Corporate accountability:  When corporations improve their own footprint and that of their consumers, providing better choices without passing on regressive costs

We share the world – the good, the bad, and the ugly, but can we share the blame? Global warming is here, but is any single entity responsible for rising emissions that lead to shifting ecology, extreme weather, and other larger, yet unclear, impacts? It’s easy to point the finger on greedy corporations, peddling their evil goods on the unsuspecting public, but the public isn’t blameless, driving to the protest in their gas-engine cars, idling in line at Starbucks, and returning home to their large, air-conditioned homes.

While there is enough blame to go around, society already picked the villain. It’s up to common enemy #1, Oil & Gas, to seek redemption.  Numerous call-to-actions including protests and shareholder mandates, have led to small steps, such as efficiency targets, 30-year emissions reduction goals, and HSE-performance dependent bonuses.

This, of course, is not enough. The industry realizes it, and the money realizes it, too. Blackrock and JPMorgan Chase are dictating the need for meaningful progress towards climate goals, and industry goliaths are coming around.  BP, BHP, and Repsol are just a few corporations that have “net-zero” announcements. But what does this really mean? Surely, they are not shutting down.

Net-zero operations in the core business can be achieved, albeit at a cost.  For upstream producers, the low-hanging fruit is wide deployment of lead detection and repair (LDAR) and renewable electrification. Reaching net-zero also means stopping all but emergency flaring through investment in gas infrastructure and only working with midstream partners with adequate and redundant gas processing facilities. In some cases, these improvements help the bottom line through energy efficiency and operational savings. In others, especially once emission penalties are in place, poorly operated companies will fail. This is what we call table stakes, and we expect that all O&G upstream and midstream companies will achieve this before 2030 or risk losing their license to operate.

But, let’s not forget O&G’s little brother – downstream refineries, petrochemical facilities, and transport – responsible for end-use products like gasoline, diesel and liquefied natural gas (LNG).  Low cost and (ideally) profitable carbon capture, utilization and sequestration (CCUS) – a holy-grail for the energy industry – would allow these emissions to be captured, sequestered underground for millennia, or up-cycled to new products. Even power plants could use CCUS to balance renewable intermittency while committing to carbon -free power. The path to net-zero is a lot less straightforward for this sector, but the science is compelling, and a new industry is burgeoning.

Operational improvements will define responsible corporations, and responsibility is quickly becoming the barrier to entry.  True accountability, though, can only be achieved through net-zero products, providing consumers with a reasonable choice for reduced impact at the use-phase. Regardless of how they are made, consumers are demanding cleaner products, and corporations are on the hook to deliver. First mover’s advantage is at play – who will win the accountability game? Repsol already drew a line, announcing net-zero operations AND end-use by 2050. BP followed suit, and the markets, the money, and the public are watching the rest of the industry.

Is there such thing as carbon-negative oil and gas? Maybe. Can O&G create a business around it? Probably. Will shareholders pay for it? Probably not.

So, while corporations continue to peddle their evil goods to the people lounging in their AC homes, consumers must begin take ownership of their choices. As they become more willing to make lifestyle changes, corporations can meet those needs with better choices and reduced impact. After all, climate change doesn’t discriminate; corporations, individuals, municipalities – we are all adversely impacted, and we are all accountable. So maybe next time, we walk to the protest?

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Rozenfeld left his position as president of Shell Technology Venture to form his own venture firm, Climate Impact Capital. The past several years have not been kind to venture investors in cleantech and energy, as well as food, water, and other environmentally focused segments. Still, Rozenfeld says he believes that taking a longer-term approach to cleantech investing will prove to be successful.

“We’ve been talking about this for a long time, but nothing’s happening,” he says of society. “Really there may be only a decade before all of the economic impact issues become completely irreversible.”

It’s that economic argument—the belief that pursuing innovation that can tackle climate change is good business—that Rozenfeld says is key. “This is not just about doing good, though that is important.

“The boundary has been crossed to reach the financial community,” he adds. “Portfolios are at risk and we have a fiduciary duty to talk about this.”

Rozenfeld points out that others are seeing similar opportunities. For example, he points to the Breakthrough Energy Coalition, an effort to boost energy innovation led by Microsoft founder Bill Gates and Virgin Group founder Richard Branson, among others.

Climate Impact Capital is still just getting started. When I spoke to Rozenfeld last week, he had just moved into his new office and said he’s looking to hire a team and is also pursuing limited partners. His plan is to raise a $30 million fund with the goal of six to eight investments over a two-year period. He expects his investors to be large foundations and family offices, perhaps with a corporate strategic group added to the mix.

Rozenfeld says he envisions a fund that takes more of a longterm approach to investing in companies, as opposed to the more shortlived timeframes in cleantech so far. “The idea is for investors to maintain shares in the company throughout [its] lifetime,” he says. “We stay with the company and keep pushing them to create great products, even when it becomes public. That’s the way to create impact.”

To find those opportunities, Rozenfeld says he will use software to provide guidance, via data and systems analyses. “One of the most valuable parts of that is the act of bringing key stakeholders together around understanding fundamental problems and mapping them out,” he says.

Rozenfeld worked in the corporate energy world for two decades, and it’s a world he knows from his childhood; his father worked in the oil business and took the family around the world. “I’ve seen the negative consequences of energy development in developing countries,” he says. “I have an appreciation for the scale of the problems and the need for solutions.”

Those experiences fueled an interest in energy policy, which he studied at Princeton University. He received degrees in public policy and engineering from that institution, and also earned an MBA from MIT.

“I certainly am not starting this firm in the hopes of becoming a mega-millionaire venture capitalist,” he says. “The way to do that is to go into late-stage investments and raise a very large fund. This is more about creating something that will make value for investors, for companies, and have a significant positive impact in terms of the world.”

See original post by Angela Shah at Xconomy 

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