headquarters, maker of dietary supplements MegaFood and Nature Made; LEED v4 Certified and reflect the company’s mission of promoting better health worldwide. © Eric Laignel

There’s renewed commitment from companies and organizations to run their business and operations in more sustainable ways. As communities and consumers begin to demand more from organizations to do more to support their communities, many are not only including sustainability in corporate social responsibility plans but are also are setting ambitious goals to reduce their impacts on the environment. And they’re making real strides in achieving these goals.

For over 25 years, The U.S. Green Building Council (USGBC) has supported its members – which include corporations, small businesses, government entities and nonprofits – to achieve their green building goals through its Leadership in Energy and Environmental Design (LEED) program. LEED is the world’s most widely used green building rating system and promotes the use of strategies that reduce environmental impact, enhance human health and support economic development. Currently, there are over 102,000 LEED certified projects across nearly 180 countries and territories.

USGBC continues to evolve LEED, adapting the program based on public feedback and the latest in green building innovation. Today’s version, LEED v4.1, raises the bar on building standards to address energy efficiency, water conservation, site selection, material selection, day lighting and waste reduction. LEED prioritizes sustainable materials, helping manufacturers to design, produce and deliver building materials that reduce a building’s environmental impact.

Companies and organizations are seeing the benefits of adopting LEED certification into their sustainability plans. With LEED, certified buildings are consuming fewer resources, reducing operating costs, increasing value and creating safer and healthier environments for its occupants.

But the newest version of LEED goes beyond design and construction of the building and takes into consideration the building’s most important asset – the people living, working and using these buildings. In fact, LEED v4.1 supports projects to implement sustainable and healthy building practices to realize environmental, economic, social and community benefits for decades to come. The specific focus on social equity ensures that buildings are not considered in isolation of their communities but prioritize access and inclusiveness for all and ensures buildings are resilient from natural and unnatural disturbances.

DATA 1 - USGBC
Reflecting an evolving typology of urban mid-rise office buildings within neighborhood retail cores, the Fremont Office Building in Seattle is a LEED Gold v3 Core and Shell building, completed in 2017.

Rethinking our Environments

Over the last year, we all had to rethink the environments in which we live and work. USGBC also reflected on the events of 2020 and in response launched its Healthy Economy Strategy, a path for how healthy places and LEED will support recovery efforts as businesses, governments and communities prepare for a post-pandemic world.

LEED Gold certified DATA 1 Seattle © Ye-H Photography
LEED Gold certified DATA 1, Seattle ©Ye-H Photography

To support its members as business and workplaces reopen in the midst of the COVID-19 pandemic, USGBC released the six LEED Safety First Pilot Credits. These credits outline sustainable best practices related to cleaning and disinfecting, workplace reoccupancy, HVAC and plumbing operations, social equity as well as pandemic preparedness and response and support project teams working toward reentry and safe operation.

More than 150 projects have started using the LEED Safety First pilot credits, such as Miron Construction, a century-old private company. It is using the credits in its Madison, Milwaukee, and Green Bay offices, for which it is pursuing LEED Silver certification, and is also implementing them in its LEED-certified offices in Neenah, Wisconsin and Cedar Rapids, Iowa.

The credits will continue to evolve as more communities re-open and as science and information are updated. The LEED Safety First Pilot Credits were designed to be agile so USGBC can update them as we learn more about the virus that causes COVID-19, while also incorporating membership feedback and best practices.

The Race to Net Zero

We’re also seeing companies make commitments to become carbon neutral as the threat of climate change continues to become more prevalent in our everyday lives. Building and construction account for 39 percent of the carbon emissions in the world, according to the World Green Building Council, and the use of energy and water in buildings emits 28 percent of emissions.

The wider green building community is taking notice and setting its sights squarely on zero. Industry groups like Architecture 2030 created the 2030 Challenge back in 2006, and the engineering arm of the building industry issued its own call to zero in the Structural Engineers 2050 Commitment Program (“SE2050”).

HDR Arlington office
The HDR regional office in Arlington, VA is a LEED Certified Platinum space that is designed to demonstrate how the built environment can be a powerful tool to create identity and rebrand an office culture.

USGBC developed LEED Zero, a complement to LEED that verifies the achievement of net zero goals. LEED Zero Carbon recognizes buildings or spaces operating with net zero carbon emissions from energy consumption and occupant transportation to carbon emissions avoided or offset over a period of 12 months. Projects can earn certification in LEED Zero Carbon, LEED Zero Energy, LEED Zero Water and LEED Zero Waste.

And we’re seeing more and more decision-makers ranging from state governments to major corporations pledging to go net zero or net positive. Some of the first LEED Zero certified projects include Entegrity Partners in Arkansas, Discovery Elementary School in Virginia, and even the Curitiba headquarters of Brazilian engineering and green building consulting firm Petinelli.

Corporations are also being recognized for their efforts in taking these pledges and turning them into action. During the 2021 USGBC Live conference in June, Colgate-Palmolive’s Burlington, N.J., facility was recognized for becoming the first site in the world to achieve LEED Zero certification in all four LEED Zero categories.

For decades, the green building industry has demonstrated how sustainable practices are not just beneficial for the environment but also shown how adopting these measures can improve the efficiency and costs effectiveness of an organization’s operations. It’s an exciting time for the building sector. As more groups adopt these measures, the industry will continue to push the envelope, creating innovative ways to build in a smarter and more sustainable way. USGBC will continue to evolve LEED and provide tools to support the industry.

 

Article by Deisy Verdinez, who supports the US Green Building Council’s communications efforts, working with media and partners to amplify USGBC’s message. Deisy have more than a decade of media and communications experience and has worked with prominent international organizations, nonprofits and federal government agencies.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Ecofin strives to make a positive impact without compromising returns-by Brent Newcomb

Ecofin Strives to Make a Positive Impact Without Compromising Returns

By Brent Newcomb, Ecofin

Brent Newcomb of EcofinWho We Are

Ecofin is a sustainable investment firm that’s passionate about striving to deliver strong risk-adjusted returns while making a true impact on the environment and society.

Our roots date to the 1990s as a London-based boutique advisory firm focused on water and energy infrastructure. In the early 2000s, Ecofin began managing money as a utility-focused investment manager and by the end of the decade, was awarded an environment-related mandate from a large Scandinavian sovereign wealth fund.

In 2018, we sought a partner to help fuel our growth, including in the US. We ended up merging with Tortoise, an essential asset investment firm, which had begun shifting its strategic focus to sustainability in 2016. What we found was a shared vision that sustainable investing does not compromise performance to make an impact. Moreover, we shared a view that we are experiencing a sustainability revolution with decades of growth ahead of us, along with exponential impact to the environment, society and in communities.

When we joined Tortoise in 2018, we retained the Ecofin brand as a platform for our products, which now includes all of our sustainability-oriented strategies. Today, Ecofin is the result of a deliberate process between 2016 and 2018 to bring together experts and world-class investors with decades of experience in sustainable investing. Our team invests in both private and public market strategies across the following major themes: climate action, water and social impact.

What makes us different and is the source of our strength, is our talented team. This is demonstrated in our performance and in our perspectives on the future, which aligns with our devotion to the sustainability revolution and our commitment to investments that help solve pressing global challenges, while creating compounding wealth opportunities for our clients.

What We Do

We are a sustainable specialist dedicated to climate action, social impact and water.

First, climate action is the drive to reduce emissions, and includes both the energy transition and waste transition.  This means conventional categories such as solar, wind, hydro and batteries, in addition to the electrification of transport, energy efficiency, waste-to-value (recycling) and waste-to-energy (cleaner fuels such as renewable natural gas).

EcoFin Turbine-2 - GreenMoney

Second, our investments in social impact focus on providing access to quality education, particularly the underserved population, as well as affordable housing and equal access to healthcare and sustainable communities.

Third, our water investments endeavor to help provide access to clean water and improve water scarcity and sanitation.

Across all themes, we focus on companies and assets that we believe provide investors with the opportunity to compound wealth and preserve capital, while providing a social good.

Why We Do It

Some of the world’s most pressing challenges have been given newfound attention. The devotion to these issues is the bedrock of the Sustainability Revolution. These are long-term secular themes and structural changes occurring on a global scale. We believe we are in the early stages of a multi-decade tectonic shift. The consequences of these changes are shifts in how we make basic decisions, how we consume resources and how we live on the planet. The shift in behavior is also re-shaping the investment landscape.

After decades of debate and procrastination, in our view, it is now clear these forces of change are irreversible and here to stay, strengthened by demands from multiple generations. The power of these forces makes sustainable investing a GARP-like strategy (Growth At a Reasonable Price), and in some cases, tech-like, in which companies’ growth potentials and valuations are misunderstood. They have aggressive growth prospects where value is not appreciated.

Reverse,Vending,Recycling,Machine.,Recycling,Machine,That,Dispenses,Cash.,Man
Reverse vending recycling machine – a recycling machine that dispenses cash

Addressing societal and environmental challenges can be a highly profitable business. This is part of the conscious capitalism philosophy that businesses should operate ethically while pursuing profits. Many companies are growing their top and bottom lines and benefitting from rapidly improving growth prospects, multiple expansion and lower cost of debt. Moreover, the expanding pool of ESG capital is bringing greater awareness and receptivity to their stocks. In addition, we think these companies will have better access to talent, and be less exposed to certain regulatory risks and the risks posed by environmental and social variables. The companies that are dedicated to sustainable practices – and providing transparency – have been attracting lower costs of capital and experiencing the early stages of a “sustainability premium”.

Key Drivers of Growth

Three key bills are before Congress that could have a significant impact on the energy sector: The Build Back Better, Green and Clean Future Acts.  Of course, others may well emerge. One of the biggest objectives of the Biden administration is to commit America to a Zero Net Carbon goal by 2050 and to attach some meaningful near-term targets and opportunities to achieve that. Specifically the White House wants 100 percent decarbonization of the utility system by 2035.

These bills will undoubtedly take multiple twists and turns, but with control of the White House and Congress we think it is highly likely some form of these bills will pass. Wealth creation with adding new sources of energy to the system over the past 100 plus years has been bigger than you can calculate. But it was all carbon. Now we’re decarbonizing and we have options because of technology.  We have the will because people, governments and corporations know it’s worth their time.

Looking to the Future

The case for a return-oriented approach to sustainable investing has become clear. The impact of addressing sustainable issues, from climate change to racial and social justice, has become a compelling investment case and, just as important, not factoring these issues represents an investment risk. Societies desire to accelerate the transformation to greener, decarbonized and more sustainable economies. These powerful and secular forces can generate substantial wealth creation and compelling risk-adjusted investment opportunities for both companies and investors for the many decades to come. Ecofin is up for the challenge of striving to deliver strong risk-adjusted returns to investors, while also making a positive impact on society.

 

Article by Brent Newcomb, President of Ecofin.  Mr. Newcomb joined the firm in 2014 and is a member of the Executive Committee and Ecofin Development Committee and serves as President of Ecofin. He is a member of investment committees for various Ecofin investment strategies as well as Tortoise Essential Assets Income Term Fund. Previously, Mr. Newcomb worked for GCM Grosvenor where he focused on portfolio management. He earned a Bachelor of Science degree in business administration from the University of Kansas and a Master of Business Administration degree from the University of Chicago Booth School Of Business.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

The Second Wave of Sustainability is Health and Wellbeing

By Sam Adams, VERT Asset Management

Kilroy Realty’s Columbia Square Residence Tower: First apartment rental project to achieve WELL Multifamily Residential Certification

For health and wellbeing in buildings, a wellness certification for a building was a luxury a year ago. Now some consider it a must have, and a way to encourage workers back to the office.

Sam Adams-VERT Asset MgmtWe humans typically spend 90 percent of our time indoors. Perhaps that’s why many us are somewhat complacent about buildings. We generally assume they are safe places to be. The pandemic changed all that. Suddenly, our attention is on whether our immediate environs can make us sick. We are asking questions about air quality, surface cleanliness, and even elevator capacity.

We have known buildings can make people sick for quite some time. The World Health Organization (WHO) coined the term Sick Building Syndrome or SBS in 1986. SBS occurs when occupants experience headaches, allergy-like symptoms, or feel dizzy after spending time indoors. Poorly maintained office buildings are estimated to impact 20 percent of workers. Improvements to air quality, reductions in air pollutants, and better ventilation can reduce symptoms by 70 percent.

SBS is not just a ventilation issue. A building’s stored supply of fresh water can reach unsafe levels of bacteria if the water system is not well maintained, leading to illness and even Legionnaire’s disease.1 Professor Joe Allen’s book, Healthy Buildings, identifies the nine foundations of a healthy building — ventilation, air quality, health, moisture, dust and pests, safety and security, water quality, noise, lighting and views. They are derived from 40 years of scientific evidence on the factors that drive better health and performance for a buildings’ occupants.

9 Foundations of a Healthy Building-VERT Asset Mgmt.2

People, Planet, or Profit?

Buildings consume 40 percent of global energy and create 30 percent of global energy-related greenhouse gas emissions.2 Being the energy hogs that they are, it was perhaps logical for the early focus of ESG investors to be on energy use reduction. It was also an easy return on investment. Reduce the energy use, reduce the utility bill. That’s good for the planet, and good for profit too. But what about the people?

A healthy workforce is a more profitable one. Healthier workplaces see less employee absenteeism, less sick days, and less employee turnover. Improving workspaces so people are more productive isn’t as easy as changing an incandescent light bulb to LED. But it’s not as hard as we might imagine.

The 3-30-300 rule

This rule of thumb describes a company’s costs for utilities, rent and payroll — all measured per square foot, per year.

A company renting office space for $30 a square foot can typically expect the utility bill to be a tenth of that, or $3. The payroll for the employees occupying that space is on the order of $300 per square foot.

Where then to focus effort?

  • 10% saving on utilities nets 30 cents.
  • 10% drop in rent saves 3 dollars.
  • 10% boost in worker productivity adds $30 dollars of value.

Companies are now beginning to focus more on the potential gains from investing in worker productivity.

The World Green Building Council published reports in 20143 and 20164 that summarize the dozens of studies that link sustainable workplace design to employee health, well-being and productivity. Case studies highlight the increases in productivity from various improvements:

  • Individual temperature control: +3%
  • Improved ventilation: +11%
  • Better lighting: +23%
  • Access to natural environment: +18%

WELL and Fitwel Building Certifications

Traditional green building certifications like LEED and BREEAM have been around for over 25 years with a primary objective to reduce environmental impacts. WELL and Fitwel are newer certifications—both less than ten years old—that focus on occupant health and well-being. Both certifications complement the requirements in a LEED or BREEAM certification, but include more health-focused requirements such as active workstations, proper lighting, low VOC materials, and layouts that promote worker interaction and even hydration. The Fitwel certification process is less onerous than the WELL version — it is both cheaper and an easier to attain. The WELL certification requires on-site verification and is more globally recognized. Building owners pursue the different certifications for different types of projects.

In June 2020 the International WELL Building Institute (IWBI), administrator of the WELL certification, created the specialized WELL Health-Safety rating in response to the COVID-19 crisis. Just 9 months later, over one billion square feet of space had enrolled to be rated. The rapid adoption of this safety rating illustrates how companies are committing to healthier spaces all around the world.

Investing in Health and Well-Being

Forward-thinking real estate companies are investing in upgrades and certifications to make their buildings more attractive to tenants looking for health and wellness. They are banking on employers choosing healthier spaces for their next office lease, and that residents will be looking for these features in their living spaces. Leaders include:

  • Empire State Realty5, owner 10 million square feet of rentable space across 14 office properties including the iconic Empire State Building, is the first commercial portfolio in the US to achieve the WELL Health-Safety rating across its entire portfolio. They have also Fitwel certified 6 of their NYC properties to date.
  • Kilroy Realty6 owns 55 properties up and down the West Coast and have more Fitwel certified projects than any other firm in the world, totaling over 43% of their portfolio. They also achieved the world’s first Well certification of a residential rental project, for Columbia Square in Hollywood, CA.
  • Dream Office REIT7 in Canada, has earned the WELL Health-Safety rating for 25 of its buildings, representing 87% of their gross leasable space.
  • Australia’s Charter Hall Group8 was one of the first organizations in the world to achieve a WELL Portfolio Score by certifying properties across their organization.
  • “Fitwel Champions” are companies using Fitwel at a portfolio scale. Real Estate Investment Trusts (REITs) making the grade include Alexandria Real Estate Equities9, Boston Properties10, Vornado11, and AvalonBay12.

The Covid-19 crisis has focused the attention of ESG investors on the S pillar (social) more so than ever before. The green building movement is routinely classified under the environment pillar because of the attention paid to energy efficiency. While green building certifications always required health and safety for occupants, the emergence of these new specialized wellness ratings demonstrate the elevation of S toward equal partner in the E, S, and G triumvirate.

 

Article by Sam Adams, CEO and co-founder of Vert Asset Management. He also chairs the Investment Research Group. Sam leads the development of new products to help make sustainable investing easier for investors. He has been a featured speaker on sustainable investing at financial advisor conferences in the US, UK, Europe, and Australia. Prior to launching Vert, Sam spent almost 20 years working at Dimensional Fund Advisors. He started Dimensional’s European Financial Advisor Services business and led it for 10 years. Sam was part of the team that created Dimensional’s first ESG strategies, the Sustainability Core funds that are offered in the US. He also led the development and launch of Dimensional’s Global Sustainability Core Fund in Europe.

Sam has a BA in Philosophy from the University of Colorado, Boulder and an MBA in Finance from the University of California, Davis. Sam is an avid mountaineer and cyclist, and is very passionate about the environment. He lives in Mill Valley, CA with his wife and three children.

 

Footnotes and Sources:
[1] Centers for Disease Control and Prevention (2021). Legionella. Retrieved from: https://www.cdc.gov/legionella/about/causes-transmission.html
[2] United Nations Environmental Programme (2015). The Sustainable Buildings and Construction Programme.
[3] World Green Building Council (2014). Health, Wellbeing & Productivity in Offices: The Next Chapter.
[4] World Green Building Council (2016). Building the Business Case: Health, Wellbeing and Productivity in the Green Offices.
[5] Empire State Realty is 0.18% of the Vert Global Sustainable Real Estate Fund (VGSRX) as of March 31, 2021.
[6] Kilroy Realty is 0.78% of the Vert Global Sustainable Real Estate Fund (VGSRX) as of March 31, 2021.
[7] Dream Office REIT is 0.04% of the Vert Global Sustainable Real Estate Fund (VGSRX) as of March 31, 2021.
[8] Charter Hall Group REIT is 0.16% of the Vert Global Sustainable Real Estate Fund (VGSRX) as of March 31, 2021.
[9] Alexandria Real Estate Equities  is 3.57% of the Vert Global Sustainable Real Estate Fund (VGSRX) as of March 31, 2021.
[10] Boston Properties is 1.80% of the Vert Global Sustainable Real Estate Fund (VGSRX) as of March 31, 2021.
[11] Vornado is 0.85% of the Vert Global Sustainable Real Estate Fund (VGSRX) as of March 31, 2021.
[12] AvalonBay Communities is 3.02% of the Vert Global Sustainable Real Estate Fund (VGSRX) as of March 31, 2021.

 

The Vert Global Sustainable Real Estate Fund only holds publicly traded REITs. Fund holdings and sectors are subject to change at any time and should not be considered a recommendation to buy or sell any security.

Mutual fund investments involve risk. Principal loss is possible. Investors should be aware of the risks involved with investing in a fund concentrating in REITs and real estate securities, such as declines in the value of real estate and increased susceptibility to adverse economic or regulatory developments. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. A REIT’s share price may decline because of adverse developments affecting the real estate industry. REITs may be subject to special tax rules and may not qualify for favorable federal tax treatment, which could have adverse tax consequences. The Fund’s focus on sustainability may limit the number of investment opportunities available to the fund and at time the fund may under perform funds that are not subject to similar investment considerations.

The Vert Global Sustainable Real Estate Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The statutory and summary prospectuses contain this and other important information about the investment company, and may be obtained by calling 1-844-740-VERT or visiting www.vertfunds.com . Read carefully before investing.

The Vert Global Sustainable Real Estate Fund is distributed by Quasar Distributors, LLC.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Why a Cooperative Model for Clean Energy Financing Couldn't Miss-by Blake Jones-Clean Energy CU

Why a Cooperative Model for Clean Energy Financing Couldn’t Miss

By Blake Jones, Clean Energy Credit Union

(above) The Howard Family and their solar PV system

Blake Jones-Clean Energy CUIn 2017, Clean Energy Credit Union (“Clean Energy CU”) received its federal charter and became the first “thematic,” online-only, federally insured depository institution with an exclusive focus on clean energy lending. Since then, Clean Energy CU has experienced tremendous success and is influencing both the banking and clean energy sectors. To say that “the time was right” for Clean Energy CU would be an understatement. Understanding its right-out-of-the-gate success requires a look at the underlying market conditions that necessitated its launch.

In the early 2000s, growth in the clean energy sector was driven by improvements in costs, technological innovation, government policy, and public opinion. This growth, however, was outpacing the availability of financing that many consumers and homeowners needed to pursue their clean energy projects. For example, upfront costs for residential solar electric systems, residential geothermal systems, and other green home improvements would typically land in the $10,000 to $50,000 range.

Of the 5,000+ credit unions and 5,000+ banks in the USA, only a handful were paying any attention to the sector. As a result, consumer financing options were typically limited to, and dominated by, VC-backed “fintech” companies such as Mosaic, Sungage Financial, and Dividend Finance, resulting in a dearth of competition to drive down borrowing costs. In contrast, all other segments of the clean energy value chain were laser-focused on reducing costs as rapidly as possible. Financing was the weak link that needed to catch up, and the cheapest form of consumer financing generally comes from federally insured depository institutions (i.e. banks and credit unions), so their entrance into the sector was sorely needed.

Against the backdrop of the clean energy economy were burgeoning concepts like impact investing, conscientious consumerism, and purposeful careers. In that evolving, impact-economy landscape, the need for an “impact banking” or “sustainable banking” option was plain to see. Even so, there were a surprisingly limited number of options for consumers to choose from such as Self-Help Credit Union, Amalgamated Bank, and Beneficial State Bank. Widespread awareness had yet to be raised that where you deposit your money was as important as how you earned, invested, and spent it.

By 2014, there was high, unmet demand for affordable clean energy loans juxtaposed with the dire needed to spark an “impact banking” movement. It was then that a group of volunteers, comprised mostly of clean energy professionals and cooperative enthusiasts, convened to address these needs. Upon learning that credit unions are, by definition, not-for-profit and member-owned cooperatives, they saw that the path forward was not actually a stockholder-beholden bank model whose mission would be subordinated to profit-maximization motives, but rather what would become Clean Energy CU.

The operating model is built entirely around the belief that everyone should be able to participate in the clean energy movement—whether as a user, an investor/depositor, or both.  Clean Energy CU offers a much-needed value proposition: member deposits will earn a competitive interest rate, be federally insured, and be used exclusively to help others pursue their clean energy or energy-saving projects via market-leading, custom-tailored loan terms.

In early 2018, after a three-year federal charter application process, Clean Energy CU opened its virtual doors. As a federally chartered credit union, it is tax exempt and deposits are federally insured, thereby giving it the lowest possible cost of capital. As a cooperative, it is democratically owned and governed by its members, and the primary reason for its existence is to serve its mission and members. An online/mobile-only services platform eliminates the need for expensive brick-and-mortar branches – and their associated overhead – and helps lower operating costs. Its focus on clean energy lending enables critically important market expertise, awareness, and adaptability.

Thapa family solar PV system
The Thapa Family and their solar PV system

Services were initially limited to savings accounts, clean energy CDs, and an array of clean energy loan products (e.g. e-bikes, EVs, solar electric systems, and geothermal systems). Philanthropic support that included a $1M grant from the William and Flora Hewlett Foundation in 2019 provided a substantial springboard. To date, over 4,500 clean energy loans totaling over $70M have been funded for members throughout the country without a single delinquency or default. Clean Energy CU continues to grow rapidly, and its services now include checking accounts, debit cards, IRAs, and Money Market accounts. Next, Clean Energy CU is planning to offer green home mortgages, credit cards, and clean energy loans to businesses and nonprofits.

Nida and Shahaan and their Tesla EV-Clean Energy CU
Nida and Shahaan with their Tesla EV

Clean Energy CU is also helping 45+ other credit unions learn about clean energy lending via “loan participations.” By selling portions of its loan pools to other credit unions, Clean Energy CU is able to lend far beyond what its start-up balance sheet would allow. Participating credit unions are able to invest their excess cash, diversify their loan portfolios, and gain experience with an exciting new asset class. Seeing firsthand how well these loans perform on their own books helps other credit unions to convince their own boards and regulators that clean energy loans are more valuable and less risky than previously thought, partly because they inherently save borrowers money (e.g. in the form of lower utility bills and fuel costs) which then increases the borrower’s ability and motivation to make their loan payments. In turn, this encourages more credit unions to do their own clean energy lending, thereby spurring competition and driving down financing costs to fund the rapidly growing clean energy movement.

Importantly, Clean Energy CU is committed to JEDI (Justice, Equity, Diversity, and Inclusion). With over half of its members from low-income census tracts, the National Credit Union Administration recognized it as a “low-income designated credit union” in 2020. Loan programs are under development to favor underserved demographics by offering discounted loan terms to low-to-moderate income borrowers and prioritizing both BIPOC populations and those vulnerable to pollution. As a precursor to these new loan programs, Clean Energy CU recently announced a new program with fellow cooperative, Organic Valley, to offer discounted loan terms to help its membership of organic family farms use clean energy, save energy, and save money.

Clean Energy CU may be the first of its kind, but it won’t be the last. New fintech companies and banks with similar goals are popping up like Aspiration, Climate First Bank, and Atmos. Clean Energy CU aims to help grow the clean energy movement and disrupt the entire retail banking sector which is receiving increased pressure to stop its fossil fuel lending and help finance climate change mitigation. With all that it has achieved in just its first three years of operation, we’re incredibly excited about what Clean Energy CU will accomplish next.

  

Article by Blake Jones, co-founder and volunteer board chair of Clean Energy Credit Union. Blake is also a co-founder of three other cooperatives: (1) Namasté Solar, an employee-owned cooperative; (2) Amicus Solar Cooperative, a purchasing cooperative; and (3) Kachuwa Impact Fund, an investment cooperative and impact investing fund.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Speed of Trust-A Native American Investment of Restorative Ag and Economics by Theo Ferguson

Speed of Trust: A Native American Investment Example of Restorative Agriculture and Economics

By Theo Ferguson, Healing Living Systems

Theo Ferguson of Healthy Living Systems

(above) Kevin Pourier’s Buffalo Horn Art: Connoting the achievement of bringing the Buffalo back. “wasna” carrying container by a hunter or warrior for nutrient dense “fast food”.

 

As White House National Climate Advisor Gina McCarthy espouses, we need to think in systemic terms when tackling our collective challenges — COVID, economic downturn, seeking social justice to heal racism, and climate change — these are all challenges that must be approached together. Our best guides — environmentally, socially, in governance practices and economically — are still our Indigenous brothers and sisters.

Eighty percent of the earth’s biodiversity is stewarded by 5 percent of the indigenous people living on 25 percent of the world’s land surfaces. Indigenous people, as a culture, have been very successful in living in balance with the environment.1 One could attest that their multi-dimensional, multi-generational ways of living and their spiritual connection with the lands and all species is the fundamental chord in the harmony and vitality they achieve.

Eighty percent of the earth’s biodiversity is stewarded by 5 percent of the indigenous people living on 25 percent of the world’s land surfaces. Indigenous people, as a culture, have been very successful in living in balance with the environment.

I attended the ASBC/SVC Spring Conference2 in April 2021. This session in particular impacted me — fundamentally. “Restorative Investing for Racial Justice: Learning More about the Tanka Bar Investment.” Participants included Aner Ben-Ami (Candide Group), Dawn Sherman (Native American Natural Foods (NANF)/Tanka Bar), Jeff Cyr (Raven Capital Partners), and Laina Greene (Angels of Impact). Some of the text of this article is drawn from that session.

In 2006 Native American Natural Foods (NANF), an Oglala Lakota enterprise mounted on the Pine Ridge Reservation in South Dakota, launched the Tanka Bar, the first commercial bison meat-and-fruit energy bar, based on a traditional Lakota recipe called ‘wasna.’ The intent of the enterprise was to bring the Buffalo back, as the Oglala Lakota people experience themselves and the Buffalo as Sister Nations. With lean buffalo meat reintroduced into their diet, the Oglala Lakota curtailed obesity and diabetes; simultaneously reintroducing the Buffalo led to regenerated soil and community health. With a goal of equitable wealth creation within its robust supply chain, NANF aimed to create livelihoods for their community members and Native ranchers (unemployment on the reservation is around 70 percent!), and bring bison back to the prairie, with profound climate and cultural implications.

Buffalo Returns – Pine Ridge Indian Reservation was on the brink of economic ruin and tribal elders Mark and Karlene felt they could find a solution. See how their company, Tanka, used cultural tradition to help create a sustainable economy for the Lakota people. Film produced with help from American Express

After its founding in 2006 by Karlene Hunter and Mark Tilsen, NANF experienced two good years, followed by 2008’s global economic dive and being pushed out of the market by well-funded “copy-cat” competition seeking to reap the rewards of buffalo meat products. Since “giving up” was not an option, NANF CEO Dawn Sherman and team “hung on” in the isolation of Pine Ridge for 3 years. NANF kept the company alive through the strength of their creation story with Buffalo, their core indigenous values, their leadership nation-wide and their on-line marketing. NANF negotiated a strategic partnership with Niman Ranch, which covered sales and supply chain management; brought in their primary bison supplier as a strategic partner; and built up their Advisors and Board. They found in the Candide Group, an equity investor partner, ready to provide regenerative funding for their food enterprise that upholds indigenous values using traditional recipes.

Aner Ben-Ami of the Candide Group3 is involved in redefining investing within the firm. Ben-Ami working with the Candide Group partner base, developed a model of investing that is based on food justice. The Group seeks through its investments to promote social justice and equity; they aim to help re-define who wins and who loses in our economy. The Group casts a wide net, knowing many issues are deeply intersectional and no issue is more intersectional than food. Our food industry can be redesigned to create wealth for the historically disadvantaged—often people of color (POC) workers/suppliers—as well as to serve healthy and nutritious food to lower income (often POC) communities. As investors, as we move capital away from an extraction economy to one based on shared ownership, it is critical to evaluate each enterprise’s fundamental principles.

Jeff Cyr is Managing Partner of Raven Capital Partners’ Raven Indigenous Impact Fund (RIIF)4, Canada’s first Indigenous financial intermediary. The Fund is working at the Canada-US Border practicing Restorative Economics. The group’s fundamental perspective is relationality in place-based capital, using money as medicine5 in service of Restorative Economics. Given Raven Capital’s focus, it was a natural alliance for Jeff to work with Candide Group’s Ben-Ami on an Indigenous investment.

The Candide Group saw the Tanka Bar enterprise’s equitable wealth creation, soil health, Indigenous values, investment structures, and focus on long-term Native ownership. Dawn Sherman’s team, with her elders’ approval, worked with Aner and Jeff to move the profit-seeking—not profit-maximizing—relationship forward at the “speed of trust.”6

The investment with decolonizing outcomes has created an innovative, reasonable 8-9 percent “all boats rise” solution built as a values-relations protocol, as well as a restorative, entrepreneur-friendly deal structure.

NANF has been opposed to the idea of building the business to sell it. NANF’s goal is to create wealth for Native owners, workers and ranchers through systemic, regenerative agriculture cultivating a keystone species while building soil health and human health. NANF believes that the goals proposed can only be fulfilled if NANF stays in Native hands under 100 percent native leadership over the long term.

Ben-Ami states: This is an equity investment with meaningful departures from convention:

  • “Native override”: Any financial distribution must include more than 51% of proceeds going to Native owners. These terms differ from conventional terms in one key way. Typically, preferred equity investors are the FIRST to get repaid. If a business must be sold because it cannot generate a return for all shareholders, preferred shareholders get all proceeds until they at least get their money back. This isn’t the case here – non-indigenous equity investors would recover at most 49% of proceeds.
  • Redemption right: Investors don’t expect NANF to pursue a sale of the business, instead investors have a redemption right. Investors ask the company to buy our shares back. If that isn’t possible—i.e. the company doesn’t have the resources—investors are collectively committed to prioritizing a third-party Native buyer. This scenario would result in an INCREASE in Native ownership; additionally, non-Native shareholders’ returns would be capped at a maximum of 2x initial investment. This is very different from a typical equity investment, where investors expect the company to be sold to the highest bidder.
  • For investors working with a severely under-resourced Native-owned company, there are certain additional considerations: Costs to holistic exit could be a pro bono attorney—term sheets lead investors’ attorney. Investors took on significant percentage of legal costs given atypical terms. Investors helped fund an outsourced CFO to support the process on the company side, so that NANF’s CEO was not solely responsible for financial analyses and projections.

Ben-Ami stated: “We’re honored to be a partner to NANF’s work, and encourage others to follow their journey in using decolonized wisdom for regenerative growth.”

  • Jeff Cyr: Indigenous investors take a lot of time. With good relationships the cost could be low. Sometimes the parties share the same attorney.

 Jeff Cyr observed: “Indigenous people are on a journey together. Money is love. Money is medicine. These enterprises are cultural capital. We want to undertake these entrepreneurial deals as native American activities overseen by the Bureau of Indian Affairs. This regenerative agricultural enterprise is taking back the Buffalo, our relatives, the bringing the people back their health.”

Dawn Sherman elevated again the critical need to work with all our relations: “Mitakuye Oyasin—We are all related.” “We need to work as partners and face the storm together.”

Jeff Cyr enjoined the audience to work on restorative enterprises. “We need an economics that works for the world, not for economic exclusion.  All my relations, create an economics for the world.”

 

Article by Theo Ferguson, CEO and founder of Healing Living Systems, Inc., a CA Social Purpose Corporation. Theo has been Focused on Food, Farming and Finance Infrastructure and Social Justice, and Advocacy since 2004.

Footnotes: Find all the footnotes details here as well as some additional useful information.

 

Note to Readers – Read Dawn Sherman’s full article on “Regenerating the Land and Native Communities with Bison” she wrote for GreenMoney in 2020.

Featured Articles, Food & Farming, Impact Investing, Sustainable Business

Betterment Harvest-Ag-Tech in Appalachia

Betterment Harvest: Ag-Tech in Appalachia

By Mark LaVerghetta, Land Betterment Corporation

Mark LaVerghetta-of Land Betterment CorpWe are at the forefront of a transformational shift throughout the Appalachian region and parts of the Midwest. As the United States incrementally and increasingly migrates away from fossil fuels as an energy source, the region has been left with a tremendous void in terms of lost economic opportunity.

The coal industry was once both the prominent source of energy in the U.S. and a major economic driver for this region. Today, thermal coal accounts for approximately 20 percent of the country’s generated electricity; down from approximately 40 percent in 2014. Due to specific mining conditions and cost structures, thermal coal mined from most of the Appalachian region has fallen below the economic margin, and much of the industry in the region has been forced into bankruptcies and out of business.

The downturn in the thermal coal industry has not only left the region with a void of economic opportunity and a declining tax base, but the associated coal mining bankruptcies have left a mounting number of abandoned and unfunded and under-funded environmental liabilities.

Land Betterment Corporation, a pending B-Corp, focuses on environmental solutions and a commitment to positive social and environmental impact by upcycling former coal mining and industrial sites to create sustainable community development and job creation. The company is taking a fresh yet practical approach in bringing real solutions to address these problems. Land Betterment’s two main divisions, Environmental Solutions and Sustainable Development, take a customized and holistic approach to remediate lands left behind by the legacy of the coal mining industry and other industrial activity, and repurpose certain parcels of land to bring business and jobs that fit a more modern-day economy. These new business lines focus on rebuilding or introducing an economic ecosystem in the region that is more sustainable and create jobs that are desired and fit the skillset of the local, yet displaced work force. The Company currently has Sustainable Business lines that include industries such as recycling, container-based housing, craft spirits, bee farming and Ag-Tech.

As a small example of Land Betterment’s work, its Ag-Tech division, Betterment Harvest, is currently building on the regional momentum to bring a scalable and community-based approach to sustainable agriculture which utilizes state-of-the-art, science-based practices that maximize productivity and profit while minimizing environmental damage. These technologies include a range of applications, such as indoor hydroponic systems installed in renovated and repurposed existing industrial buildings selectively positioned throughout eastern Kentucky. This sustainable development exemplifies how Land Betterment repurposes prior industrial sites left by a declining industry into new technologies that the community can embrace.

As another example, Land Betterment recently successfully bid to acquire control of a shutdown elementary school in Perry County, Kentucky. Land Betterment plans to renovate the Willard Elementary School, which was closed in 2018, and repurpose the school and surrounding property into an ag-tech center to focus on vertical and greenhouse farming. The closed school has approximately 4 acres of developable land which Land Betterment plans to upcycle into a local agriculture tech center and utilize the interior of the school for sophisticated vertical and greenhouse farming to grow various produce and plant propagation.

On this particular acquisition, Mark Jensen, Land Betterment’s Executive Chairmen commented that “We are really excited about the development of our Betterment Harvest division and the local adoption we are seeing. The Willard School is a great example of how we are approaching the Ag-Tech industry. The local community was happy to see the shutdown school repurposed for economic and community development. The region has a ton of old infrastructure and mining lands in need of environmental repair. We see the potential that these lands have in other industries, such as agriculture, and the region is in need of an economic shot in the arm. Additionally, the Appalachian region makes for an ideal Ag-Tech hub as its location places it within a one day drive of the majority of the U.S. population. The highly skilled, local workforce is excited about new opportunities, and we are excited to bring a scalable and solution-based approach to support the regional momentum in the Ag-Tech industry. The Appalachian region and the U.S, as a whole needs better access to healthy foods. With the U.S. increasingly relying on food imports, an efficient and sustainable agriculture hub in Appalachia address a lot of problems. For one, it reduces the transportation and diesel use of imported produce. It also helps in rejuvenating a region with a real and positive impact. We’re not just providing fresh produce and jobs to the communities; we’re also teaching future generations about agriculture and health”

To help advance Land Betterment’s business model in this region of the United States, the Company currently has access to over 13,000 acres of land to help foster new industry. Land Betterment is also working with the local technical college to support the activity of its Ag-Tech operations as well as to promote the education and relevant technical skill development. Mr. Jensen added, “We are excited to be at the forefront of the tremendous potential for the region to develop sustainable business practices to address some of the regional and national problems.”

Click here to learn more about Land Betterment and its impact investment opportunities.

 

Article by Mark LaVerghetta  After spending 20 plus years on sales side securities advisory, Mark has been dedicated to delivering shareholder and stakeholder value. As for the Vice President of Corporate Finance and Communication for American Resources Corp (Nasdaq: AREC) he drives retail and institutional investor communication and strategy. As a Co-Founder and Chief Governance Officer of Land Betterment (Private pending B-Corp) he ensures proper operational and corporate governance while growing sustainable businesses. Mark is a graduate of University of Virginia with a B.A. in economics while playing varsity Lacrosse.

Energy & Climate, Featured Articles, Food & Farming, Impact Investing, Sustainable Business

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