Episode 19: Sustainable Investing and Divestment

Claire Veuthey (left), Mike Fiorio (right)

Claire Veuthey (left), Mike Fiorio (right)

Claire Veuthey
Director of ESG & Impact

Mike Fiorio
Northland College Board of Trustees

Host: Dave Karlsgodt
Principal, Fovea, LLC

Production Assistant: Kaia Findlay

Remember the old adage, Put your money where your mouth is? Or maybe, vote with your wallet? No matter which way you say it, money talks. In this episode, Claire Veuthey of OpenInvest and Mike Fiorio of Northland College’s Board of Trustees discuss sustainable investments and how to make financial choices that reflect planet-forward values. Claire, the director of ESG & Impact at OpenInvest, a startup devoted to socially responsible investing, walks through the management of funds and investments and how they can become more sustainable. Mike discusses how Northland’s Board of Trustees reached their decision to divest from fossil fuels, and the importance of listening to student voices in balance with the university’s financial interests.


Episode Transcript:

The following is an automated transcription of this episode which will include errors and omissions. You can listen and follow along with the text here:


Dave Karlsgodt 0:00

Welcome to the campus energy and sustainability podcast. In each episode, we'll talk with leading campus professionals, thought leaders and engineers and innovators addressing the unique challenges and opportunities facing higher ed and corporate campuses. Our discussions will range from energy conservation and efficiency to planning and finance, from building science to social science, from energy systems to food systems, we hope you're ready to learn, share and ultimately accelerate your institution towards solutions. I'm your host, Dave Karlsgodt. I'm a principal at Fovea an energy, carbon and business planning firm.

Claire Veuthey 0:33

If your business is so extractive that you're going to lose all your customers, and you're not going to gain any new customers, that's not good for your business over time, it might be great this quarter, but in a couple of years, no one's going to be coming to you if

Mike Fiorio 0:44

you if our ultimate objective is to attract good students who want to be difference makers, change makers in the world, and make this place a better planet. The fact that we are divesting from fossil fuels, helps to college go out into the world and shout it out from the mountaintops and attract good students. And once they understood that, it was an easy transition.

Claire Veuthey 1:12

I think we've gotten to the point where it's more normal for folks to think about their purchasing decisions, like what they eat, what they were, what they drive or don't drive, but it's a little bit less common for folks to think about that in their investment portfolio.

Dave Karlsgodt 1:27

In this episode, I talked with two financial professionals about the concept of sustainable investing. My guests are Claire Veuthey of open invest, a public benefit corporation dedicated to making socially responsible investing easier and more accessible. And Mike Fioriro, a current member of the Board of Trustees at Northland college, a private liberal arts college in Ashland, Wisconsin. In our conversation, we talked through the various ways that individuals and institutional investors can promote sustainable business practices through their investments. We also discuss the Northland College Board of Trustees decision, divest from fossil fuels through their endowment. One quick update from our team. As I mentioned, in the last episode, we had a great response to our recent job posting about our summer internship program, we're excited to announce that we hired not just one but two interns. In addition to helping me out you'll hear from each of them individually as they produce their own episode over the summer. For now, I hope you enjoyed this may 2019 conversation with Claire Veuthey and Mike Fiorio.

So Claire and Mike, it's great to have you on the podcast today.

Claire Veuthey 2:32

Happy to be here. Thanks, Dave.

Mike Fiorio 2:33

Thanks. Dave agreed.

Dave Karlsgodt 2:36

Well, we've got a full plate of topics to get into today, some institutional investing 101 we might say and, and hopefully some real world experience around divestment. But before we dive in, maybe each of you can give a few minutes just to introduce yourself and how you found yourself working in and around this topic. Claire, maybe we'll start with you.

Claire Veuthey 2:55

Sure. So my day job is as director of ESG and impact at open invests and we're a pretty early stage startup in the socially responsible investing space. I also have a second job as a student. I'm a part time student in the Berkeley Hoss MBA for executives program.

Dave Karlsgodt 3:15

Great. Yeah. Mike, you want to give us a little introduction, please?

Mike Fiorio 3:18

Sure. I'm Mike Florio, I am He recently retired 60 year old man, who for the past 33 years, was a principal in a financial advisory firm in northern Wisconsin. over my career spanning four decades, I helped numerous investors individually as well as institutional wrestling with the concept of socially responsible and ESG investing. I'm also a trustee. Now going into my fourth year with a small liberal arts environmental college with a sustainable bent Northland, Northland college, and through my involvement at Northland, and my chairmanship of the business affairs committee and investment committee have helped the college wrestle with the notion of divestiture from fossil fuels, and through that relationship with Northland, and in an effort to get some good information, became acquainted with the intentional endowments network. Northland is now a member, I believe now for its third consecutive year. Normal college is 125 year old institution that is situated on the south shore of Lake Superior Northland is fairly unique in that it intertwines the liberal arts with the sciences, environmental sciences, natural resources and sustainability. Majority students at Northland, go there for the natural resources, environmental studies, outdoor education and sustainability course offerings.

Dave Karlsgodt 5:11

So I'd like to start with just some basics. I think most of our listeners know, you know, what a pension is, or what an endowment is, we don't need to get that basic. But I know for most people that have been in and around campuses, and they've heard of this divestment campaign, led by students are, like, you know, students storming the offices of the President, for example, demanding that the university divest of fossil fuels. But I know there's a lot of passion around this, but there isn't necessarily from my experience, a lot of deep understanding about how endowments work, how institutional investing works, etc. So Claire, I know you have a pretty good solid history of, of just institutional investing in general. So maybe you can give us a little bit of a background, who are the people making these decisions, or what or who even talking about here.

Claire Veuthey 5:59

So this really two major players, and then a whole ecosystem that has emerged around those players you have with the industry, cos asset owners, and they are, at the end of the day responsible for the assets and the funds that we're talking about. So that will be endowments, family foundations, often and at the small scale, it'll be individual people in their and their own personal funds. Then you have asset managers. So they're the professional investment folks like my company, for example, who are hired to manage assets on behalf of asset owners. And between asset owners and asset managers, you have a whole host of other service players, so many large asset owners will work with investment consultants, for example, who helped them find asset managers. In earlier parts of my career, I worked with a number of service providers that worked provided research for asset managers that we would rate listed companies on environmental, social and governance issues, for example, and there's a whole host of other providers that help both of those actors do their jobs better.

Dave Karlsgodt 7:04

Got it so that the like a university endowment, for example, would need to work with an asset manager or would leverage the work of a firm like the one you just described.

Claire Veuthey 7:13

Exactly. Yeah. And it would likely work with quite a few asset managers, actually, it would work with one for the fixed income, depending on the size of the endowment, one for fixed income, maybe a couple in the equity space, some in in real estate and private assets. Yeah, I could work with a whole stable of asset managers.

Dave Karlsgodt 7:29

So Mike, it sounds like you have done some of this work as well, in your career. Anything to add here, just ton of mechanics, the basics of what we're talking about, who are the players? And

Mike Fiorio 7:38

that's a good question. I would just add to what Claire said, Yes, from a perspective of both a past financial advisor and also current trustee of Norfolk college, I think you start with the fact that anybody who is charged with fiduciary responsibility of managing money, whether that be the trustee of the organization, an officer of the organization, or the actual asset managers, we are all trustees, or fiduciary, as I should say, and fiduciary duty of care to manage that money with lots of prudence. And there is a federal Act, which euphemistically, is called a myth, uniform prudent management of institutional funds act that has been adopted by 49 states, the District of Columbia, and the US Virgin Islands. And it's a enact that requires a duty of care for people like myself and Claire, that requires us to create a roadmap for the institution. And those of us in the industry refer to that as an investor the policy statement. And it's nothing more than a roadmap that lays out what the institution's goals are asset allocations, and expected return over the long haul, benchmarking of returns on the institutions portfolio to indexes. And as trustees, producers, officers of the organization, we use that roadmap and live and die by it. Part of an investment policy statement can include ESG and that's kind of the starting point for conversation of every organization with respect to inclusion or exclusion of investments that relate to the mission of the institution, such as divested or fossil fuels.

Dave Karlsgodt 9:52

So is that similar to like, I know, as a personal investor, you know, have a retirement fund. And they, they always make you fill out the form that says, you know, how aggressive Do you want your investments to be? You know, when do you expect to retire, things like that? Some of those seem to be just communication with the investment professional that I work with, but some of it seems to be they need to justify why they're making certain investments. Is that kind of similar to what you're talking about? But in this case, with an institution rather with an individual?

Mike Fiorio 10:20

Yes, yes, absolutely. And, you know, names and faces on, officers and trustees of organizations come and go, but the investment policy statement remains the same unless it is amended. And it truly is a roadmap. It's a living document, and over time, it can be changed and often is

Dave Karlsgodt 10:42

by a member. Okay, so if if you are in an institution, and you get to the point where you can amend that type of a document to say, okay, we'd like to increase the sustainability of our investments in some way, whether that's, you know, getting out of fossil fuels or or, you know, some other sustained ability goal, what are the different ways that that that can be pursued then? So maybe, Claire, I'll throw this one to you. I mean, like, what, what are the tools available to the institution at that point, or to the investment manager, asset manager, as you alluded to a second ago?

Claire Veuthey 11:17

Yeah, absolutely. There's really three methods, if you will, that sustainable investing can be implemented. The first is the one that's best understood, and that people really think about first when I think about socially responsible investing or sustainable investing, and that's exclusion. Right. So traditionally, Quakers, for example, when they started thinking about responsible investing, they said, Well, we don't want to own defense companies, that's just not in line with our passive, its values, it doesn't make sense for us to have a company that's really primarily manufacturing the products of war in our investment portfolios. So you can avoid companies whose activities you don't agree with or you don't think are sustainable in the financial sense or, and any other sense, really, there's a corollary to that which some people call positive screening, which is the opposite, right? You seek out companies that you think are doing good, and that fit your mission as an organization, and you can overweight those or include them when they wouldn't naturally be included, depending on your investment style. So that's the first method. The second method is a little bit more nuanced, and, and really aligned with how traditional investment managers work. And that's what I would call integration. So it's really looking at environmental, social, and governance factors as factors in the valuation work and in the calculations that go into figuring out a terminal multiple for a stock, for example, so when a fundamental analysts will peel through all the financials of a public company and say, Okay, well, we think the stock is worth x, but the market is pricing at why. And we think it's worth buying, because the stock will go up, we believe in business, part of how they can make that evaluation is based on environmental, social and governance issues. For example, if the company is creating products that allow people to reduce their energy use or replacements for energy intensive products, for example, beyond meat, just IPOs. And I think much of the interest around that stock has to do with folks choosing plant based options instead of meat based options. So that would be integration. Yeah, just

Dave Karlsgodt 13:19

to stop you there. So that would be an example. Like, it's not just that they're not doing bad, it's that what they're doing has a market for it, people are excited about their product, because it's something that hasn't been done before. But it also has, you know, environmental benefits to it that you could argue as well,

Claire Veuthey 13:35

exactly. Okay. And the third method is called engagement. So if you sit on the investor side, you'll call it company engagement. And if you sit on the company side, often it's called shareholder engagement. And that's really when those two parties talk. It can be very formal, but it's not a scripted or process that has really formal channels, like proxy voting, for example, it really has has to do with developing a trusted relationship. And the there's a number of ways to do that. But it's really about a conversation between shareholders and management or representatives of management, with the shareholders often counseling, pressuring, badgering, you know, depending on the conversation, the company to do more, or at minimum, disclose more about its impact on the environment or on social issues. Its plans to manage risk to its business based on climate change, for example, or changing societal norms, things like that. So that would be engagement. That's kind of a third way that investment managers can implement and integrate environmental, social and governance issues into their investment process.

Dave Karlsgodt 14:42

Okay, but that's real humans talking to each other. That's not just people buying or selling the stocks. It's not a market signal. It's real conversations.

Claire Veuthey 14:50

Exactly. each other. Yeah, exactly.

Dave Karlsgodt 14:53

And when that happens, who is who's at the table there? I mean, how, like, describe an example of what that looks like, in your more in a real sense, not in the general sense.

Claire Veuthey 15:02

Yeah, there's a huge range. I think, from the environmental, social and governance side, the folks who have been really good at this are long standing asset managers who've really at and they don't necessarily hold a huge piece of the stock, it really helps to get a meeting with management if you hold a big piece of the company's shares. And to be clear, these are publicly listed companies they are that means they're owned by the public, and very big asset managers will own a relatively big piece, which was often just a couple of percentage points. Right, BlackRock, just a gigantic asset manager, I think it's 6 trillion in assets under management often won't hold more than 15, or 20%, of a listed company. And for really big companies, it's more like 234 percent. So big, really big asset managers can easily get those meetings, but they're not always as informed about the environmental social governance issues. Smaller managers who really made their name in yesterday, engagements will will have developed deep relationships internally on not only with Investor Relations, but often also with the sustainability folks at the companies they're speaking to. And they'll overtime, you know, have a quarterly or bi annual call saying, Well, how are you doing on this issue? We asked you about last quarter. What about now we know you have other stuff to focus on. But keep keep this in mind. This is one of those important but not urgent issues. Eventually, what happens if the conversation isn't fruitful, shareholders will put together shareholder resolution and then try to put together a coalition of investors who will vote for that resolution and and try to get management attention that way.

Dave Karlsgodt 16:37

Okay, so that's more of a nuclear option at that point, because then it's more of a formal process versus just a conversation.

Claire Veuthey 16:43

That's right, exactly.

Dave Karlsgodt 16:45

Okay. I didn't fully appreciate that, when we were, you know, kind of prepping for this call. So thanks for that clarification. Is that something then that, like, say, if you're thinking about a university? I mean, is it conceivable that representatives of the University are every university endowment would be involved in a conversation like that? Or is it just the people that they would hire their asset managers that would do that?

Claire Veuthey 17:06

Either, or, we found that big asset owners who have the teams and the capacity to think about this deeply will do it themselves. So calipers, for example, like really big entities will often do the engagement themselves. I think the reality is that most asset owners don't have the ability to have a big team that's, you know, constantly really informed about these issues, and needs to rely they need to rely on their asset managers. Sometimes they'll split the difference, they'll say, Okay, well, we really know a lot about these issues. And we're going to keep engaging companies on climate change in corporate governance, but all the other issues, which are important, but are, you know, the issues of the day, for example, or that that kind of come and go or that are more technical, maybe they'll push those to the asset managers. But by and large, I think asset owners should feel free to push their asset managers to engage on their behalf. That's part of the investment process.

Dave Karlsgodt 17:57

Yeah. That you may not know the answer sort of this. I mean, I assume you don't sit you're not a CEO. But what would be the motivation of the senior leadership of these businesses to take these meetings? Is it because it gives them insight into what their shareholders are thinking? Or is it? You know, it's, I mean, if it's just a few percentage points, I can't imagine that it's not like they can take control of the company. Talk me through that? What would be the motivation?

Claire Veuthey 18:21

Now? Good question, uh, all of the above. And I think the most productive conversations like that, that I've been part of, generally, the CEO gets it, they know that this is an issue for their company, and they generally appreciate that shareholders will, will flag it, it's not just Oh, those pesky shareholders, we kind of need to do something to make them happy. I think the the CEOs that are the most engaged and and frankly, where you see the most change in the company is when they get that it's a long term issue that they need to think about. And they appreciate the nudge from their shoulders, I was on a call with a couple of years ago, and it's pretty unusual to have a CEO doing the cost, and it's an IR Investor Relations representative, maybe, you know, you really work at right, the corporate secretary or someone from the board. But in this case, the CEO was there was really active, really informed really knew a lot about the issue we're talking about, and really on the same page, and it was just about the kind of information shareholders want to disclose about work the board was already doing and the management was already doing so often. You know, in the best of cases, that's a situation the board says, look, we already have views on all of us, we just didn't feel the need to make it public. Because that's a threshold of particular scrutiny that companies tread carefully, which I understand, I think, to your point, CEOs, give those shareholders the time of day because they're like, Oh, wait, maybe there's something here that we either haven't been thinking about enough or that is going to get bigger, and we'd like to understand it better before it becomes a resolution in a couple of years time.

Dave Karlsgodt 19:49

Got it. In other words, they they may be doing good work and having lots of internal conversations. But making it public is both a lot of work, you know, you have to message it right. But also opens you up to risk and terms of talking about things either, you know, maybe competitive advantage is gone. Or there's other aspects of that, why they wouldn't say those things, but shareholders pushing them might. It opens the door for others to see. Okay, this, our competitors are doing this, so we should too.

Claire Veuthey 20:15

Absolutely. Yeah, exactly.

Dave Karlsgodt 20:18

Got it. Um, one thing I forgot to ask you, can you explain what it is that your firm does? I mean, where do you fit in this ecosystem you just described?

Claire Veuthey 20:26

Yeah, absolutely. So open investors, we use all three methods. So the portfolios we put together are designed to track benchmark indices very carefully. So they're really passive investments. But they're customized individuals and endowments values, right. So if you're a Family Foundation, really concerned about conservation, and you can make sure that your endowment In addition, for example, to your programmatic funds, are really aligned with your overall organized organizational mission. And what we'll do put together a portfolio that, for example, avoids companies that are the worst on deforestation practices, and overwhelms the companies that are the best. So that would be the positive and negative stream screening or exclusion and inclusion method that I described first. Because we're a passive shop, actually, we don't use that second tool, because we're not building individual evaluations for the companies, we really rely on the benchmark index provider to have a view on the way each company should have in a portfolio. And we use that as our baseline. The third method, and this is really novel, actually, we have a pending patent on this process. We've really distill down proxy voting. So that is simple and intelligible. Because it's a highly regulated process, it can get quite technical. And it's a little tricky to understand if you're not thinking about corporate governance all day, which most people, understandably, are not. So what we do is really distill down there often, but not always shareholder resolutions, but anything that needs to be voted on at a company annual meeting, that shareholders have the right to vote on will will distill the ones that are relevant to sustainability concerns down to a pretty simple question, provide our clients and investors with all the context they need, if they want to dig in more deeply, and then allow them to vote on their phones literally with a swipe. Yes or no on on on a proxy vote on those resolutions. So yeah, I'll take it back. We don't use the second tool, but we do use the investment divestment tool and the shareholder engagement piece of it.

Dave Karlsgodt 22:31

Well, two questions there. So one, part of the reason you don't use that second is because I assume you need enough scale or enough like if you're calipers, you if you have enough scale that you can absorb the administrative costs of taking on that engagement process. Yeah,

Claire Veuthey 22:44

that's right. Absolutely, we are looking to partnerships, and that's something I'm working on actively is working with other investors who are like minded and have similar views on the same issues. And this happens a lot actually, in the space investors will band together, aggregate the waist of the shares that they all collectively own, to push a particular point of view. So we are small, still on the asset side. But that really hasn't stopped other proponents and other asset managers from really making a difference. And really having the ear of some big companies on some important issues that they were, you know, conveniently ignoring before, there's actually a great story, a woman named Natasha Lamb who works at a company called agenda capital, who's led a series of really remarkable campaigns, particularly on gender pay equity over the last couple of years. And she's been engaging with a number of companies for years. And then I think when she just didn't see enough progress, submitted resolutions, shareholder resolutions at a bunch of financial services, companies and a bunch of tech companies, encouraging them to disclose on the gender pay gap and the gender pay difference within their employee base. And she's she's gotten a lot of attention, I think, really raised the issue in a way that hadn't been raised properly before.

Dave Karlsgodt 23:58

Basically, you don't have to do that, because you've got people that are focused on that. And you can pay attention to them and join forces with them. Maybe take the lead on other aspects of, of making them exactly,

Claire Veuthey 24:08

yeah, and I think that's the way these Coalition's work best because, you know, companies know their businesses really well, you can't just ask them to do things differently without being really informed, which is which is right. And it's pretty hard for investors who own even just 100 stocks, much less than, you know, thousand different different stocks to be as informed on all the issues as the management representatives are speaking to. So I think the best way for investor Coalition's to work is this divide and conquer approach, say, Okay, well, you asset manager x really focus on the climate issues and will really focus on the social issues will make sure that we're in sync, so where we agree on the position the other has taken, or we don't, you know, we don't join when we don't agree, or we have a different take, but it really allows for more traction and better quality discussions, frankly, between shareholders and companies, when you have that kind of structure.

Dave Karlsgodt 24:58

Okay, that helps in it. And then back to your proxy, you know, I guess it's like Tinder for proxy voting or like, the, you're simplifying it down so people know what they're voting on and giving them a chance, because I imagine that a lot of people just don't vote on stuff. Exactly. They just never take the time. So it's it's sort of like midterm elections that a few people get to make a bigger impact with their voting because they take the time to do it, or is or is it? Or is it structured such that the big shareholders have more sway, so

Claire Veuthey 25:31

it's not structured such but if you're an asset manager, you need to vote on behalf of your clients, so they are your asset owner, what happens most of the time is the default position is to vote with management. So you can see the how this becomes a little bit of a circus, right management puts together the agenda, all the points that need to be voted on the board says we recommend you vote x and most asset managers vote x, they don't even look at what the issue is. They just say management knows company best. We're just going to vote x. But okay, yes, sometimes. So there's obviously a lot of accountability, I have to say getting a shareholder resolution on on the ballot is pretty tricky. Already. There's a whole number of hurdles, you can't just file whatever you want, you need to own a certain number of shares, you need to have on them for a certain number of a certain number of years. It can't be considered meddling in the company's business. Since that not, that's not the investors role. It's usually about more information for investors from the company. And then even if a resolution were to pass and get over 50% of the vote, they're not those resolutions are not binding. So it and this has happened. Unfortunately, management can just choose to ignore the results, it behooves management to take a closer look and say, Okay, well 20% of our shareholder base thinks is an important question. Maybe we should take a look. It's just it's just not a great look to totally ignore that kind of results when you have a vote like that. But it but it definitely happens.

Dave Karlsgodt 26:54

Got it, maybe a way of putting it would be a resolution would be effective at getting things like disclosure, the, you know, gender pay gap example you gave a second ago, not necessarily saying we think you should go into this market, or we think you should try this product or something like that. That's that's management's job. So that's not

Claire Veuthey 27:10

correct. That's exactly yeah, investors generally shouldn't be making that kind of recommendation. But they can ask for more information. That's pretty standard. And you can see how it's a bit of a Trojan horse, right? The idea is, make sure you one, do if you don't have the data on gender pay gap within your company, you probably should. So please go set up those controls, and then report back to us on what the results are. And then you know, once the report is out there, because it's it will be made public. The expectation or the you'd expected company to do something about it, the numbers are really bad. Of course, they don't have to, but you'd hope that they would, that's part of the the point of asking for more information is then you know, acting on it?

Dave Karlsgodt 27:53

Well, it's interesting to hear you describe it from your perspective, as a consultant, we have been getting more inquiries from for profit company, most of our work has traditionally been just higher ed, where there does seem to be a little more of a mission link to, you know, the sustainability goals. Maybe they're being pushed by their students or faculty, as Mike alluded to earlier. But we're starting to see that in some for profit companies, and largely it is coming from shareholders. So I guess, good work, you know, on that front, but turning the conversation back to higher ed. Mike, I guess I would be interested in getting your perspective on those three methods that Claire just laid out, as a trustee or as a board of trustees, how have you interacted with those tools?

Mike Fiorio 28:33

Well, I would say that, in my experience over the past 33 years in the industry as an advisor, and now in the last three, as a trustee, it's been an evolution. Early on, there were a few money management investment companies out there that did socially responsible investing, you know, internally, they were charging a bit of quite a bit of money for what they did. Now, over the decades, things have come along, and it really isn't rocket science anymore. institutions. And individuals can invest money in a plethora of investment products that are sliced and diced to meet consumer demands. And it can be anything from, you know, plain vanilla mutual funds to exchange traded funds to separately managed accounts that will screen out specific industries, companies or search out companies that leave no, no mark on the planet with respect to carbon or humanity. With respect to north from college, I can say with certainty that Northland’s journey probably started easily 20 years ago, like you said, early on, we have demands from both students and faculty to divest from fossil fuels, the likes of AOC, and young people in general, who aren't afraid of the establishment, they're leading the charge and demanding change. The end of the day, this vision of higher learning its mission is to educate students. And in the absence of students, you know, there is no mission. And the objective of every institution of higher learning is to get students and if you're not listening to your audience, they'll go somewhere else, if you're not going to do your job, someone else is going to do it for you. So, you know, maybe this is a good segue into processes. But the process by which Northland ultimately went from essentially no holds barred, our objective is to earn as much money as we are fiduciary capable with the least amount of risk to doing that, with some attention to the planet, part of that journey led to the intentional endowments network, and me behind the scenes seeking some of the data that would help me go to, you know, 60, and 70, and 80 year old people who have spent their lives in business, in business, the ultimate objective is profit, any business whose objective is profit, you know, without it, they're out of business. So in the effort to make that case, in touch on the dominance network, provided me with some empirical evidence that would help me understand my fiduciary duty. And then from there, I always try to keep it simple. You know, Frank Luntz, who is a marketing guru in the car industry and now with the the Republican Party, says that it's not what you say, it's what they hear. And, you know, my goal in leading the conversation with trustees about divest from fossil fuels, was to help them understand that a as a fiduciary by divesting from fossil fuels, we are going to sacrifice returns necessarily on our underlying endowment portfolio. And be if our ultimate objective is to attract good students who want to be difference makers, change makers in the world, and make this place a better planet. The fact that we are divesting from fossil fuels, helps the college go out into the world and shouted out from the mountaintops and attract good students. And once they understood that, it was an easy transition, you know, divest from fossil fuels, in my view is a beginning. It's a starting point.

Dave Karlsgodt 33:06

Well, let's get into the specific process of this a little bit. Maybe, Mike, you could speak specifically to what did you guys actually do like, well, how did you actually get fossil fuels out of your investments and interest, an ongoing process? What did you actually go through? You had these conversations? At what point did you pull a trigger on a policy change or process or, you know, when did money start flowing from one account to another?

Mike Fiorio 33:32

Well, it was, like I say, this process, I think, started 20 years ago, and I came in as a trustee, I would say maybe a year into a conversation, trustees, collectively meet at our institution, just four times a year, quarterly. And it took, I would say, two years to go from starting the conversation myself, that is to having the conversation I just had with you about you know, it's not about sacrificing returns necessarily. But it is about doing what's right. being consistent with our mission. We do those things, the rest of the challenges of attracting good students. We're going in the right direction. After tabling the divesting of fossil fuels from our endowment over the course of several quarters. Finally, they got it they understood. You know, from a business persons perspective, climate change, Frank Luntz is the one that coined the term climate change. You said, global warming is not a warm and fuzzy. But climate change can be palatable. And that goes to it's not what you say, it's, it's what they hear. If you start conversations with if we don't start changing our ways, the planet is going to spin out of control, and we're all dead meat, you have to begin with maybe somebody those those ideas, but what about those ideas? And how can we change them, while at the same time not affecting our bottom line on the endowment, but our bottom line, in terms of attracting more and better students is a good conversation to have. And that's when they understood that we could do this, and then it was tabled for one more quarter. And we came in with a a motion resolution that said, we're going to do this, we're going to divest will give ourselves up to five years to make it happen. You know, your wheels are in motion. Our investment manager is essentially we're in private, separately managed accounts. And we're screaming out the fossil fuels. You know, again, that's a starting place. And I can see going forward into the future, you know, maybe not only screaming out fossil fuels, but tempting to start to look at, you know, carbon footprints of companies. And even beyond that. And again, it's not rocket science, there's a million in one ways of easily doing these things. And in terms of costs, which are part and parcel of a producer is responsibility to keep them low. Costs are compressing all the time. It's very competitive.

Dave Karlsgodt 36:24

Yeah. So let me just summarize what I've heard then. So first and foremost, it was expensive initially, because nobody really knew how to do it. And it was basically a boutique service offering at that point, but the costs have come down. The second part was the conversation with the rest of the trustees really had to focus on how does this help us be better trustees and be better stewards of the money that we're being trustees of promoting the mission of the institution and things like that? Maybe with the backdrop of climate change, but not certainly not? We're going to save the world through our dollar investment. It's really more about we're going to make a great university because we're investing in a smart way. Is that a fair way? To summarize it?

Mike Fiorio 37:03

Yes, it would be the only other thing I would add is your best friends in effecting these changes are your faculty and your students? And that's where change comes from, ultimately, that they're, they're pushing

Dave Karlsgodt 37:19

for that. Got it? You don't have lots of quippy sayings on T shirts and the Board of Trustees meetings, most people are pretty buttoned up, it sounds like, yes. Okay. Claire what maybe you, go ahead

Claire Veuthey 37:32

I just want to jump on a point that Mike made earlier, I think asset managers and an asset owners actually have a duty of care as a fiduciary duty to maximize shareholder value, and that has increasingly or overtime really been interpreted as maximizing the stock price. But you can see value isn't only an exclusively encompassed by the stock price. There's lots of other components. And lots of investors, and other folks will tell you, it's not the only thing they care about, right? They want the business done, right? They want it to be sustainable again, in the traditional financial sense, if your business is so extractive that you're going to lose all your customers or, and you're not going to gain any new customers, that's not good for your business over time, it might be great this quarter, but in a couple of years, no one's going to be coming to you. And I think that's a pretty easy concept to understand, even if you're only focused on returns. So I just want to be a little bit cautious about this, this idea of fiduciary duty, it's it's super important. But we can be a bit quick to rush to that to the idea that it's just about maximizing the share price and not a slightly more holistic understanding of what value

Dave Karlsgodt 38:41

Yeah, fair enough. I mean, there's both short term value long term value, but there's also societal value. And that's starting to become I mean, those are intertwined. Right. Or another way I've heard that put is, if we really do see massive impacts from climate change, then the economy itself is at risk. It's not about right, choose between one or the other. It's just that it. Yeah, there is no economy at a certain point, if it gets too bad.

Claire Veuthey 39:06

Exactly. There's there's no business on a dead planet.

Dave Karlsgodt 39:09

Fair enough? That's a good way to say it. I want to bring up a question, then I think both of you, I would venture a guess would consider yourselves capitalists in the general sense. You know, basically, the basic idea of Adam Smith's invisible hand saying that as long as you have good information that, you know, markets are the most efficient way to organize your economic system, rather than like a Soviet style command control. But that said, the the key point that I think people often forget is, its access to information is central to that idea. I'm curious how much access there is to this information. I know that, like I mentioned earlier, some there are companies coming to us now and saying, Hey, we need to get this information out there to the world for people to look at. But I would say frankly, most of what I'm seeing out there is not particularly detailed. And there's a lot of you know greenwashing information or just inadequate information, or just people just don't know how to capture this, as investors are from your perspectives? Are you seeing enough information to make these types of decisions? Is that getting better? Or just just talk to me about that, that idea? Or you know, or argue my my premise in the first place?

Mike Fiorio 40:17

day? That's a good question. There's a lot of information out there, I would start by mentioning a study I read, and I'm thinking it's maybe five or six years old now. That was done by Merrill Lynch. The study essentially made an attempt to create a an ethical score for all the larger capital life companies, publicly traded companies in the United States, and then correlated, those ethical scores with long term performance. While behold, those companies that had good ethical scores tended to perform better than those that through out the window, by ethical, I'm talking about companies that don't cook their books, treat their employees respectfully apply best practices, or regulatory hot water. Those are the companies that are the good long term performers. And in recent history, what comes to my mind is balling, you know, bowing his head, it's your issues recently, and course, their stock prices suffered. And it gets down to maybe 11% or so over its highs in recent history. There many, many other examples, Volkswagen, you name it in banking as Wells Fargo, I think there's plenty of information that will give investors and investment companies enough information to make reasonably good choices and who gets into the portfolio and who doesn't.

Dave Karlsgodt 41:58

So Claire, same, same question to you. So how, how does your firm for example, help your clients separate the greenwashing from actual actionable information?

Claire Veuthey 42:08

So let me take a step back and just talk a little bit about sustainability reporting. Sustainability reporting isn't regulated or very lightly. So which means that companies essentially disclose what they want, when they want and how they want. And as you can imagine, they largely disclose what makes them look good when it makes them look good, you know, when it's convenient, and they're not putting out other fires. This makes it really hard for investors to compare that information between companies, which really is how investors make decisions, right? They say, Okay, well, we can own a, we want exposure to the financial sector, we're looking at consumer finance, let's look at these four companies that have relatively similar business models. But I can't compare them on this one issue because they all disclose one of them discloses things on a two year cycle and the other set targets for years ago, but hasn't updated anything or told us how they've done on their targets. And the last one doesn't disclose anything. So it makes it really hard to really make an informed decision based on that kind of data. And I'd say that the big environmental, social and governance data providers have largely built their business on the fact that there wasn't a clear formal standard understanding of what issues which should matter to which companies, I'll just put a little plug in here for an organization called SASB, which is the sustainability Accounting Standards Board. And they really jumped into this yawning gap that existed, I think, back in 2011, which is when the organization was formed, and modeled themselves after the FASB, all right, well, investors say they care about these issues, but companies aren't disclosing them. Well, companies say none of our investors care, or if they do, they're all asking for different things. And we can't disclose everything, please be more directive or more specific about the information you want to see. Issue experts and other stakeholders are generally disappointed with the quality of disclosure or companies are putting out really beautiful reports that aren't made for investors, they're made for their community, maybe their regulator, often they're made for their employees. And they're, they're more story based than database, which again, is an investor would want to see data and stories are great, but only to inform and give a little color on the data. So it says we did was spent four or five years, working closely with big investors, you know, Vanguard, Wells, capital, State Street groups like that big companies that were engaged and interested in working on these issues and a number of subject matter experts. So accountants, securities lawyers, folks who knew the environmental social issues really well, and came up with a set of standards of how sustainability issues should be disclosed. And they came up with very technical disclosure saying, you should disclose this particular metric normalized by sales on a quarterly basis. And here's an example, size, he's been working on this really hard, they finally put out their first set of the first final standards in q3 or q4 2018. So this year, we'll really see whether whether companies step up to the plate and say, Okay, well, now we have the standards that we've been asking about for a long time. Let's see what the numbers look like, let's see if they if they actually use them, of course, this is, it's not mandatory, it's not regulated, yet, for companies to disclose any of this. And under this sec, it's unlikely to be regulated, but companies now have have the tools that they need, they may need a year to set up controls in order to really disclose the data properly. But I think 2020 will be really interesting to see which companies actually use the tools that have now been created for them to disclose sustainable, there's

Dave Karlsgodt 45:53

a lot of parallels to the higher ed world, a lot of the reporting, there has also been a challenge. A lot of our work tends to be just cleaning up their reporting data so that we can start talking about what to do about it. You know, there's a lot of just filling in the gaps. But yeah, I mean, how is it? So it sounds like it's getting better? And is it? I mean, could we expect that from every level of company? Or is it just the large companies that will be able to disclose that information? What can we expect?

Claire Veuthey 46:17

Hmm, um, so I've been lucky to work in a couple of regions around the world. I was based in Singapore for a couple of years, and in Amsterdam, Switzerland. And I'd say there's definitely a regional bend. So by and large, Western Europe is very good at this kind of disclosure. And I think it's at least in part because big investors there have been pushing for longer. The US is, is picking up especially the really big companies, but really the defining factor of which companies are, do a good job disclosing environmental, social governance issues or which companies compete at a global level. So you'll have companies like Wipro, in India, or Taiwan, semi based in in Taiwan. So companies firmly based in emerging markets, they compete again at a global scale, and they know that their clients, to some extent, their suppliers, and certainly their investors are interested in these issues. So to answer your question, it's mostly larger companies, though, increasingly, we're seeing it go down the market cap, and smaller companies are kind of getting the picture and realize that they need to have somewhat better answers. To be fair to small companies, often they're already doing some work on the side, they just don't disclose it publicly. So they're, maybe they're new to being listed or smaller companies just get less scrutiny, because they're not generally as widely owned as really big companies. But most of them are sort of getting the memo and realizing that they need to be a little bit more public about what they do on the environmental and social side. Yeah.

Dave Karlsgodt 47:42

And I guess we're talking about publicly traded companies here, not necessarily just companies in general, because the private company doesn't have to do any of this. They don't want to right. I mean, there's no,

Claire Veuthey 47:50

very little That's right. Yeah, that's right, though, again, you'll have some great private companies that will, will disclose but that's strictly because they choose to not because they're required to got it.

Dave Karlsgodt 48:00

Okay. All right. So one other after seeing all of their hearing about all of the tools and and mechanics of this, how big of a stick Do I really have as an investor? It sounds like there are different ways I can engage. But I guess coming back to an institutional investor, so somebody that's involved with, like, like, Mike is with that as a board of trustee. How big of an impact could I or how big of a stick do I have?

Mike Fiorio 48:25

My take on this is we live in an economic democracy. And by that, I mean, both how we spend our money collectively, and how we invest our money speaks to what we're talking about today. And well, perhaps individually as, as individual investors or institutions, we don't have a ton of clout. collectively we do. And in this day and age, with the advent of Facebook and social media, you can getting lots of people on the same page, at the same time, witness various commentators on various networks, losing advertisers, because of what they've said, The same holds true in investing. Every day, what we spend our money on and what we invest our money yen ultimately, has an effect on the direction of what what's important to we the people.

Dave Karlsgodt 49:28

So in other words, from a public relations perspective, there's an outsized impact. So if you can get enough people on board saying the same message to the same company, they'll change their ways. Is that good summary?

Mike Fiorio 49:40

Absolutely. That's Adam Smith.

Dave Karlsgodt 49:43

So Claire, what about logistically, I'm like, if I really want to get a meeting with the CEO, and I am involved with the university pension fund or something like that. I mean, how does that work is I don't imagine that person charged with managing the money directly is, you know, having lunch dates with the CEO, a company they're investing in, but how can they engage? What does that look like?

Claire Veuthey 50:04

There's a couple of interesting ways that investor can make a difference. And we touched a little bit earlier on shareholder engagement, which I think can be very effective, though, to be fair, it's often quite slow. But there are lots of there are lots of other ways. And I think part of the point we're trying to make at open invest in something I really firmly believe in personally is that consumers have a lot of power to, and employees have a lot of power. So if you work for an organization that isn't, you know, really meeting the bar of what you think it should be doing on sustainability, I think you probably have more power than you think, again, going back to your point of all of us being capitalist, I think what you buy also makes a big difference. And that includes in your investment portfolio, I think we've gotten to the point where it's more normal for folks to think about their purchasing decisions, like what they eat, what they were, what they drive or don't drive. But it's a little bit less common for folks to think about that in their investment portfolio, even though it might be you know, one of the biggest parts of their personal net worth or you know, some of the biggest assets they have, they're often just sitting on the shelf in something really standard instead of a little bit more, a little more oriented to how the how the individual sees, sees the future and wants to

Dave Karlsgodt 51:16

In other words, we spend a lot of time thinking about what kind of straw we do or don't use. But meanwhile, we have most of our network tied up in the investments that are really driving the world.

Claire Veuthey 51:26

I think so yeah, I think we have more power than we think in that space. And there's, again, part of what open investors trying to change is activate all of that. Because if you stop someone on the street and ask them, would you if there were no financial trade off? Would you want your assets invested in line with your values in the way that you see the future and the world that you want to exist? I'd like to think most people would say yes. And we can do that. Now. It didn't always used to be the case many of these products were and continue to be really expensive. But increasingly, again, a bit of a plug for my employer. But there's there's other ways to do this. You can get investment products that are standard from the financial point of view and very aligned from an environmental, social and governance point of view.

Dave Karlsgodt 52:09

No, that's good news. Well, let me turn it back to students for a second. I know that a lot of institutions, unlike Northland college, the efforts to pursue divestment in particular have fallen flat. Are there other ways students can get involved? Or you know, Mike, now that you've guys have kind of achieved that? Where are your students getting involved?

Mike Fiorio 52:29

Northland, just recently, some urging from me, the north on college faculty and staff and students just started a fund, they call it the northern college resiliency fund. And it actually, for governance reasons, is just a part of the main downer, but it's a separately managed part of it, they are funding it with some of the fees from students and staff, every reduction, faculty and staff, you know, their goal is to help the college affect change in the world. I'm interested to see how they grapple with the question of making money attempting to make money so that they can fund their desired goals from the spending of some of the income from the fun with the realities of being a fiduciary and all that goes into that. But I can see this small college and its students and faculty, learning about social justice and how they might affect change through, you know, shareholder proxy votes. And I'm just very curious to see how that works. But, you know, I think they're going to make some noise and ultimately, you know, through collective wisdom of all kinds of investors, and consumers out there, you can affect change, you know, companies Listen, and if you're not doing your job, someone else will do it for you.

Dave Karlsgodt 54:02

Okay, well, shifting gears, then, if people listening to this young professionals are interested in getting into this space, what does this look like for them today? What are the different ways they might get involved? And I would say, maybe ranging from, you know, the very business-centric side, maybe the investing side, but also from the activism side, what are some of the opportunities for them, Mike, go ahead first and all that clear, filling?

Mike Fiorio 54:24

Sure, just a basic comment first, and then maybe some advice. I have a son who attends a university, and he's in the sciences. But essentially, what we're talking about here is being well rounded, and leaving your options open. Well, he's a scientist, his minor, is in entrepreneurial ship, and recently had a great conversation with him about a course he took called the business of science. And essentially, a liberal arts background. never heard anybody, whether you're a scientist and mathematician, or what have you, ever, the ability to communicate well is never a bad thing. With respect to maybe some advice on making money saving the world. And I gave my son recently, some advice, who was a senior, and it was draw a Venn diagram, three circles in each circle, right, a question. The first question is, what do you do best? The second question is, What gives you the most joy? And the third question is, how can you best serve? And where those three questions intersect on that Venn diagram is where your career lies. And if you do those things, there's a place for you in this industry, if that's your desire, and your passion.

Claire Veuthey 55:53

So if you're interested in sustainable investing, as a career, I think there's lots of ways to get into it. Right? what I've seen is before looks either come in from the environmental, social and governance side, or from the traditional investment side, and they will parlay the experience they have in one or the other to move into this hybrid space. But to be fair, I did most of my training 10 or 15 years ago, and things have changed. There's a lot more curriculum focused on sustainable business. And there was before and I think folks can come out of higher ed, much better equipped than I was to really contribute productively in the space immediately. I started my career with research providers, I think it was close to my my grad work since I was a kind of a social sciences major. And a lot of the qualitative research I was doing there was very similar to the work that I did in my first job where I rated publicly listed companies on environmental, social and governance issues. You can also start as an investment analyst, and either on your own time or hopefully, with the blessing of your employer, really learn more about sustainability issues and how they might show up in the companies you're analyzing. As we mentioned earlier, there are lots of other roles here. So I know some folks, especially after business school, but not sometimes before business will will go work for an investment consultant. Some like Cambridge associates, will work directly with mission driven organizations and will help them pick asset managers. And that can be a great way to understand the field. There are also other avenues into this world. So one of the co founders of the company I work for now, Josh Levin, spent six years at the WWE on the sustainable finance team, and then met up with some old friends of his and co founder, the company I work with. So there's lots of different avenues. I think you have to be directive, it's not going to happen by accident. But if you have your eye on the ball, you can move into the space.

Dave Karlsgodt 57:45

All right, well, final question. Just to wrap this up. It sounds like there's a lot of change going on in this space. It sounds like it's come a long ways from where it started thinking 1020 years out? What's your vision for what this might look like? Mike, you want to give us our first pass at that

Mike Fiorio 58:01

I looking in the rear view mirror of my career, or the past 30 plus years, I've seen tons of change in this industry. And I see no reason why going forward into the future, the pace of change won't easily equal it or exceed. And I look forward to what might come up.

Dave Karlsgodt 58:22

Great. Claire, last word goes to you.

Claire Veuthey 58:24

So if we do really well, as an industry, if we continue to do well, and frankly, I've seen amazing growth just in the last 10 or 15 years. I think that investing and sustainable investing will essentially be the same thing, at least long term investing. If you're a day trader or a corporate raider and really thinking very short term. I'm not sure ESG issues will matter because they often play out a little bit more slowly. Not always. And there's been some pretty notable examples of that. But hopefully, my ambition would be those two things to be the same and for environmental, social and governance issues just to be part of part of regular investing.

Dave Karlsgodt 59:06

Excellent. Well, I want to thank you both for taking the time today and and digging through the weeds of some of these conversations, as well as some of the higher level background and perspectives that you both bring. So thank you very much for your time. And thanks for coming on the podcast.

Mike Fiorio 59:20

Thanks for having us

Claire Veuthey 59:21

Thanks for having us Dave.

Dave Karlsgodt 59:22

That's it for this episode. I did want to give a big shout out to the staff the intentional endowments network that helped connect me with today's guests. You can learn more about IEN at intentionalendowments.org. To learn more about today's episode or any of our shows. You can visit our website at Campus energy podcast. com. You can follow us on Twitter, we are @energypodcast. If you'd like to support the show, please consider leaving a rating or review on iTunes or sending a link to a friend. As always, thanks for listening.

Episode 18: University of Virginia's Delta Force Program

Andrea Trimble (left), Jesse Warren (right)

Andrea Trimble (left), Jesse Warren (right)

Andrea Trimble, CEM, LEED AP BD+C, O+M
Office for Sustainability Director
University of Virginia

Jesse Warren PE, CEM, LEED AP BD+C, O+M
Sustainability Program Manager for Buildings & Operations
University of Virginia

Host: Dave Karlsgodt
Principal, Fovea, LLC

The focus of this episode is the University of Virginia’s Delta Force, a self-funded building energy efficiency and sustainability program. You’ll hear how UVA has taken a $400,000 seed fund to yield $42M dollars in energy related cost savings to the University. We get into the nuts and bolts of the program but also zoom back to talk more generally about their sustainability programs and collaboration with their city and regional governments.


Episode Transcript:

The following is an automated transcription of this episode which will include errors and omissions. You can listen and follow along with the text here:


David Karlsgodt 0:00

Welcome to the campus energy and sustainability podcast. In each episode, we'll talk with leading campus professionals thought leaders and engineers and innovators addressing the unique challenges and opportunities facing higher ed and corporate campuses. Our discussions will range from energy conservation and efficiency to planning and finance, from building science to social science, from energy systems to food systems, we hope you're ready to learn, share and ultimately accelerate your institution towards solutions. I'm your host, Dave Karlsgodt, I'm a principal at Fovea an energy, carbon and business planning firm.

Jesse Warren 0:33

The biggest thing that I love about my job is that we have the freedom and flexibility to identify what is the best path forward for the university, as opposed to being prescribed to a specific one.

Andrea Trimble 0:45

We've reduced our greenhouse gas emissions by about 19% since 2009, despite very extensive growth, and a lot of that has been attributable to energy efficiency.

Jesse Warren 0:57

When I came to UVA, I was worried that I was going to have to fill out a requisition form to do a project in the next budget year and things like that. And that told me that I wasn't going to have the impact. But what I learned is things like the Delta Force model that allow our funding to revolve makes sure that our impact is significant and its immediate.

David Karlsgodt 1:19

In this episode, you'll hear my interview with two staff from the University of Virginia. First Andrea Trimble, office for sustainability director, and Jesse Warren, sustainability program manager for building and operations. The focus of our conversation is UVA is Delta Force, a self funded building energy efficiency and sustainability program. You'll hear how UVA has taken a $400,000 seed fund to yield $42 million in energy related cost savings to the university. We certainly get into the nuts and bolts of the program. But we also zoom back to talk more generally about their sustainability programs, and how they're collaborating with their city and regional governments. Before we get started, a quick thank you to all of you who shared our recent summer internship job posting, we had an overwhelming response. And we're honored and humbled by all of the amazing candidates that said it applications. I asked my wife to help me in reviewing the applications. And this morning, she told me that compared to all the negative news We've been living through, reading the ideas of these passionate, smart, articulate young people ready to take on the world's challenges gave her a great deal of hope. I couldn't agree with her more. And I look forward to introducing a new voice to the podcast the summer. For now, please enjoy this may 1 interview with Andrea Trimble and Jesse Warren from the University of Virginia.

Andrea and Jesse, it's great to have you on the podcast today.

Andrea Trimble 2:44

It's great to be here. Thank you for having me. Thanks, Dave.

David Karlsgodt 2:46

Well, I'm excited to have you both here today to talk about your building Efficiency Program and sustainability programs, specifically the Delta Force program. And I know we're going to get into a bunch of different topics, including building standards, students, faculty and community engagement and project finance all sorts of fun stuff, I'm sure. But before we get into that, can you both just introduce yourselves so we know who we're talking to? And maybe give a little bit of background on the UVA campus? Just so people know where you are? Andrew, why don't you start?

Andrea Trimble 3:20

Sounds good. My name is Andrea Trimble and I am director of movies office for sustainability, which is a team of 13 full time staff and 18 part time student employees who focus on strategic planning, collaboration, program and event management, project implementation and engagement communication with two primary aspects to the office of outreach and engagement side. And we have staff associated with that and an energy engineering side of the staff associated with buildings and recycling. UVA is fairly large, we have over 16,000 undergrads over 6000 graduate students, over 16,000 employees, and over 16 million square feet of building space. This also includes a large hospital and health system, which is included in all of our goals and UNESCO World Heritage Site, our Thomas Jefferson's lon. And we're tied to

David Karlsgodt 4:11

thanks, Jesse, over to you.

Jesse Warren 4:12

My name is Jesse Warren. I'm our sustainability program manager for buildings and operations. What that means is I'm responsible for energy efficiency on the building side of the meter, I'm responsible for new renewable energy development on grounds as well as our Solid Waste Management Program. The university is somewhat unique in that we have campus energy systems that are provided by both fossil fuels and electricity, and those are sold to our individual buildings.

David Karlsgodt 4:39

Alright, thanks for that. Let's dive right into talking about the Delta Force program, which was the premise of what we wanted to talk about in this show. So maybe Jesse, can you just give us an overview of the program, and then we can dive into some of the details?

Jesse Warren 4:53

Sure. So Delta Force is our internal building retro commissioning program, we've been working for about a decade on retro commissioning existing buildings on grounds. The way we do that is by creating sort of a multifunctional team of folks that consist of energy engineers like myself, as well as building operators, maintenance technicians, and outside subcontractors to be able to get these buildings to their peak performance. We do this through an internal revolving fund model, where we, we fund the initial investments into energy efficiency, and then we recover 125% of that investment over time. So our construction costs end up being recovered through the energy savings of those projects. And that helps fund the the office for sustainability and our internal operations.

David Karlsgodt 5:43

Tell me a little bit about the scale of savings you're talking about.

Jesse Warren 5:48

At the end of calendar year, 18, we have invested $16.7 million into Delta Force, and we've saved over $42 million in avoided energy cost. Wow, those are real metered savings. And that is the net of our savings. So if some building has gone over, that's been taken into account, when I quote that 42 million,

David Karlsgodt 6:06

you're not just counting your successes, you're counting your your failures is running that number. That's great. All right. Well, Andrea, you were the one that reached out to me about this program. What specifically was it about the Delta Force that you thought would be relevant to the listeners of this podcast?

Andrea Trimble 6:22

So one aspect of our work that's very important to us is to share replicable models that could be implemented elsewhere, in order to scale impact, especially as we all collectively work together on urgent global issues and climate change. We really value the importance of sharing materials and lessons learned with anyone who's interested. I've been focused on sustainability in higher education for about 13 years now. And I really think the Delta Force program is an innovative but replicable program with really impressive financial energy and greenhouse gas results.

David Karlsgodt 6:53

Well, I'm excited to dig into some of these details. But how did you guys get this started? We talk a lot with clients about the idea of having a revolving fund and reinvesting and using the savings from one project to reinvest to the other. But how did you get this off the ground in the first place?

Jesse Warren 7:09

Well, I mentioned early on that we've got a strong energy and utilities infrastructure here on campus, and our plants are selling hot water and chilled water to our buildings. And our buildings are returning chilled water and hot water to them. So what happens is we identified buildings that had a very low chilled water delta t. And we own the energy and utility side said, we're going to go into those buildings. And we're going to make those investments in retro commissioning and new vows in order to increase the delta t across the building. That'll make our plants more efficient. And that'll make it cheaper for the enterprise to run. We enter we invested about $400,000 into that project. And we generated about $800,000 a year and energy savings, meaning we had about a six month payback on that investment. So the university said okay, we'll take back our $400,000. But we will give to you the other $400,000 in order to seed or evolving fun program to keep these kinds of investments moving. That was in about 2009. Since then, we've undertaken about 30 projects encompassing close to 50 buildings, in varying levels of energy efficiency retrofits ranging from light retro commissioning all the way down to deep energy retrofits including new lighting, water fixtures, etc.

David Karlsgodt 8:28

So Jesse, just so my dad, when he listens to this podcast, can and get what you're saying, can you explain the concept of delta-T, because I think that's pretty critical for people to understand.

Jesse Warren 8:38

Sure. So when we send chilled water out to a building, we send that chilled water out at about 44 degrees, we want that chilled water to come back at like 64 degrees, because that's how our machines are designed to work. When those buildings are performing poorly, that water can come back at like 48 degrees, that means you've got a four degree temperature rise across the system and that of the 20 degree temperature rise that our systems are looking for. and forcing our machines to operate in those conditions leads to a loss and performance and degradation over time.

David Karlsgodt 9:10

Basically, you want to suck more of the cold out. Is that a way to think about it?

Jesse Warren 9:13

exactly. To get into the engineering of it. Your efficiency is dictated by these temperatures. And the broader the span of the temperatures, the better than machine can operate.

David Karlsgodt 9:24

Okay, great. Well, I think you mentioned this, but what was the source of that original funding? Can you remind me?

Jesse Warren 9:30

that was funded through energy and utilities programs, so the chiller plants were operating at less than optimal performance, and they came up with the idea to go into these buildings and retro condition them. So for years, the Delta Force program before we incorporated the office for sustainability actually lived in energy and utilities, and not in building maintenance, because that was what was really the original funding source.

David Karlsgodt 9:53

Okay, good. So but it sounds like you got this first big project and you had great results. And then you were able to expand that out and take it from there. How did the program developed since then? I mean, so you had the big project, what, how did you get your second project, your third project, etc.

Jesse Warren 10:08

So once we had a track record of success, it was really a matter of identifying those big energy consuming buildings, and then putting in place the pieces that we needed to retro condition them. When I say retro condition, I'm talking about bringing all the systems back to the level of performance that they had when they originally designed. I think that's a noble goal. But our goal today is to do better than that. We want the buildings to perform better than design. So it's retro commissioning, plus all these energy efficiency activities that come into it. So once we started sort of persuading people that this was an opportunity, we were able to sort of grow that reputation and fund on campus.

David Karlsgodt 10:46

Now, that's an interesting point. So you're saying even the building is originally designed is not as good as you're able to get buildings to? Now? That's correct. Is that? Is that because that when they design them? Is it that they're not thinking hard enough, they're being too conservative? Or is it just that the technology's gotten better, or you've just understood how the systems work better or

Jesse Warren 11:06

a little bit of all three, to be honest with you. The systems were designed to do what was appropriate back then. And today's codes and standards have evolved because we have a better understanding of ventilation or building envelope designed, for instance. So we don't just try to bring it back to the original condition, we try to bring it to the condition that it wants to be today. So as we look forward, that involves things like air change optimization around laboratories, we've got spaces that were designed to be lat have laboratory ventilation systems, but are not being used as labs, whether that's through a change in space, or a decision that was made an initial design, we can come back through and recalibrate those spaces to use significantly less energy. And while we're at it be a lot less noisy and intrusive on the building occupants.

David Karlsgodt 11:53

Got it. Okay, so you're treating these like long term working assets, rather than like a disposable building, essentially. Right?

Jesse Warren 11:59

Okay. If you think about our long term history here on grounds, I mean, we're celebrating our 200th anniversary, and many of our buildings are built out of, you know, slate roofs and copper gutters. And in order to make those kinds of decisions, they make sense on the 50 or hundred year scale. Now MEP decisions, mechanical, electrical, and plumbing decisions aren't being made that way. But for our buildings that we know are not going anywhere, we're taking the longest view.

David Karlsgodt 12:24

So Jesse, a key point, something that seems central to figuring this all out would be metering. Can you tell us a little bit about how your buildings are metered? how detailed is that? How much do you rely on that information?

Jesse Warren 12:37

Yeah, so metering is sort of the crux of everything that we do, right. Because if you think about the way the Delta Force model works, we look back upon historical metering data to understand what the building was doing before we got started. And we continue to charge them that baseline, as we reduce energy, the energy reduction, cost comes back to us. So we are taking credit for the avoid cost associated with our work. And then once we achieve our cost recovery, the mechanism falls away. And now the School of Business Unit against a benefit.

David Karlsgodt 13:14

So is that based on a couple of years, is a weather normalized, like how do you how do you do that to make sure you don't just, you know, one building had a bad year or something went wrong, and that's the baseline or vice versa, that you know, they weren't using it at all. So their baseline was really low.

Jesse Warren 13:26

Yeah, that's a risk that we kind of take on ourselves, we've got to be really judicious with the projects that we choose to make sure that things like that aren't going to happen. Like, I'll give you an example. There's a building on grounds that we've wanted to do ever since it was built, but it hasn't reached full occupancy yet. So for our model, once the occupancy increases by 25%, with that final build out, that's when we really have an opportunity to come in and manage energy. for better for worse, our model doesn't work when the building is partially occupied, or isn't a state of transition.

David Karlsgodt 13:57

Yeah, do you have other mechanisms stick it at things like that is that just that's not within the scope of what your Delta Force program is trying to deal with?

Jesse Warren 14:04

Well, we're working on them. We've got a couple of different ideas on how to manage that. But Delta Force is sort of the primary vehicle, we've considered an Andrea, feel free to chime in if you think I'm out of line here. But we have considered something more like a green revolving fund that would negotiate these payments, instead of relying on actual building metering to generate the savings. By doing that, we would decouple some of the risk associated with what you're talking about be whether or increased occupancy, but still showing the avoid cost against the calculated based on

David Karlsgodt 14:40

got it, but right now you're using meters. And and and that's that's the, you know, kind of a reliable way of getting at it. And

Jesse Warren 14:46

it remains really important to us even today, because that's the level in which we interact with the customers utility bills, we're going to set the customers utility bills to that baseline. And we're going to repeat that year over year until we get to cost recovery that can be anywhere from two years on a spectacular project to 4, 6, 8 on a more typical one.

David Karlsgodt 15:07

No, that makes that makes total sense. But how I mean, I hate to dwell on this too much. But I just know how much blood sweat and tears I've put into trying to get at some of these questions, you know, just from a consulting perspective, not necessarily trying to manage it directly. But I find that in most cases, the building meter data that I see at universities is pretty rough. Yeah, did you guys spend quite a few years just getting your, your numbers and processes and like the tool set figured out first? Or has that kind of happened along the way, as you've added buildings, and you just didn't do it for the few buildings you were focused on or, I mean, Talk Talk to me about how that process, you know, laid out, we don't need to get into the nitty gritty of you know exactly how you did it. But just

Jesse Warren 15:50

so in, in broad strokes, we've got about 550 buildings on grounds, most of those buildings, our buildings, even though some of them may be a pump house or something like that. Regardless, they're all metered. And the reason they're metered is because we buy electricity at the substation level at about six cents a kilowatt hour, and we sell it back to our buildings at about eight cents a kilowatt hour. That means we own and operate all of the electrical infrastructure between the substation the building itself, but if we had our energy company bring power directly to that building, it would cost us close to nine cents a kilowatt hour. So we've been generating instant value for the university by taking on the strong energy and utilities enterprise. But in order to make that strong energy and utilities enterprise work, we needed to have strong metering in place. So we've had a metering and billing group who's been focused on this for years. And that gave us the opportunity to interfere with that process with Delta Force. I've told countless universities and other installations that they need good metering in order to put a program like this in place as for

David Karlsgodt 17:01

No, that makes sense. And it sounds like even just the delta between what you guys can get as a wholesale customer and what you would have to charge individual departments that they were to hook up directly to the utility, that difference would justify the metering by itself. I imagine that's a pretty big spread of price, right? There

Jesse Warren 17:18

it is. And so if you think about the rotunda in the lawn and the UNESCO World Heritage Site, we're serving all that from hot water and chilled water that's being generated elsewhere. There's no good place to hang a cooling tower on the rotunda.

David Karlsgodt 17:33

Yes, and the architects are appreciative that you didn't try. Right.

Jesse Warren 17:36


David Karlsgodt 17:38

Excellent. Okay. Know that I appreciate that. That's, that is maybe a little bit of a secret sauce that I think others can learn from. So, um, okay. Well, you mentioned that you've got slate roofs, and some, 200 year old buildings and things like that. How much of this work are you doing in house versus outsourcing, because it seems like there's some pretty specialized skill sets involved there.

Jesse Warren 18:02

Yeah, so we operate on sort of a zone maintenance perspective. So we've got about 10 maintenance zones who are responsible for the boots on the ground work and most of these buildings. And then we've got specialty shops. Those specialty shops consist of things like building automation or fire alarm. And we can deploy those resources from a central location. What we have done is we have worked with our local maintenance zones to identify what their capacity is. So for some zones, we can do a lot of electrical work. And we want to do all of that with them, because they take the most pride in the work that they've done, because they're the ones who have to go back and maintain it over time. If you think about my LED lighting change out, we want the maintenance zones to be engaged in that because they're the ones who are ultimately going to benefit from the reduced maintenance associated with LED, so they should know how to service and work on them. And by installing them, they can get there. We also focus on their essential shops for things like build automation. So in order to achieve the work that Delta Force has set forth, we have created this building optimization team. Now I don't want to take credit for this. This lives over an automation services because they've done a great job coming up with a team of cross functional HPC mechanics, pipe fitters, electricians who can controls technicians who can strip the pneumatic controls, often existing building and re install digital, while the customer is none the wiser. That is how we perform most of our work working with local maintenance zones or with our building optimization team to actually deploy these things. But when we need surgery, switching capacity will go out to outside vendors as well. So for instance, we recently did some lighting projects in residence halls, and those needed to be done in a very short time-frame. And so our maintenance folks were already busy doing other maintenance work during the shutdown. So we'll bring in outside subcontractors to do revamping electrical work, even mechanical work if it's a appropriate. But I would say our guiding focus is if we're going to be doing something in the longest term, we need to think about how we staff up to do it. If it's something that we're going to do temporarily, or that's not part of our core business, we look at how we shop it out.

David Karlsgodt 20:15

Okay, yeah, that makes sense. That seems like a reasonable way to make that determination. Stepping back, though, is something you just said, you know, something we get a lot of push back on when we talk to clients about this concept of a long range Efficiency Program is the actual getting people out of the buildings and the whole mechanics of it. You know, it's one thing to look at it on a spreadsheet, it's quite another to really think about how many buildings you're going to disrupt. But based on what you just said, it sounds like you can do this work without getting people out of the buildings. Tell me more about that.

Jesse Warren 20:46

Yeah, so for the most part, we can service these buildings while they're occupied. And a great example of that is Clark Hall. Clark Hall is the original School of Law on grounds. So it was built in about the 1930s. But around 2005, we built a large wet lab and library addition on to him. So we got the idea of why don't we look at that as an energy efficiency retrofit. And we were able to do a lot of the work with the building optimization team while the building was occupied. But that building has labs and it has lab hoods. And those lab hoods are used for noxious chemicals and things that otherwise shouldn't be breathed in. And we had to shut down those lab hoods, because we had people on the roof. And when the wind blew a certain way, or they stood in a certain place, they would get headaches or they would get killed. So we have to shut down buildings if things like lab ventilation is threatening the people who are doing the work. But under normal circumstances, they can do things like hotwire the return air temperature sensor so that you can run off that so that they can do the work they need to program their controllers in time.

David Karlsgodt 21:55

Got it. So yeah, major renovations you are still moving people out of at least portions the building, but for some of those things that you're doing again, and again, and again, as you work your way through work in technology through the buildings, right able to do it in segments. That makes sense.

Jesse Warren 22:10

So if we have for instance, a two week shut down, that might require four months of coordination to get all the pieces and parts in place, get the researchers out of their space so that we can shut the building down to do what we need to do temporarily.

David Karlsgodt 22:23

Got it? Um, let's talk about construction standards for building. So you have buildings going back 200 years, but you're building new spaces, I'm assuming as well. You're renovating buildings all the time? What type of standards do you have in place that guide how you know how good the building is going to be when you build something new or renovate something that you're renovating? Andrew, you want this one?

Andrea Trimble 22:46

Sure. So in terms of sustainability, UV has required LEED certification for several years. About two years ago, the Office for sustainability and partner ship with others across the University City started developing Green Building Standards. And these are both process oriented as well as prescriptive. The idea behind the standards was twofold really one that we go beyond the minimum requirements of lead to put in place minimum EV requirements for new construction and major renovations. But then also to enable a process that is collaborative and gets the UV owner, the various constituent stakeholders on the TV side, on the same page as to what the project goal should be and match against. So for example, similar to some other green betting Sanders at other universities, we have requirements for integrated design, setting goals early in the project. And then matching to those goals through energy modeling and lifecycle costing at each phase of design. We also put in place, minimum Eli energies intensity target or the building. So the way that we do this, instead of setting requirement, that's a percentage below ashtray, we set it up requirement that's 25%, below a baseline that we determined. So the way that we determine that baseline is we take buildings of like type at UVA, look at their meter performance, and then cut 25% off of that as the minimum target for new construction. And those went into place about a year ago. So we're starting to get some good feedback and some good metrics as to what's working well on that. And soon we'll have buildings constructed in in operation so we can measure the success of this different sort of energy target.

David Karlsgodt 24:32

Yeah. Is that because you have? I mean, it sounds like you have a lot of great information on your building. So you're able to do that I think people default to hash rate or something just as a standard. But is that is that part of why are you been able to do that as part of

Andrea Trimble 24:43

right? That's part of why so the having the good meter data for all these buildings? We were finding that? Because Yeah, because we're able to get much more specific on the building the next building types within a particular building. When we do that. We are hoping that we think we won't get much better predictions of energy consumption.

David Karlsgodt 25:04

Great. Yeah, no, that's and there, you can think about things like how does this deal with their district energy system versus just kind of a standalone building? Like you might run into an

ashtray standard? Okay.

Interesting. All right. Well, one other silly question I have is, is what's the Where did the name come from? You have this called this the Delta Force? Sounds like, I know, you guys aren't too far from a lot of military installations. But I don't think maybe where does the name come from? So delta t.

Jesse Warren 25:34

So yeah, that's a good question. I don't have the answer to that. I came from sustainability consulting around military installations before I came to UVA. So I'm pretty familiar with the term here. I think it started with the idea that we were chasing delta t, right. But over time, I think it's become, we are capturing the Delta in your utility bills. So if we can do use your energy expense by 25 percent? Well, that 25% comes back to us until we've recovered our investment. So in other words, we capture the Delta up until we're complete. So we have not yet decided which of those two stories is true. I've heard both.

David Karlsgodt 26:16

Yeah, whatever one pulls the best, I guess, right?

Jesse Warren 26:19

Depending on who you're talking to, at the moment.

David Karlsgodt 26:21

Perhaps it'll run for president as well. But

Great, okay, well, maybe let's switch out of the tactical a little bit. This program sounds amazing, and I think would be envied by many listening to this podcast that are in trying to get something similar set up at their own institution. But at some point, you had to get people to buy off on this. And, you know, I do this for a living, but getting non technical people to get excited about things like delta t, is not always the easiest thing to do. But somehow you guys have pulled this off. Can you tell me a little bit about how you got your administration on board,

Jesse Warren 26:57

I have experienced getting caught summers on board, and I came into the program after it already existed. What I can tell you is we have a track record of success and continuing that track record record of successes and everybody's best interest. But for us, I think it came down to having one sort of big win, that we could then parlay into other wins. So if you think about that project that we did over at Mr. For where we identified $400,000 worth of improvements that saved $800,000 a year, I would suggest finding something like that funding it and then figuring out how to get that funding to not return to the initial pocket. That's been a lot of the conversation we have is can you fund something out of one pocket, and then have it roll back into something different, like a revolving fund? And if you've got a quick win like that, where you can show the return on investment with doing so I think you've got a strong case.

David Karlsgodt 27:57

Interesting. Okay. Yeah, that'd be that. Having that kind of return, I guess, happening within one budget cycle, something like that, is that key, or,

Jesse Warren 28:07

or something on the two year, three year range? You know, I talked about Clark Hall. Now, Clark Hall is a big project. For us, we invested nearly $2 million in that between the Delta Force investment and the university's investment. But we managed to cut the building utility costs from $1.2 million a year to about $450,000 a year, saving 67% and about 750,000 a year. So the projects don't have to be small to be a quick win. That was a long win for us, but was a huge one.

David Karlsgodt 28:39

Right? Okay, now, that makes sense. But it also sounds like you had the data, the metering data in that information, and you're charging customers, is that a prerequisite to doing a program like this, do you think

Jesse Warren 28:53

I think the money has to come from somewhere. So I like the idea of holding that baseline and continuing to fund it as if that was real energy expense, because from the customers perspective, it would have been, I think a lot of the value that we bring is that we bring sort of a comprehensive project management solution, right, we come in, we say you don't have to do anything, you just have to agree to the things that we propose. And for the most part, facilities management can come in and perform the work. That's not to say people don't participate. And we don't, we do actively bring occupants into the work that we're doing. But if they so choose, we can perform that project transparently

David Karlsgodt 29:34

got it, they can choose to think about it just as Okay, you're going to make my bill go down and basically not get in my way, or they can be collaborative, and, and work with you.

Jesse Warren 29:41

So like at Clark Hall, for instance, we really focused on occupied engagement. We wanted to know what the occupants desired out of the project. And we also created materials like pledge boards and signage to explain what we done so that people could use that project to actively catalyze their behavior when they're within the building.

David Karlsgodt 30:01

Right. Okay, so communicating what actually happened versus just fixing the things behind the scenes. And nobody actually notices the difference. Maybe they aren't complaining as much, but it's still in the back of their mind.

Jesse Warren 30:10

That's right. So depending on what kind of when you want, it can be a quick low hanging fruit return on investment, we have advanced far enough that we're really focused on comprehensive building solutions that look at everything from building to building occupants. And how can we provide the best for our students and faculty?

David Karlsgodt 30:32

Yeah, how is that transition been going from those quick wins to that the deeper retrofits? Because I imagine you have different motivations, you have different. I mean, it's probably a lot of fun for you, personally, Jesse, I would imagine, right? Because that's what everybody wants to get to rather than just another lighting retrofit. I mean, not that we don't want to do those. But like, what is that? Just how does that feel different? Maybe it's a way I could ask that question.


Jesse Warren 30:58

let me look at it from the other end, you know, for everything that we fund we've got to pay for, right, so we have an account, and that account is allowed to go up to negative a million dollars, because the university understands that we're going to be spending money before we get it back. Right. So we started out with some money, we have now operated in a deficit. And that's okay with the university operating the deficit, because that's how we get to those bigger projects. When we start to bank money into our account, that tells me we're not doing enough, we're not going deep enough, we're not getting as much energy savings as we could, because we're not making as big investments as we can. So over the 10 year life of the program, we've seen two different swings, where we started to sort of accumulate money, and then realize that we could use that money to make deeper investments. So in the beginning, it was things like, retro commissioning, and it was things like low wattage fluorescent lights, and then we we started making enough money off that that we said, you know, we can move over to LED lighting, and we can start doing things like whole building, commissioning, and controls, replacements and upgrades. And that's what we do today. But even then, we started to see the account balance drop, when we started making more substantial investments. And then we saw the account balance rise again, once those investment starting to pay off. So today, we're in what I call the third phase of that, where we're really going into deep energy efficiency where we're given the opportunity. So that's LED lights. But that's also things like creating a smart labs program, where we can identify what is the safest and correct level of ventilation for the work that people are doing, and then tailor it accordingly. So to bring it back to your question, how do we get to deep energy efficiency projects, I would say it's happened in plateaus. we've, we've demonstrated success at each of these plateaus. And then once we've demonstrated success, we can keep doing the exact same thing. But our universities not asking us to do the exact same thing. They want us to hit aggressive goals, carbon energy, so we're being asked to do more and more.

David Karlsgodt 33:02

So when when you're talking to administrators, now I know you mentioned you weren't really there when the program got set up. But how much do they think about this? or How did they message it? Do you feel like, you know, it's a talking point in speeches they're just reading off? Or is it something that they've really internalized and couldn't really articulate in, you know, in their own way, as administrators,

Jesse Warren 33:22

I'm the ones who are active participants really see the value. Because in the example of Clark Hall, you know, we put $2 million into that building, but we're saving three quarters of a million dollars a year. So by the time we finished our project, we were almost done with our cost recovery. And that frees up money that they can use for faculty for spaces, whatever they need. I would say that spending money on energy is not the highest and best use of dollars at the university. So how can I reduce that?

David Karlsgodt 33:49

Right? Okay, so and then they're able to say it that way. I mean, they're, they're parroting that message out there that which is amazing. That's great.

Jesse Warren 33:56

Yeah, so Arts and Sciences has been a tremendous proponent of ours, we've done many good projects together like that Clark Hall. And so the Dean of Arts and Sciences, as well as our President Jim Ryan recorded sort of congratulatory messages for our Clark Hall celebration, where we celebrated the LEED certification, the building and brought all the occupants back together to sort of show them what they've done.

David Karlsgodt 34:22

Great. So instead of being a cost center, and oh, no, this facility guys are coming back with another big house of money, they're looking at you, as, you know, an investment, a place to invest to focus on the mission of the university, and

Jesse Warren 34:35

they can reduce their energy spend. And they can also reduce their maintenance spend. And both of those are wins, I will recover some of the energy spend immediately, but the maintenance is greatly. So that's just a pure win for them. So when I come back, and I fix systems that are broken, or we put an LED lights where we had fluorescence before, they're going to benefit from that reduced mate and savings on day one, then they will benefit from the reduced energy savings after the project recoveries complete.

David Karlsgodt 35:05

Alright, well, one other systematic setup question was you tell me a little bit more about the billing process? So it sounds like you're charging departments, I assume you've got, you know, auxiliary, non core University components that are also using energy. How do you It sounds like you're acting like utility, what does that look like from various departments on campus when they when interacting with your team?

Jesse Warren 35:31

So we've always had auxiliaries on grounds like Housing and Residence Life, athletics, and things like that. And they've always been self supported. Right. So housing Residence Life is funded through tuition fees, or however that works. But the university used to be centrally funded. And about five years ago, we made a switch away from that into responsibility centered management. So now, we've said that you the department are responsible for that building, not never, they're responsible for the maintenance of it, but you're responsible for the energy consumption, and the spend associated with that, I think part of the intent there was to give local control to that money, so we can do a better job of managing it. One of the realities for the Delta Force program is we went from having one big customer to a whole lot of customers, right. And so now I've got to sort of develop a track record of success with each one of them, and then work through their building portfolios from start to finish in order to get to the success that they need.

David Karlsgodt 36:30

That's an interesting point, because it means instead of just pleasing the folks that sign, sign your check at the top of the food chain, you really have to act more like an internal business. And that's right, customer service and things like that. Yeah,

Jesse Warren 36:44

that's right. We're very customer focused here. You know, we all agree to work together. But in many ways, facilities management services could be replaced with services from the outside. So it's by far in our best interest to keep those customers pleased with what we do.

David Karlsgodt 37:01

Yeah, but but you're still with working within the bounds of the new chair of the mission of the university as well, rather than just outsourcing your entire energy system for precisely

Jesse Warren 37:09

right. And that gives us opportunities to engage with folks outside the University, the University of Virginia foundation is interested in our services, we may not be able to provide funding there, but if we can help our land holding arm make good decisions about energy and climate that's

David Karlsgodt 37:24

in everyone's best interest. Interesting. Yeah. So you're not limited by really narrow scope, you can expand that within what makes sense in the bigger picture of the university's goals. And that is,

Jesse Warren 37:34

the biggest thing that I love about my job is that we have the freedom and flexibility to identify what is the best path forward for the university, as opposed to being prescribed to a specific one?

David Karlsgodt 37:49

No, I really liked that point. I mean, as a small business owner, and entrepreneur, you know, appreciate the ideas of people being motivated to do good work and, you know, serve customers. And you know, that the essence of sort of American capitalism from that perspective, but I recognize, you know, it doesn't always give you the outcomes that you want. So it sounds like you have a really interesting hybrid for your job where you're within, you know, essentially a state agency, but operating like a business. That's right, but not, but not in a way that you're just cutting costs to the nth degree. That's, I think, where it's been abused over, you know, as as privatization and some of those trends that have gone on over the last couple of decades. That's it, it's not that it's something in between,

Jesse Warren 38:29

you know, I'm an energy engineer. And I've got four energy engineers on my team, I started out as one of those energy engineers and was eventually promoted over top of the group. For me, it's very important that we're out there making these kinds of improvements. And we have a professional reputation that we have to uphold. And that's what's been able to get us I feel into these spaces in these departments. If one customer sours on our work, I can guarantee you that many customers will sour.

David Karlsgodt 39:03

got us you have people holding your feet to the fire, but you've got, you know, the passion and mission driving you to make sure that you do that, which is a really powerful mix. Oh, that's great. Great. Yeah. You know, Andrea, we've, we've neglected you for a little while. But you're more you're less than the day to day of the maintenance aspects of this, I assume. But from a sustainability perspective, how does that fit in?

Andrea Trimble 39:26

Right, so you may set up his Board of Visitors set a greenhouse gas goal in 2011, and then followed it up with a reactive nitrogen goal in 2013. So UVA was the first university to set a nitrogen goal, and since that others have followed on and UVA has been a partner in nitrogen planning. So those were sort of our two foundational goals. And then in 2016, we launched our first five year plan, which included 23 goals and over 100 actions. So as we check towards those goals to forge plays a big role in the particularly the greenhouse gas goal, the nitrogen goal, and we've also signed on to that that our Buildings Challenge goal to reduce energy's intensity by 2020, below 2010 levels by 20%. So we've seen significant strides, particularly on the greenhouse gas side. In Progress, we've reduced our greenhouse gas emissions by about 19%, since 2009, despite very extensive growth, and a lot of that has been attributable to energy efficiency through Delta Force. So the program is a really important part of achieving our quantitative goals. And then Jesse spoke a little bit about how we engage the individuals within the buildings, we also have a strong engagement goals as part of the sustainability plan and all that awareness building as part of our approach to sustainability.

David Karlsgodt 40:49

Yeah, how does that all fit together? Are you it, you know, just talk me through the organizational structure, who's in charge of engagement is that part of the Delta Force program is sustainability over over the Delta Force program or the other way around or? So it fit together?

Andrea Trimble 41:04

Sure. Our office for sustainability has two sides, really. So we have about half the number of staff on each side. One side is focused on outreach, engagement communications, with across the university, Pan University. So we have a manager over that group, and communications person, several outreach people, green labs, a staff member. And then on Jesse side, he has energy engineers, the energy engineers work, some on outreach and engagement, but the dedicated programs are really on that reach engagement side. So we have a green workplace program for staff a green living program for housing, buildings, green labs program for lab spaces, and there's slightly different approaches, terms of outreach and awareness on each of those types of individuals or building types.

David Karlsgodt 41:50

Great, and how is that funded? Or is it all one big bucket or

Andrea Trimble 41:55

so they're essentially sort of two 3%. Very funding sources, I guess, that we're working with right now. One is just you described the revolving nature in savings from the first program. And that's what funds our engineering side, the outreach side is funded through a very small portion of the electricity rates are just you mentioned the delta between what comes into the substation, and what we charge the buildings, a small piece of that is office for sustainability. But a lot of that is other aspects of overhead type things. And then the third is when we launched our sustainability plan in 2016, we were allocated $3 million dollars from in central funding from the university, for the university committee on sustainability to manage so through that funding, we've been able to pilot a lot of projects, across our approach, have engaged or discover, so our engagement programs, our stewardship programs, which move us towards our quantitative goals, and then our discover programs, which are teaching and research and using the grounds of the learning.

David Karlsgodt 43:00

Okay, so you're but you're, you're getting a little bit of the money from some of the things that we've been talking about with the Delta Force program, but there's also central funding and did that come later or beginning? Or are they completely disconnected or

Andrea Trimble 43:14

they're pretty disconnected. So data for is pretty much funding that that side of the office, whereas the energy and utilities essentially report through operations and facilities is funding, the average engagement communication side of our office, including my position. And then the central funding came in 2016. Through sort of our governance structure, which is our university committee on sustainability, and they, when we work with them to allocate those funds through to individual projects, and initiatives that move us towards our goals.

David Karlsgodt 43:49

So Jesse, how how does Andrews team or this, you know, the sustainability aspect of the university? interact? From your perspective?

Jesse Warren 43:57

Yeah, so I mean, we all work as one big collaborative office. Many times we need things from the outreach engagement and communication side, and they need things from us to green Labs is sort of a perfect example of that, because neither of us would be successful in reducing the environmental impact of laboratories from an infrastructure and personal perspective, if we can only work on one half of that.

David Karlsgodt 44:21

Got it. So you're not just working to save energy, you've got a little broader mission than that.

Jesse Warren 44:27

I meet with a lot of people and a lot of people have varying motivations for what it is that they do uncomfortable if they just want to save money, but other people have more aspirational goals. And that's where we have sort of a variety of customers across the university. Some people are interested in good indoor air quality, and how do we manage climate as best we can others are interested in how do we squeeze a buck out of it? And once they've done that, hopefully, we can lead them further down the path.

David Karlsgodt 44:53

Great. Yeah, fair enough. Andrea, I think my next question goes to you. This is fairly wide open. But thinking about just where you are, what's unique about your sustainability work in the context of Charlottesville,

Andrea Trimble 45:07

I think there are a few different things at play, I think in terms of our position within Virginia. We're sort of centrally located in Virginia. And while we're starting to see the increasing impacts of climate change, and rainfall and heat and weather, weather related impacts, we don't have the imminent threat of sea level rise. But we do have a position as a University of Oxford University within the state to understand the impacts on our state. So there's a one of the ways that we translated that into action is we have a large environmental resilience institute that has a one of the key components is coastal resilience. So we have been tailoring our sustainability programs to what's not just the need, and the impacts in our immediate region, but also in our larger, larger state. Another aspect is, increasingly, and this isn't, this isn't unique to Charlottesville at all. But increasingly, as our programs have grown, we've seen much more deliberate, intensive conversations around equity, inclusion and race in relation to the environment, such as the environmental justice, impacts, and general diversity of perspective in our sustainability conversations. So sure, this video has been sort of a focus area, a lot of these equity issues and conversations but it's not, these conversations aren't unique, and these problems aren't unique to Charlottesville is something that every community really United States should be grappling with. So we've been in terms of sustainability really trying to understand how do we ensure that the decisions we make proactively or in reaction to problem are achieving the best outcomes for every type of individual that interacts with the NBA.

David Karlsgodt 47:08

So we don't just get to make Jesse's customers happy. We're thinking about the whole region and and the broader aspects of the work you're doing that make sense.

Jesse Warren 47:16

So an example of that would be how we're working through the climate action planning process with Albemarle county in Charlottesville. You know, Charlottesville is a smaller than Albemarle County, only about 40,000 people compared to about 100. But we're working sort of collaboratively collaboratively across all three entities, UVA, Charlottesville and Albemarle County, to at least have coordinated messaging around climate goals, and maybe in the future, some shared milestones.

David Karlsgodt 47:44

Yeah, that's interesting. I think we're seeing a lot more of that around the country of universities taking the lead on those kinds of conversations, because we see, I think, you know, not every university, but many universities have been doing this type of work for at least a decade now. Well, cities are still kind of catching up in a lot of ways. I mean, there are exceptions, some of the cities have lived for a lot longer, as well. But

Jesse Warren 48:06

yeah, I would say that here, we've been committed in our cities and counties have been committed to climate action for a long time. I'd say we're an active participant in that, because we certainly want to make sure that we're we have a seat at the table, but they have plenty of their own direction leadership to make sure this gets done.

David Karlsgodt 48:24

Right. Yeah, that makes sense. Yeah. What where do you see the overlap in the collaboration? Is it you know, the Regional Transportation type type issues? Or, you know, what are some examples of that? Because I'm, you know, they don't really care about the delta T of your chilled water system, for example, direction, right? I mean,

Jesse Warren 48:40

I would say the value that we bring is twofold. One, we have an experience in doing these kinds of action plans, right? We've got action plans for our greenhouse gas emissions. And now it's time to work with our communities to develop that to the other thing, place where we can really collaborate is on expertise around climate solutions. So in our office, we've got a lot of expertise around Solid Waste Management, composting, recycling, energy, efficiency, renewable energy. So we go out into the community, and we lead working groups or energy sector Task Force is related to how we manage those assets, or manage that infrastructure.

David Karlsgodt 49:17

Great. So you're truly being the educators on these topics. Because you've been doing this work internally, you've got, you've tried out all the different ways of recycling and the different signage, that kind of thing. And you're able to share that knowledge with the community.

Jesse Warren 49:30

That's right. And when you think about it, these are Community Solutions, right? If we have one way of recycling here at UVA, and a different way of recycling, and people get off grounds, they need to at least understand that if we can't coordinate those two pieces, and the same goes for energy infrastructure.

David Karlsgodt 49:46

Do you see that there are some issues that cities and counties are better suited to deal with that universities really aren't? I mean, like, I guess the example that comes to my mind would be Regional Transit issues, just you know, you don't control the retreats transit system. But beyond that, are there other things like that?

Jesse Warren 50:04

I think a lot of the collaboration, and leadership will come on things like renewable energy, because they have the opportunity to encourage things, loan program by downs, financial mechanisms, taxes, even, that can encourage people to make those kinds of decisions. You know, at UVA, we're really good at directly investing in infrastructure. But we don't really have that opportunity in the same way in the community.

David Karlsgodt 50:30

Yeah, you can't do you can't really deal with things like changing the mix of power coming into the substation, or things like that on your own right, precisely.

Jesse Warren 50:37

So we've got to work together. And are there places where the counties and cities are further along? Well, absolutely. They're better at working with their constituencies and helping us understand that because they're going to have to convince these people to do things that the university could mandate.

David Karlsgodt 50:53

All right, well, hopefully, we've covered the highlights of your Delta Force program. And I think I can say it's very, very impressive. I think many people listening to this will be envious of what you've been able to achieve. And, and you may have some people vying for your job, Jesse in particular, I think a lot of people that work in this space, wish they had the tools that you have at your command, I'm sure you got plenty of hard work. But, man, I know, it sounds like you're awesome, Jeremy, I

Jesse Warren 51:19

opine for a minute. We you bring up two points. The first is I'm part of the Delta Force team because of the cost recovery model. When I came to you, the A, I was worried that I was going to have to fill out a requisition form to do a project in the next budget year and things like that. And that told me that I wasn't going to have a big impact. But what I learned is things like the Delta Force model that allow our funding to revolve makes sure that our impact is significant, and its immediate. And I think there's others that are attracted to that. With that being said, we are currently hiring for an energy and sustainability engineer. So if somebody is interested in being part of our team, look on our UVA website, the jobs platform is called work day. And in there, you'll be able to search for energy and sustainability engineer.

David Karlsgodt 52:08

Got it, you're hiring. So you're not worried about somebody taking your job. You're just trying to fill out your team, but

Jesse Warren 52:13

I'm looking for the smartest and most capable person to come work for us who can take my job.

David Karlsgodt 52:19

All right, well, that's this is the now sponsor of our episode here is job posting. The other thing I was going to mention there, though, is that sounds like also, if there's an administrator out there that wants to set up a program like this, that is a key thing to attract folks like you, they get to do this great work. If they want to attract the dynamic thinkers you need it, they need to set up the systems in such a way that you can be successful. That's right. requisition forms being the lead on that for sure. Great. Okay, well, yeah, anything as we just wrap up, I mean, that's, that's a lesson learned right there. But other lessons learned you'd like to share with folks, as we kind of pulled the threads together here,

Jesse Warren 52:58

I've got to that I've Well, maybe three that I've learned from experience. The first is that technology changes really, really fast. So when you think you're going to get a really good deal on buying a bunch of lights for this building, and the Let's buy some extra lights for this building this building this building, so that we can get a price break. By the time you're finished doing that last building, the technology will have moved so much that you're going to want either a different product, or you're going to be paying significantly different prices for the products that you have. The another big takeaway for us is having a longer view of the building's themselves. There was a time when we were really looking at individual opportunities and saying, How can we fix this? And that meant we were chasing all of our big problems and all of our big energy hogs. But at some point, we kind of chilled out and realize that the answer isn't to get everything as fast as possible. The answer is to get every building on grounds at the time that's appropriate. So there was a building on grounds that had electric resistance heat. And so we were adamant that that needed to be created heat pump, and we got a heat pump put in and about the time that that system is going to achieve its payback, the building was demolished. So that didn't really represent the kinds of savings I want to give to the university, which are long, persistent savings over time,

David Karlsgodt 54:14

right? Yeah, hopefully that wasn't a big building.

Jesse Warren 54:17

Now, it was a little warehouse storage space. But again, it was a lesson.

David Karlsgodt 54:23

Andrea, what same question to you again, you were the one that brought this to my attention in the first place, which thank you very much for doing so this has been really fascinating talking with Jesse and this whole program, but like, what have you learned from your perspective?

Andrea Trimble 54:35

Jesse has hit on it a few times already. I think it's the stakeholder engagement piece being so important. We really focus on collaboration and our purchase. So I think it's really important that everyone who is involved in the project gets the proper recognition. And then I asked, I think that is important that the occupants understand the impact that the project has, and how they can continue to help achieve getting savings through day to day conservation.

David Karlsgodt 55:04

Very good, very good. Well, as I said before, and I will say, again, super impressive what you guys are doing here, using the expression, if if it exists, it's possible. I think your story helps maybe dispel a lot of myths that other organizations that you know, maybe have seen a program like this done on paper, or in theory in a spreadsheet somewhere but you know, really don't believe it's possible to do. But your story shows that it can be done indeed, any any last pitch any other job opportunities that he VA, we should be telling our listeners about her thank

Andrea Trimble 55:38

thanks so much for having us. We really appreciate it, we always are happy to share any of the tools and resources that we create. And we're always happy to talk to people. So if anyone is interested in talking through their own setup at their school, and what may be possible and what we've learned in more detail and how our program works, and more detail, we're always happy to do that. Always happy to share templates.

David Karlsgodt 56:03

That's great. And I'll be sure to include ways to get in touch with you and links to resources etc. in the show notes. Yep. Great, Jesse, any final thoughts?

Jesse Warren 56:14

Now I really appreciate y'all having us on the show and we look forward to maybe talking to you again.

David Karlsgodt 56:19

That's it for this episode. To learn more. You can always see the show notes at our website at Campus energy podcast. com. You can follow us on Twitter, we are at energy podcast. The show is a free service, but if you'd like to support the show, please consider leaving a rating or review on iTunes or just telling a friend about the show. As always, thanks for listening

Transcribed by https://otter.ai

Episode 16: One Lab’s Trash is Another Lab’s Treasure: Reducing Waste and Increasing Reuse at Northwestern University

Julie Cahillane  (left)  Garry Cooper  (right)

Julie Cahillane (left) Garry Cooper (right)

Julie Cahillane
Sustainability Associate Director
Northwestern University

Garry Cooper, PhD
Rheaply, Inc.

Host: Dave Karlsgodt
Principal, Fovea, LLC

Production Assistance:
Kaia Findlay and Animesh Bapat

Any kindergartener can recite the lesson that ‘sharing is caring.’ For youngsters, this just means it’s nice to let someone else play with their favorite toy. But for Garry Cooper, sharing plays a crucial role in caring for the planet and finding solutions for waste reduction and efficient resource use.

Inspired by the copious amounts of wasted lab equipment he encountered as a Ph.D. student, Cooper founded Rheaply, Inc., a startup that now helps universities and other institutions across the world reuse and recycle by sharing unused and unwanted lab equipment with other labs. From glassware to antibodies, you’ll learn some of the logistics behind trading world class research equipment all with a focus on sustainability.

The success of Rheaply, Inc.’s pilot at Northwestern University is framed by Julie Cahillane, Sustainability Associate Director at Northwestern University. Her breakdown of the waste produced by research institutions showcases the important role of sustainability in labs across the nation. She’ll go into what it takes to institutionalize sustainability at the university level and teach you how your institution can empower people like Garry Cooper on your campus.

Episode 13: The Challenges and Opportunities of Aggressive Climate Action

The panel at CHESC 2018 (  Left to right)  Tyler Durchslag-Richardson, Fletcher Alexander, Lindsey Kalkbrenner, Eric Eberhardt, Dave Karlsgodt

The panel at CHESC 2018 (Left to right) Tyler Durchslag-Richardson, Fletcher Alexander, Lindsey Kalkbrenner, Eric Eberhardt, Dave Karlsgodt

Eric Eberhardt
Director of Energy Services
Energy & Facilities Management Services
University of California, Office of the President
Lindsey Kalkbrenner
Director, Sustainability, University Operations
Director, Center for Sustainability
Santa Clara University
Fletcher Alexander
Sustainability Programs Manager, Institute for Sustainable Development
California State University, Chico
Tyler Durchslag-Richardson
Senior Analyst, Facilities Services and Integrated Planning
California Institute of Technology
Host: Dave Karlsgodt, Principal, Fovea, LLC

This episode was recorded live on July 10th at the 2018 California Higher Education Sustainability Conference (CHESC) which took place on the campus of the University of California, Santa Barbara. Dave Karlsgodt moderated the session: “The Challenges and Opportunities of Aggressive Climate Action.” Panelists from a cross-section of California institutions answered questions about their climate action efforts.  You’ll hear both success stories from these leading institutions, but also some honest discussion on where they have more work to do. Topics include the nature of their climate action strategies, making the business case for sustainable practices, the dual role of higher ed. to lead and to educate, carbon neutrality, 100% renewable energy and more.  Audience members bring up some challenging questions including how to consider equity, social justice, and the stratification of resources to address these challenges.  The discussion includes a combination of inspiring success stories and honest self-reflection from sustainability professionals working in the trenches.


Episode 10: Repairing our Relationship to Stuff – Barnard College’s Sandra Goldmark Discusses Sustainability in the Context of Reuse, Repair, and Design

Sandra Goldmark, Barnard College and Fix-up Repair.

Sandra Goldmark, Barnard College and Fix-up Repair.

Guest: Sandra Goldmark
Director, Sustainability and Environment and Associate Professor of Professional Practice in Theatre at Barnard College;
Co-Founder of Fixup.

Host: Dave Karlsgodt, Principal, Fovea, LLC

Production Assistance:
Sarah Barr and Cecilia Kane

Ever feel like you spend a fortune keeping up with the latest in tech, fashion, and other trends? Have more stuff at home than you know what to do with? In this episode, Sustainability Director at Barnard College Sandra Goldmark discusses our obsession with stuff, how overconsumption threatens our climate and natural resources, and how we might repair our global economic system to be better in-tune with our innate human values.

A set designer, Goldmark first noticed the scope of our problem with single use items in the context of theater where sets would be built, featured in a show for several nights, then go straight to the landfill. This inspired her to start a repair service called Fix-up. Business boomed and Goldmark learned people were willing to pay to get their old stuff fixed, sometimes as much as a new replacement would cost, prompting the very good question: why don’t major retailers offer product repairs?

Her work demonstrates how a practical repair service can prompt a deeper investigation into how our stuff defines our humanity, and how what we have says about who we are. A prime example of how a grassroots initiative can fill a gap in innovation, Goldmark challenges us to adopt an experimental approach to sustainability on both the individual and campus levels.

Join us this episode for a glimpse into Goldmark’s vision for a revamped global economy built on the principle of repair, beginning with fixing that old chair in your garage.

Web Resources:

Ztuff Slides