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Episode 9: Alicia Seiger

This week, Jon Powers is joined by Alicia Seiger, Deputy Director of the Steyer-Taylor Center for Energy Policy and Finance and Managing Director of the Precourt Institute Clean Energy Finance Initiative. This episode’s conversation focuses on the evolution of academic thinking on climate and finance and also what is driving the business case for investing in clean energy.

Alicia leads the center’s work to develop and deploy financial innovations for philanthropic and long-term sources of capital to catalyze rapid decarbonization of the global economy. Ms. Seiger co-founded the Aligned Intermediary, an investment advisory group helping large-scale investors channel capital to resource innovation. She also serves on the board of PRIME Coalition and Ceres and advises student entrepreneurs building climate solutions. Alicia holds an MBA from the Stanford Graduate School of Business and a BA in Environmental Policy and Cultural Anthropology from Duke University.

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Transcript

Jon Powers:

Welcome to the Experts Only podcast, sponsored by CleanCapital, where we explore the intersection of energy, innovation, and finance. Our host is CleanCapital’s co-founder and former Federal Chief Sustainability Officer Jon Powers. Learn how CleanCapital is revolutionizing clean energy finance, and find more episodes at cleancapital.com, iTunes, or wherever you get your podcasts. If you like what you hear, be sure to subscribe and leave us a five-star review.

Jon Powers:

Welcome to CleanCapital’s Experts Only podcast. Today we’re talking to Alicia Seiger, the Deputy Director of Stanford’s Steyer-Taylor Center for Energy Policy and Finance. We’re really going to explore the evolution of some of the academic thinking on climate and finance, but also Alicia has been a real leader at helping to drive investors into investing in the climate space. She wrote a recent paper and argued that the business case for acting on climate change has never been stronger, and never more urgent. We look forward to exploring this with her. Alicia, thank you so much for joining us here at CleanCapital’s Experts Only podcast. Really looking forward to talking about some of the things you’re seeing at Stanford. Focusing on the intersection of energy, innovation and finance, but really wanted to start off before getting into that, and really explore a little bit of your personal journey in this space. You’ve had an interesting career, that’s gone from foundations, to NGOs, to the investor side, and obviously now working at an amazing university. Can you talk a little bit about your career, and how you ended up where you are today?

Alicia Seiger:

Sure. I can trace it back to my freshman year in college, for a standard writing course requirement. I was charged with reading Earth in the Balance, and was really struck by what Al Gore articulated in that book, and transfixed by the challenge of harmonizing human and natural systems. That was early enough in my college days that I was able to shape my curricular experience around it. Did a program where I could design my own major, and put together a major in combining environmental science and policy, and cultural anthropology. Was able to write a thesis pursuing intellectual property rights for indigenous peoples as a means of preserving cultural and biological diversity, which I thought was really cool and interesting at the time. When I got out, I realized it was really hard to find work in [inaudible 00:02:26], or at least that would pay you anything.

Alicia Seiger:

Fortunately I was from the Bay Area. I came back here and got in early on the first wave of tech innovation, or I should say internet innovation. Found I really loved and thrived in an entrepreneurial environment, was taken by sales and business development roles and thrived in that space. At the time, I spent that chapter working for an internet advertising company, and keeping the internet free. Wasn’t quite enough of a mission for me to feel sated. At least the side of me that really wants to work for passion. I left that post, went and pursued my MBA at Stanford, and wrote my admissions essay on finding the intersection of sustainability and entrepreneurship, and developing market-based solutions for environmental problems. Seeing business school as a path towards being able to do that on my own as an entrepreneur, which is where I knew I liked to be.

Alicia Seiger:

I’m one of the few people.

Jon Powers:

Be fascinating to go back and reread that today.

Alicia Seiger:

Yeah. Hearing what they said they wanted to do. It was hard when I graduated from business school. The really clean tech hadn’t begun in earnest. There were few opportunities for entrepreneurship and impact to come together. I stuck around, wrote case studies for a couple of years for the Center for Entrepreneurial Studies here at Stanford. Then finally found that intersection at a company called TerraPass, which was one of the early pioneers of the carbon offset industry. The voluntary offset market in the US.

Alicia Seiger:

After the birth of my first child, wanted to change my pace a little bit. Having a startup at home, I didn’t need also one during the day.

Jon Powers:

Right.

Alicia Seiger:

I started working as an independent consultant for foundations, NGOs, and family offices, picking up projects around climate and energy strategy, broadly. That’s where I really saw a disconnect between best intentions of philanthropy, and through the scale and scope of the need. When I had seen the Steyer-Taylor announcement of the Steyer-Taylor Center, and having both gone to Stanford and then worked at the Center for Entrepreneurial Studies, I knew these centers could be really interesting places to affect change. I logged a pitch in there, started in as a consultant, and I’ve been here now five years.

Jon Powers:

Talk a little bit about what the Center does.

Alicia Seiger:

Sure. The Center is a joint initiative of the business school and the law school. Our mission is to explore and develop economically sensible policies and financial mechanisms, to scale up financing for deep decarbonization globally. Bit of a mouthful, I realize.

Jon Powers:

Right. It’s a good mission, though.

Alicia Seiger:

Right? The way I think about centers, particularly at Stanford, is that they’re really in their best form of bridge between academics and markets. They all have an anchor of a faculty member, but they’re able to bring in practitioners who want to spend some time thinking deeply about really critical issues in interdisciplinary fields, and developing thought leadership to bring back to the market, but also to bring to the campus community. I think about this role is a continuation of my entrepreneurial path. In this case, I’m able to leverage the assets of Stanford University, including faculty, students, alumni, and the physical plant, through megaphone, and convening power we have, to develop and deploy climate solutions.

Jon Powers:

In your experience at Sanford, not just at the Center, but going back to even being a student, how have you seen the students’ interest change in climate and energy? Then also parallel, in financing, getting them interested in climate energy?

Alicia Seiger:

Yes. I saw Al gore speak here in 2005. At that time, there was certainly interest among students in sustainability issues, but finding the right channel for it. I’d say a couple things in particular have evolved. One, the language and specificity around how to develop curriculum and programming, that advances solutions and learnings in climate and energy has evolved. It was from sustainability, although in some ways it has come back to sustainability, in the nomenclature. Thinking of things as environmental issues, to an appreciation that climate is not an environmental issue, but in fact, a macro economic and productivity issue. Its pervasiveness, in terms of approaches to the challenge. Different avenues in different disciplines to approach the challenge has evolved. The students themselves are coming in now, with deep experience and expertise in related fields and roles.

Alicia Seiger:

They’re not coming out of investment banking and saying… I mean, some are, and saying, “I want to use this time to reinvent myself, and learn about stuff I had not been exposed to.” Then go off, and do something completely different. Many of them are coming in having worked in resource efficient innovations in various stages, before coming into Stanford, or working in the energy sector, even in the oil and gas sector. Developing knowledge and expertise they can then redeploy towards innovative solutions on their way out. The expertise and experience of the students has really evolved over time, in ways that I continue to be impressed by.

Jon Powers:

I want to dive, in a minute more into some content. Some of the stuff you’ve been working on and writing about. To stick with the academic track for a second, when you look across the way things have developed, if you had the ability to change some of the curriculum within the MBA track, or find ways to take the folks in the engineering school and the folks pursuing their PhDs, and make sure that they understand the business side of what they’re trying to achieve, what changes would you make?

Alicia Seiger:

I spent a fair amount of time thinking about this, although I’m not an academic, but having been a student, and being an alum and thinking about these issues deeply. I do think, particularly among MBA programs, there’s a lot of work to do here.

Jon Powers:

Right.

Alicia Seiger:

They’ve captured the themes of social innovation, impact investing, and even to some degree and in some programs, sustainability, but climate change is so much bigger than that. An understanding of it shouldn’t be confined to the self-selecting good kids who seek out those courses and themes. The motto here at Stanford is, “change lives, change organizations, and change the world.” My soap box I like to stand on in response to that is, “Fulfilling that mission really requires empowering students with knowledge, framework, and exposure, to the risks and opportunities they’re going to face as a result of a changing climate.”

Alicia Seiger:

That’s regardless of what sector of the economy you’re going into. Regardless of the role you’re going to play. We need to be training 21st century leaders for 21st century challenges. We are underdeveloped in that area, and it’s something that I’m working on. Not because I’ve been asked to, but because I care deeply about it. Trying to get more curriculum up here at the business school, I’m going to start teaching a class at the law school I’ve designed around some of these issues. Although trying to tailor it for law school audience, which is a challenge for me personally, having never been to law school. We’re going to have slots for other graduate students, so we’ll be able to bring in engineering and business students into that course. It’s a small seminar course.

Alicia Seiger:

Also, excited about a program that’s going to be happening at Duke in the spring. The woman Katie Kross, who’s leading that, has reached out to me, to help join a planning committee that is doing exactly this. Working with a coalition of other leading business schools, to try and really reinforce this idea that the climate change and climate leadership are central to an MBA curriculum. That students really need to be exposed to these issues on develop deeper understanding of the risks and opportunities they’re going to confront as a result.

Jon Powers:

Yeah, it’s so important for folks to understand that it really permeates everything we’re doing.

Alicia Seiger:

Mm-hmm (affirmative).

Jon Powers:

When I was working at the Pentagon, one of the things we were really trying to push down, was the effect of climate. Whether it be you’re talking about the mission in Sub-Saharan Africa, or in the Pacific Rim, or you’re talking about building out an installation here in the United States, and making sure it’s out of the hundred year flood water maps that they completely be rewritten here, in the next few decades.

Alicia Seiger:

You know, one other thing I just want to capture, and maybe we can throw this back in somewhere, but you asked a good question about how you navigate sitting at the intersection of academia and finance. It’s a tricky intersection to navigate.

Jon Powers:

Yeah.

Alicia Seiger:

I just want to answer that with a, “Carefully.” I’m always trying to keep in mind the mission of a University, and the unique role we can play, and the roles we should avoid, in terms of trying to do things the market’s going to do more efficiently and effectively. Think about that and in what I distilled into a tagline for the center, but it’s to innovate, teach, and connect. We come up with good ideas that can be distributed through traditional channels of peer reviewed journal articles, as a traditional product of academia, but also white papers, and short thought pieces that are easier to disseminate and digest.

Alicia Seiger:

Then we have a teaching mission obviously with the students, but also with practitioners, and bringing people together. Not only just bringing them together, but bringing them together in a learning posture without any hints of advocacy. That’s a unique role that academia can play. Then I try and keep myself grounded in the real world. I serve on a number of boards, and advise companies and students, and do some consulting work, just to make sure I’m grounded in what’s really happening. Academia can have a tendency to be walled off to what’s really going on and make the perfect ‘the enemy of the good’ and all those sorts of things. I really try and avoid that.

Jon Powers:

It’s really interesting. Having spent some time at Stanford in some previous roles in Silicon Valley, it’s really being at that heart of action out there, has made us such a unique community. Whether it be the Hoover Institute, or some of the other really, really interesting dialogues that happen on the University are excited.

Alicia Seiger:

Yeah. [inaudible 00:12:25] lucky, because so many people come to us.

Jon Powers:

Right.

Alicia Seiger:

We can get a very diverse mix of ideas, and voices, and diverse in terms of viewpoints, but also in terms of geographic diversity and sector diversity. People come from all over the world, and pass through here.

Jon Powers:

Let’s change focus a little bit from the pure academic side, and talk a little bit about some of the work you’ve been focusing on. I’ve read some of your recent papers. One, I think, you published a really good friend of mine, Kate Brandt. It’s really exciting to look at the message investors hopefully are hearing about the opportunity, in terms of investing in climate, investing in clean energy. One of your recent papers, you argue the business case for acting on climate changes has never been stronger, and also never been more urgent. It really does seem we’ve crossed a threshold, where this went from an issue of doing good, or doing well for the planet, to now this is about real cost savings for companies. This is about profits. It’s about companies that really are driving efficiency through sustainability. Can you talk a little bit about the evolution of the market and why it’s, this time today, so critical?

Alicia Seiger:

Yeah, sure. Shout out to Kate, too.

Jon Powers:

Of course.

Alicia Seiger:

Let me break it up into the two fronts. As far as the evolution, one is the science and impacts. If nothing else, climate change is very good at reminding us of its occurrence. There now just a relentless onslaught of data, to keep it front of mind and top of mind. A simple survey of the headlines of the last seven days, both domestically and internationally, will give you that. A couple of data points I often reference are 10 odd years on record since 1998. Hottest year ever was 2016, which shattered the record from 2015, which broke the record of 2014. You get the idea.

Jon Powers:

Right.

Alicia Seiger:

Another really compelling data point I look to is the, “So what of that?” Which I then look to the economic impacts of extreme weather. If you look back, starting before 1990 to 35 years prior, there was an average of one, or excuse me, the average number of billion dollar losses was five per year. That’s globally. In 2016, there were 15 weather and climate related disasters, that exceeded a billion dollars in losses in the US alone.

Jon Powers:

Wow.

Alicia Seiger:

We’re talk about the last… If you just add up Harvey and Irma, we’re going to be off. Harvey’s already estimating over $100 billion. We’ll see where we end up with Irma. The economic impacts of climate and weather disasters are becoming un-ignorable, both in terms of private sector and also government policy, in terms of how taxpayers are going to have to respond to paying for these storms. Then you’ve got lots more scientific data that we could go through. I’m not an atmospheric scientist, and there’s plenty of data out there. I frankly don’t want to spend a lot of time on that debate, but those are my two favorite statistics for just setting the stage on the science and impacts.

Alicia Seiger:

The market evolution is really interesting. I look to summer of 2012 as a big turning point, or start of the dominoes falling, with Bill McKibben’s Rolling Stone article, Global Warming’s Terrifying New Math. What that did, you can watch these dominoes fall. It really started the divestment movement, which in turn started a conversation among CIOs, that hadn’t been taking place before. Force that conversation, but in forcing that conversation, a couple of things happened. One, you had some people that were really compelled by the morality of it, and started to get way more proactive than they would have otherwise. Looking for economic arguments, but also starting to make decisions just purely based on moral values.

Alicia Seiger:

It also ignited a series of efforts, that started to really quantify the economic impacts. Great work from folks like 2 Degrees Investing Initiative, and CDP, that started to really do the math on stranded assets, make the economic case for the oil and gas sector. Then you had the risky business report come out, that really made the economic case for the whole US economy. You started to hear Bill McKibben’s voice, you’re getting Mark Carney’s voice, and Mike Bloomberg’s voice, and two former US Treasury Secretary’s voice, sounding the alarm bell. That’s a big change in four years. In the middle of that you had, or towards the end, I should say you had, you had the Paris Agreement, and you started to really see an evolution of leadership, and data, and action around markets at a scale and scope that you really hadn’t seen before. The dominoes are down now.

Jon Powers:

Right.

Alicia Seiger:

One of the things I’ve observed, that I find interesting about this, from the investor perspective, and track progress of different types of asset owners. One of the things I find interesting is folks that started with the environmental posture, and coming at it, even from even the moral side, or just as thinking of climate as an environmental issue, have in some ways been slower to act, than those to just been looking at the data or the numbers. You’re seeing case in point. You’re seeing BlackRock, and Vanguard, and these big institutional investors, that aren’t acting on moral grounds, making tremendous steps and strides, in terms of mandating climate risk disclosure, and publishing reports, and voting proxies, to a degree that’s even bolder than what you’ll see from some university and foundation in balance.

Jon Powers:

Yeah, it’s interesting. I feel like with the university endowment side, where there’s the invest, the divest movement has been incredibly powerful. It’s driven by so many different factors, which involve students and alumni. There’s a strong case to be made for that to happen, but lot of them have struggled to make the next step, which is the invest step.

Alicia Seiger:

Mm-hmm (affirmative).

Jon Powers:

We understand why we should be divesting from these fossil fuels, but why are clean energy projects very solid investment to be making. You see insurance companies, and others. Full disclosure, at CleanCapital, we have Jon Hancock, the life insurance company, invested in a lot of our projects. They see the long-term potential of these deals, and recognize the great cashflow involved. As you said, BlackRock, Vanguard, and others, are starting to come along. How do we take those divestors, and move them to the next step?

Alicia Seiger:

Yeah, such a good question. We spend a lot of time thinking about this at the Center, have launched an investor round table series called Investing in a New Climate, to help bring asset owners together by cohort, to talk about this stuff. One of the things I’ve observed, that I just find fascinating and frustrating at the same time, and it gets back to my origins story, but it’s the cultural anthropology side. It’s the people problems. You’ve got, particularly for law, endowments. Large asset owners, that are supposed to be acting like long-term investors. They’re organized in a fund-to-fund model. They’ve been operating a certain way for decades, where they’re looking. They’re picking managers based on track records. Some long standing relationships where they’re being forced to confront really new ways of thinking about resources, and resource efficiency and availability, and new risk factors, and data sources, and tools, and strategies for managing that.

Alicia Seiger:

Yet, they’re still very much stuck in the 10, 15 year track record model. That, and it needs to be a 2 and 20 closed-end fund, because that’s what I know. Give me the product that looks exactly like all the other products I buy

Jon Powers:

Make it easy.

Alicia Seiger:

That’s run by someone who’s been doing it for 10 years. You can’t, it doesn’t work. You need new teams, with new experiences, that they’re not going to have that 10 year track record because it’s new. The models that worked for other asset classes don’t work for these themes and types of assets. They demand new models. Sometimes they do work, but oftentimes it demands new models. You’re recognizing the need for change, but have institutional and human capital barriers, that are preventing… Forget incentive structures and governance, that are preventing the scale and speed of transformation on the invest side, that is required.

Jon Powers:

Yeah. It’s interesting. Going back to your Bill McKibben comment earlier, about the dominoes beginning to fall, it’ll be interesting to see now, was really exciting is post-Trump administration, not to make this political by any means. The Trump administrations pull out a Paris announcement. All of a sudden you had literally hundreds of companies come forth and say, “Wait a minute. We’re not doing this because of Paris. We’re doing this, because this makes awesome economic sense, whether we’re Google, or Apple, or GE, or whoever. We’re making these major commitments, because this is great for our bottom line.”

Jon Powers:

Hopefully that business case now begins to permeate with some of those fund managers as a [inaudible 00:21:16] managers. It’s still going to be a little bit of a long haul to get there. The work you guys are doing is going to be really important to continue to educate them, and drive them to action, because it’s that capital that will continue to make the game-changing efforts we need to accelerate clean energy. For instance, worldwide, or accelerate efforts on water. If we have to keep going to those 2 and 20 managers, who have crazy hurdle returns, these projects aren’t going to get done at the scale that we need.

Alicia Seiger:

Right. Your comment raises another thought for me, and I think it’s really important. I fell in the trap of talking about investment in terms of funds, which leads you down the thought that just clean tech venture capital, that’s going to get us out of this, which is not what I meant to suggest. There’s plenty of types of private equity fund model, whether you’re into the really early stage stuff, growth, or whatever. I articulated the challenges there, in terms of fund-to-funds management. Let me also now make a plug for disclosure, because I think what you said is exactly right, in terms of the response from the business community to Trump’s pull out of Paris.

Alicia Seiger:

I think that is a very encouraging sign. You’re seeing leadership on this issue in a way we hadn’t seen before, based on economic arguments, which I think is a really positive trend. The challenge for those CEOs, and for the market in general, is that we don’t have good data on which companies are our future proofing. The CEOs are making compelling and fact-based arguments, that it is in their economic self-interest to respond to climate and become climate resilient, invest in opportunities, and mitigate manage risk. We’re hamstringing them, by not providing their investors with datas to separate the leaders from the laggards. The work of the G20, FSB, TCFD, if I can throw down a bunch of acronyms. We can clean up [inaudible 00:23:11] It’s so critical. The economic arguments are as good, as strong, as they’ve ever been. The science and impacts are as compelling and terrifying as they’ve ever been.

Alicia Seiger:

We’re just making it harder for ourselves, by not creating the transparency we need in the market, to track these risks and price them, and reward the companies that are investing in resilience. It’s something the change in administration has a significant impact on, because you saw the march towards a full G20 adoption of the TCFD recommendations. Now you have a G19 of those recommendation, or endorsement at least. It’s going to fall back on the private sector to try and create synthetic and voluntary engagement to get to that data. One of the bright lights I see in all this, and I see this on campus and in my travels with practitioners, is you’re seeing a lot of really cool innovation around data and disclosure. Throwing down more acronyms, but with AI, and machine learning, and satellite imagery, and ways to provide actionable data for investors on companies and assets, vis-à-vis climate risk and exposure. You’re going to see a proliferation of software tools, and software as a service, offerings and consultancies, that are going to try and help investors do this while we wait for our federal government to implement consistent rules of the road.

Jon Powers:

I challenge our listeners to go and Google ‘Stanford Social Innovation Review’, and you can find Alicia’s article on ‘Businesses and Investors Need to Act on Climate Now’. It’s a great overview of some of the stuff we’ve talked about today, and a really important piece to help drive the conversation. Alicia, I thank you for taking the time today. I wanted to ask. We have a standard final question here for folks. If you could go back to yourself, when you were graduating, before you went and sold internet heads and could have a conversation coming out of college, or coming out of high school, what piece of advice would you give yourself?

Alicia Seiger:

Sure. I’ll be succinct. I say, “Figure out what you care most about, and what you’re really good at, then find the best people you can to go pursue those things with. It’ll all make sense in the review mirror, and objects are closer than they appear.”

Jon Powers:

That’s great. Thank you so much, and thank you so much for taking the time. Look forward to seeing you in person here in the near future.

Alicia Seiger:

Thank you. This was fun.

Jon Powers:

Absolutely. Thank you to Alicia Seiger for joining us at CleanCapital’s Experts Only podcast. Challenge each and every one of you to go to CleanCapital.com and download and see our latest episode. I want to send a quick thank you to our producers, Lauren Glickman and Emily Connor for their work, and ask you to go to iTunes or wherever you get your podcasts, and give us a five-star rating. If you have any thoughts on who else we should be interviewing, feel free to submit those to us at podcast@cleancapital.com. Thanks.