Experts Only Podcast #100:

With Decarbonization Expert Jan Vrins

[ Partner – Global Energy, Sustainability & Infrastructure Lead, Guidehouse ]

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Transcript

Jon Powers:

Welcome back to Experts Only. I am your host Jon Powers. I am the co-founder of CleanCapital and served as President Obama’s Chief Sustainability Officer. On this podcast, we explore solutions to climate change by talking to industry leaders about the intersection of energy, innovation, and finance. You can get more episodes at cleancapital.com.

Jon Powers:

Welcome back to Experts Only. I am your host Jon Powers. Today, we talk with Jan Vrins, who is a segment leader and partner for energy and sustainability and infrastructure at Guidehouse. For those that are not aware of guide house, it is a really amazing company helping to guide both companies and governments in the decarbonization journey. What is interesting is a lot of companies struggle cause they do not have the core resources or expertise really to understand these shifting markets around sustainability and climate change. And, guide house has the expertise to help walk them through. We will talk about some of their most recent reports and some of the work they are doing and really highlight, I think, where things are moving in this market overall. So, I hope you enjoy the conversation and as always, you can get more episodes at cleancapital.com. Jan, thanks so much for joining us here at Experts Only.

Jan Vrins:

Thanks, Jon. Happy to be on here.

Jon Powers:

Yeah, really excited to be talking to you. The work you are doing at guide house is pretty tremendous, but I want to sort of step back and talk about your personal career. You grew up in the Netherlands came here to the U.S and really built a career on the consulting side, working really for some of the most distinguished firms in the country. What got you interested in consulting? And, as you have gotten into it and had a career in it, what have you learned about helping to really navigate and really change the direction of some pretty major companies with those tools?

Jan Vrins:

Yeah, sure. And, I have to go back 30 years ago. Believe it or not, time flies when you are having fun, Jon. But actually, during my last year in college, and I was studying business and technology, I did an internship at KPMG consulting Indianapolis. And, I wrote my graduation thesis on technology driven business transformation and how important it is for organizations as they implement technology to look at processes and to look at people and to look at structures and operating models.

Jon Powers:

Right.

Jan Vrins:

To lead to successful implementation. That is really how I got into consulting because after I graduated, they made me an offer to come and join them. And, that is where I joined KPMG as a consultant. And then, one of my first projects I remembered really well was an ERP Implementation for a government agency in the Netherlands.

Jan Vrins:

And, at that time, ERP’s were not really integrated yet. So, you had finance and you had supply chain and you had HR.

Jon Powers:

Yup.

Jan Vrins:

And, there was a lot of technology integration or system integration that had to happen to make it work. But, my focus was really more on the processes and how the business processes and the organization and the people had to be transformed as part of these ERP Implementation as well. So, that was my first project there. And then, at that same time, we developed and I was teaching a course on the same topics. So, there I was, right? 25 years old teaching on IT and business.

Jon Powers:

Right.

Jan Vrins:

Integration to Senior Executives. So, I can tell you not easy, but I learned a lot by doing that.

Jon Powers:

And then, where in that journey did you first start to get interested in climate and energy?

Jan Vrins:

Yeah. So, after my career in the Netherlands, I actually made a couple of steps before I got to the U.S Jon. So, KPMG asked me if I wanted to help build a consulting practice in the Caribbean. I was 25.

Jon Powers:

Sounds awesome when you are 25.

Jan Vrins:

Yeah. They gave me an expert contract which still existed at that time. So, I said, “sure.” And, the plan was to go for four years and help KPMG build out a practice in the Caribbean. That is where I met my wife by the way. And, I never made it back to the Netherlands.

Jon Powers:

Right.

Jan Vrins:

After the Caribbean, they asked me to lead the energy practice for South America and I moved to Brazil actually. So, I lived in Brazil.

Jon Powers:

Oh, interesting!

Jan Vrins:

And, that is where I really got into energy. Obviously, Brazil is a very, not only beautiful country with beautiful people, but also a very rich country from energy.

Jon Powers:

For sure. Yeah.

Jan Vrins:

Resource perspective. And that is where I started to see on one side, the tremendous resources and opportunities of energy, but also the downside, right? With the rainforests being impacted by deforestation and things like that. So, that is where I started to think and get really interested in, okay, energy is really key to everything we do. Right? We cannot even have this conversation without energy or electricity, but it is also impacting the earth that we live on. So, that is where I really started to think about those things. And then, I did move to the U.S also for KPMG. And, spent some time with Accenture. And then, when I joined Navigant, that is where I really got into deep climate sustainability. We acquired a company in Europe called Ecofirst because I wanted to have a global footprint and I wanted to bring that climate…

Jon Powers:

Right.

Jan Vrins:

…sustainability footprint with it as well. And that is how I got into this space. And then, Navigant became Guidehouse later on.

Jon Powers:

Yeah. Let us talk about that for a second for folks that are not familiar because I think people are getting to know the Guidehouse brand, but it came from Navigant. Can you talk about just infrastructure for a second? Where you guys went from Navigant into PWC and sort of how Guidehouse was created?

Jan Vrins:

Yeah. So, Guidehouse was created from the consulting, the federal government, the government consulting practice from PWC. Navigant, we had a long standing history and I will not go into that. But, we were two standalone organizations, Guidehouse and Navigant pretty much the same size. And then, two years ago, we came together. We were acquired by Veritas Capital who owns a guide house. And, we continued as Guidehouse where again, Guidehouse X PWC brought this really strong government, federal, state, and local expertise around large programs that are so key to drive some of these policies and make them work.

Jan Vrins:

And at Navigant, we had really deep industry expertise in healthcare, financial services. And then, in my case, energy. And, bringing those two together, we have created this 21st century consulting firm where I think what makes us really unique is that we can straddle between government at all levels and commercial. And, to take on some of the world’s biggest issues. And, that is our ambition. You need to be able to work for the department of energy and at the same time, work for utilities around how we decarbonize buildings as an example. And, I think that is what makes us really unique. We do not work in silos. These problems are too big. They cannot be solved in silos. And, you have to have collaboration between the private sector and the government at all levels to solve some of these big issues that we are dealing with.

Jon Powers:

What is interesting is you are also not geographically constrained where you are taking lessons being learned in Europe around taxonomy for ESG and bringing it back here to the U.S. And, really helping to bridge the folks that are trying to solve this. As you said, “There are silos here at home.” But, how do we have those conversations? Here we are doing climate week and there is all this conversation at the UN around solving these problems. You guys are bridging a lot of those gaps.

Jan Vrins:

Yeah, absolutely. We have climate week now. In six weeks, we have the call, right?

Jon Powers:

Yep.

Jan Vrins:

So, absolutely. I have always been a global. A guy within consulting businesses and I have learned very early on that there is good things happening everywhere. And, if you are able to take those good things to your clients wherever you are. Whether you are in the Netherlands or whether you are in Brazil or whether you are here in Florida we are in right now. And, bring those lessons learned. That is extra value I think that we can bring to our clients.

Jan Vrins:

So, around climate and sustainability, absolutely Europe is leading in certain areas.

Jon Powers:

Yeah.

Jan Vrins:

Last scale renewables, offshore, wind, hydrogen, but guess what? Energy efficiency. The U.S for many, many years has actually been leading that space and Europe is actually behind and can learn a lot. So, although Europe is building all these large skill renewables which are absolutely needed as a big opportunity on the demand side to really…

Jon Powers:

Yeah.

Jan Vrins:

…help decarbonize buildings and reduce energy uses. And, they can learn a lot from what we have done here in the U.S. So, that is kind of how I straddle back and forth and try to bring the best of what is globally available to my clients.

Jon Powers:

Yeah. So, let us talk about that for a second. Because obviously the cultural change around climate change. I actually wrote a piece last year called “From Greta to the Boardroom.” Because the culture dynamic around acceptance has changed globally. And, finally here in the U.S it is coming along. We have reached a tipping point and now we are really getting to that tipping point for business and finance to take actions. We are seeing ESG investment every quarter at a record level. The new administration, the Biden administration is coming in and doing things like setting key metrics for financial institutions and public companies to measure themselves. Shareholders are looking for climate planning and adaptation planning, but the reality is most companies do not have climate and sustainability as a core function area within their organizations. Right? So…

Jan Vrins:

Right.

Jon Powers:

…how does Guidehouse help those firms really navigate this landscape?

Jan Vrins:

Yeah. The way I described it, right? Is, if you look at finance and accounting which is a core function for every organization, right?

Jon Powers:

Yeah.

Jan Vrins:

And there is governance, there is processes, there is systems, there is data that is reporting. Imagine this for carbon emissions. Right? So, imagine a similar system within organizations for carbon emissions because every organization is going to set certain targets to reduce their carbon emissions over the next three decades. Right? We have to be carbon neutral by 2050. There is no question in my mind that that is the bigger goal at the end of all of this. Every organization, whether it is a public organization, government agency, or whether it is a commercial or organization have to set those goals. Then, they have to put a plan in place in terms of how they reduce carbon. And, this is not only about energy supply.

Jan Vrins:

If it was energy supply, Jon, it would actually actually be pretty, pretty easy,

Jon Powers:

Yeah.

Jan Vrins:

But, this is about energy supply. This is about how we decarbonize buildings that are using a lot of carbon fuels. This is about transportation. And, this is about industries and agriculture. So, there is some sectors that are really hard to decarbonize. So, everybody will set those targets. Everybody will have roadmaps. I think a lot of the technologies exist. It is now a matter of how do we create skill around some of these technologies. Similar to how we create a skill around solar and Onshore wind, we need to create skill around Offshore winds and battery storage and renewable gas for example, which we are going to have as well. And then, organizations are going to need to set up again, systems. And, reporting structures where they can not only for themselves see how are we doing against those plans, but also report to their shareholders and their customers.

Jon Powers:

Right.

Jan Vrins:

In terms of, the progress that meeting. So, this is a big new area for organizations. And yes, I agree. I do not think right now that most organizations are equipped to do that. And, there is going to be a lot of resources needed to help them do with that. How we do that? We get engaged at the beginning. We get engaged at when organizations want to set targets, science based targets, not easy, pretty complex. And, how you develop then roadmaps. We call it decarbonization journeys. And then, how do you measure the progress and how do you do reporting? A couple of really interesting things that we are doing now is we are managing the partnership for carbon accounting financials. And, financials play a big role you know that Jon in terms of…

Jon Powers:

Yeah.

Jan Vrins:

…driving some of this. But, this project that we are doing is a global partnership of financial institutions. I think there is now, well over 150 financial institutions that are participating in this PPF initiative. They work together to develop and implement an approach to report and manage a greenhouse gas emissions for all the companies that they invest in and all the companies that they own. So, you are talking about again, 150 financial institutions over 40 countries representing 50 trillion in assets.

Jon Powers:

Right.

Jan Vrins:

And, they are all going to talk about how do we report and what are the measures that we put in place to report on how well our companies are doing against their carbon emission reduction goals…

Jon Powers:

Yeah.

Jan Vrins:

…which is pretty impactful work.

Jon Powers:

Yeah. Let me step back and run into that thread for a second because so, for folks that are not familiar with this and why this is so important, when we get to a place where we are really beginning to measure these metrics if you think about greenhouse housing, accounting, and people are sort of familiar now with scope one and scope two and scope three. How is that developed? It was not developed in a box. There was a series of conversations in working groups that really developed these metrics that then, were adopted and began to get more adopted across the market. And, at some level now, we are seeing a treasury in the SCC. And, out of Europe, we have had a whole conversation on the show about the taxonomy in Europe. These metrics are being now officially accepted at the government level. The work you guys are doing is building that momentum, building the cohesive support of the folks that are going to be implementing it.

Jon Powers:

I like to think about addressing climate a little bit as like you remember the scene in the Matrix? You ever watch the movie, the Matrix from years ago?

Jan Vrins:

No.

Jon Powers:

And, it was not until things really slowed down for him and he had be seeing the lines of code flying by him.

Jan Vrins:

Right.

Jon Powers:

Climate change is scary to people. But, once you start to understand it and you can begin to see those lines of code. You see it runs across everything that you touch. Right? And, how do you address it? I recently read the report you guys put out “Navigating the Decarbonization Journey.” And, it outlines for folks that are getting into this space those different pathways. And, how do you get involved? So, when you go into a company, you talk about sort of finance, supply chain data, business model. Are they engaging you guys to help them develop the roadmaps? Are you getting to the point now? Or you have got sort of off the shelf stuff you can bring in? What is that process like for a company engaging?

Jan Vrins:

Yeah. They engage us in several ways. One is indeed with setting some of these targets and TCFD has set some of the stages around a carbon emission standards and reporting on that. But, it is pretty complicated.

Jon Powers:

Yeah. Very complicated.

Jan Vrins:

I would argue that carbon accounting is actually way more complex than financial accounting. So, we measure.

Jon Powers:

Right.

Jan Vrins:

So, we are setting up systems now that are more complex than financial accounting. And, financial accounting is not easy and I am not an expert. So, it is pretty complex. So, our organization engages with that organization engage us with defining the roadmap we call it journey. But, more and more, we are really partnering up with companies. So, in that same white paper, we talk about a coalition that we form with Marsh McCormick and Pepsi-Cola. And, it is called supplier leadership on climate transition, collaborative.

Jan Vrins:

And, what we really do is what you mentioned. We are really looking at not only scope one which is their own carbon emissions, right? Of their own operations.

Jon Powers:

Right.

Jan Vrins:

Mars or McCormick or PepsiCo, but really look at scope two and three where they are going to engage all their suppliers and customers to really take out carbon out of the entire supply chain. So, that is how we get more engaged as well. And, last but not least, as you said, “if companies do not have the expertise, it is really not easy to build it and also to maintain it.”

Jon Powers:

Yeah.

Jan Vrins:

So, we have companies now that are asking us and say, “At Guidehouse, can you just do it for us?” Right? So, as organizations traditionally have outsourced some of their financial accounting, some of their HR processes, some of their IT processes, we are seeing the same around carbon accounting and reporting where we basically do it for companies.

Jon Powers:

Yeah.

Jan Vrins:

In models and then, we use resources from India that are very price competitive and good by the way, very qualified resource as well. And, we outsource it for organizations as well. So, those are some of the ways we get involved.

Jon Powers:

Yeah. Do you see the industry maturing to where down the road we do financial audits on all of our investments at CleanCapital? And, those reporting are helping to highlight what we are doing. UCRC, a maturing in the market where 10 years from now, people are auditing their sustainability in carbon metrics. They are at some level right? Doing reports, but actually like a true audit. Like we see in the financial side.

Jan Vrins:

Absolutely. And, I do not think it is going to take 10 years, Jon. I think it will be sooner where companies will actually certify.

Jon Powers:

Yeah,

Jan Vrins:

And, certification is not just looking at the numbers, but actually going into that production process and the logistic process, and actually certify the levels of carbon that have been taken out either logistics or even production processes or even some of their builder processes in terms of agriculture parts of their business. Well so, I think certification becomes key. Remember Walmart said a while ago, a couple years ago, “Oh! We are going to take out a Giga ton of carbon out of our own operations and working with our suppliers.” Well, that is a big statement and very ambitious.

Jon Powers:

Yeah.

Jan Vrins:

Love it, but how do you actually measure that?

Jon Powers:

Yeah.

Jan Vrins:

And, how do you stood that that is actually true. It will become more important as not only banks, but also insurance companies will value businesses quite differently. I mean in Europe, there are already insurance companies right now that do not ensure assets that are based on carbon. So, it is going to be a big thing from a certification accounting audit perspective because it is going to determine how many investors am I able to attract? What insurance do I pay on some of my assets? But, in the end, it is also about their customers. Right?

Jon Powers:

Right.

Jan Vrins:

We have just seen that customers want this. People are driving a lot of this. Customers want greener solutions. In the case of some of the food companies, in the past, some of our clients produce these big boxes, right? Cereal boxes. And, why did they produce big boxes? Because it was all about visibility on the shelves of supermarkets, right?

Jon Powers:

Yeah.

Jan Vrins:

This is a great example. Well, when you open up a box like that you see a big plastic bag. And, that bag is what? Half full at best?

Jon Powers:

Yeah.

Jan Vrins:

Sometimes it is like a third full? So, it was a huge waste of packaging. Right? And now, we have seen in Europe and we have discussed with McDonald’s about it and others as well in other products. Customers do not want all that waste. So, they want now, smaller efficient packaging. And, guess what? It also takes up less space in the trucks that we put in. So, you save on fuels.

Jon Powers:

Yeah.

Jan Vrins:

It is. It is such a win-win win for everybody. Customers want it, they can reduce supply chain costs and they can reduce carbon. We have strong cases. Now, Jon, where we do all three. We meet clients needs, we take out costs out of supply chain and we make the supply chain greener. We take out carbon and that is a win-win for everybody because shareholders love that. Clients wants that. And, the CFO likes it as well because they are saving costs at the same time.

Jon Powers:

Yeah. That is why I think we are at a tipping point, right? The demand is now here where it is no longer just a CEO who is driven by this, but it is a requirement. It is going to be driving a lot of the change across the company.

Jon Powers:

So, just to change for a second. I think you know my background and I led sustainability for the federal government, did a lot of climate planning for the federal government. And at one point the federal government was a real leader in this space, driving large scale renewables, looking at supply chain, looking at everything about electronics, and driving sustainability electronics. They have sort of lost that mantle the last few years and are trying to restart and regain momentum here. What I find really interesting is that the work that you are doing with the private sector who now is really leading this. How do we take those lessons learned and bring them back to the federal community so that they can be leaders once again in this space? Whether it be the defense department or the work that is happening across the GSA or department of energy. How can you guys help them guide their way forward?

Jan Vrins:

Yeah, you are absolutely right. We would not be where we are today with solar if it was not for the U.S government scaling some of those technologies early on saying that microbiomes by the way. So, there are a couple of examples. They are same with energy efficiency standards, right? Of appliances in buildings and office buildings, and in our homes as well. A lot of that work has been led by the department of energy for decades. And again, I think U.S is still a leader in terms of energy efficiency of appliance and buildings and things like that. So, absolutely U.S was a leader and in certain areas is still a leader. But, Europe and other regions obviously are making big investments and getting ahead of us as well.

Jan Vrins:

How? For me, it is simple and as you know we have a big team working with all the departments that you mentioned and are footprinted of guide out half of our business or more than half of our business is with government, federal government and state, and local. I think right now with the direction of the new administration, the targets are coming down on the agencies and the departments.

Jan Vrins:

We have a really, really interesting opportunity right now. Take for example, department of defense. Department of defense is probably one of the biggest, if not the biggest utility in the world, given all the utility assets that they have, right? They have substation…

Jon Powers:

Right.

Jan Vrins:

…transformation distribution. They have behind the meter micro grid, they have storage, they have all that. They also own one of the biggest fleets in the world, vehicles. And commercial vehicles, and then, you have all the combat and army with vehicles and you have the planes and all that stuff. So, there is two parts of it. I get it. And then, they have a lot of locations and a lot of buildings and a lot of bases that we are talking about here.

Jon Powers:

Just to give you guys some color that the army has three times the square footage of Walmart.

Jan Vrins:

Yeah. Right.

Jon Powers:

Just the army alone that does not count the other agencies.

Jan Vrins:

Here you go. No. The flip side is they are also the biggest emitter in the U.S, right?

Jon Powers:

Totally.

Jan Vrins:

They are responsible for almost 1% of carbon emissions in the U.S. So right there, you have the biggest emitter of greenhouse gas emissions in the U.S. So, if you want to have an impact I think it can be used. And then, if you look at their ecosystem where they work with large corporations and companies consulting companies like us Guidehouse, but also manufacturers in this space that are manufacturing equipment for energy supply, that are manufacturing vehicles and things like that.

Jan Vrins:

They have a huge opportunity to work together with us and their commercial partners to really make a dent and really drive some of these technologies at skill. And, whether that is electric vehicles or whether that is building electrification or whether that is a life skill, a battery storage that they need. They have a unique opportunity, not only to reduce their carbon emission footprint and make them more resilient, but actually to drive the U.S and the global agenda forward. So, we have been talking to them and, I think they understand the role that they could play. And, it could be way more impactful than what we have seen so far specifically.

Jon Powers:

I agree.

Jan Vrins:

And, we are super excited about it.

Jon Powers:

Excellent. Well, first of all, for folks that are just learning about Guidehouse now, you can go to guidehouse.com and you can access the navigating the carbon decarbonization journey right there on the home homepage with a bunch of other really great thought leadership pieces and great data around where the industry is going. Yeah, I always ask my folks in the podcast the same final question: if you can go back and sit down with yourself and in the Netherlands and give yourself a piece of advice before you headed off to work at KPMG at the time, what piece of advice would you give yourself?

Jan Vrins:

Yeah. Interesting question. There is so many pieces of advice, but I think one is think outside your lane. Think outside your box. It is very human to think about your own lane. We are not going to solve some of these problems if we stick to our own lane. So, yeah. Really think big and really see how you can collaborate to solve some of these problems, it is really important. This is very interesting. When I talk about some of these bigger issues and how we should attack them, people get worried about their own box. And, I am like, “Do not worry about your own box. This is what we are trying to solve here. And, we need all the stakeholders engaged. And, we need to look at all the technology that are available.” Right?

Jan Vrins:

It is not one technology. There is no silver bullet to solve this problem. So, we need all the stakeholders, we need all the technologies, and then we need all the financing that comes available through governments. And, as well as some of the private funding. And, I think there is a lot of opportunities to combine those two and a lot of interests to combine those two. You know that better than I do.

Jon Powers:

Yeah.

Jan Vrins:

We need all that. And, it is all about skill right now. But, we need to hurry. Right?

Jon Powers:

We need to hurry.

Jan Vrins:

We are on a path of three degrees and we need to get to one and a half degree. That is a big uphill battle there that we need to have. But, I am very optimistic. I think that the technologies are here. The will is here and now, we just need to make it happen.

Jon Powers:

Yeah. No, I agree with you and thank you for the leadership you and Guidehouse are showing on this and helping to really take people on what you call the journey here. We need to be driving forward. So, thank you so much for joining us at Experts Only.

Jan Vrins:

Thanks, Jon. My pleasure, man.

Jon Powers:

Yeah, absolutely. And, thank you so much for the team at Guidehouse, and Aaron Connelly, and Ted Adair, and the folks at Guidehouse for putting this together. And, for our producers, Colleen Young and Carly Batten. You can get more episodes at cleancapital.com. We will also have a look to the Guidehouse reports there. Really look forward to continue the conversation. Thanks!