ESG: The Triple Bottom Line and Why It Matters with Tim Mohin, Partner and Director at BCG.

Welcome to another episode of the Solar Podcast. Today Dave is talking with Tim Mohin, principal and director at BCG. Join us as they discuss Tim's impressive career as a sustainability officer at companies like Apple, AMD and Intel. They also discussed Tim's time as the chief executive at the Global Reporting Initiative and the landscape of laws and regulations affecting sustainability today. Let's get right into it on the Solar Podcast.

Dave Anderson (00:36):

Well, welcome everyone to the Solar Podcast. I'm Dave Anderson, the host, and we're thrilled today to have Tim Mohin with us, who is an executive, an author and all around great guy. We're going to spend a lot of time today talking about work that he's done formally as the CEO of ESG Advisors and now more recently, with BCG as the famous consulting company, and we're going to talk about it from the perspective of sustainability and the things that he really has been expert in. He can easily be found online. He's given numerous speeches and talks. I've had the opportunity to consume some of those before. So thrilled to have him on the podcast. Welcome, Tim.

Tim Mohin (01:11):

Thank you, Dave. It's a pleasure to be here with you today.

Dave Anderson (01:14):

Yeah. So Tim, I'm sure that there are things that I didn't cover in terms of your biography that our listeners would love to hear about yourself as well. So maybe you can tell us a little bit more about yourself personally and otherwise.

Tim Mohin (01:23):

It's a long tail, Dave. I've had many jobs but only one profession. I've always been in sustainability. In fact, when I got into this field way back when, I'll probably date myself here, we didn't really have that term. Sustainability wasn't coined yet. In fact, at that point, if you wanted to be an avowed environmentalist, you had two choices. You could be an activist. You could go work for Greenpeace or something like that or you could be a regulator. I chose the regulatory path.

(01:56):

I started off my career in the federal government. I was with the US Environmental Protection Agency for over eight years and then I moved on to the United States Senate and worked on various legislative issues. So some of the big ones of the day were the Clean Air Act, for example, which is still very much law today, super fun, clean water. But my big issue when I was in the Senate anyway was environmental technology, which is very germane to the conversation we're having today about solar power. We may have been ahead of our time. The idea that the public sector and private sector can work together to actually bring these technologies to market is something we talked about way back when, this is in the '90s, and now we're seeing come to fruition today. So that's an exciting symmetry for me to get into in this podcast.

Dave Anderson (02:50):

So I would love to hear, just again because your career spans this idea of sustainability, what are some of the things that we maybe got wrong early on in your career that you feel like we're starting to get right now as you've seen an evolution in your career?

Tim Mohin (03:03):

Yeah, it's a great question. I left a few decades out, but when I left the federal government, I actually worked in the private sector for 20 years, Intel, Apple, AMD. I was the CEO of the Global Reporting Initiative, which is the big sustainability reporting standard.

(03:23):

But to answer your question, based on that background, I think there has been this massive coming together of the public and private sector. We've really seen that the issues of climate change in particular have become so evident that even the financial sector is looking at this as a source of instability. And so the government has really stepped in and said, "What can we do to try to make the transition from fossil fuel power to renewable energy?" And you're seeing it in the Inflation Reduction Act. You're seeing it in the disclosure rules that the Securities and Exchange Commission is currently proposing. You're seeing it across the world in capital market regulation requiring new disclosures from all sorts of companies. So this is all starting to take shape, and it's really interesting for an old guy like me to see it go from this fringe activist issue into the mainstream of global commerce, and that's what we're witnessing today.

Dave Anderson (04:25):

Yeah. Obviously, this last year, we had one of our biggest pieces of legislation in the history of the United States, I would say anyway, in the Inflation Reduction Act. That is obviously an act of government that's certainly going to help facilitate and bring to pass through the private market or through the private sector a lot of business. What are your just high level takes on the Inflation Reduction Act and what are the things that you're particularly excited about? What are the things that you wish would have made it into the bill? I know it's a huge bill, but maybe you can comment a little bit about that. There's still a lot of people that are trying to figure out what all of the implications are, and I think that those things are being sorted out right now actually. But anyway, I'd love to get your take on that, obviously, coming with your background that you have both in government and in the private sector.

Tim Mohin (05:17):

So at a high level like many people who are from my background, more of the environmentalist background, I couldn't be more happy with the Inflation Reduction Act. The most publicized number is this $369 billion that is going towards subsidies in the form of tax credits and grants to really get more renewable energy out into the world. And I know that's a very broad statement. There's lots of different nuances in detail, but one of the hidden stories is that that number is actually an underestimate. Those tax incentives are uncapped, and some analysts have looked at it and said it could go as high as even double that number. And so it's really, really exciting to see what's going to happen in the next few years as this law starts to take effect.

(06:12):

And I really think that because it is now law, it's really going to be hard to undo. So we have a lot of political back and forth on these issues as you know, Dave. When I get this question about the Inflation Reduction Act, I said this is settled. I don't think it's going to change. I think you're going to have this momentum for a good long time, and I think you're going to see its effect on bringing the renewable energy numbers up over the subsequent years and decades.

Dave Anderson (06:42):

Yeah. I think some of the parts of the Inflation Reduction Act that are uncapped are relating to the investment tax credit. There's 30% investment tax credit that exists for many different types of renewable solar. Obviously, as the Solar Podcast, that's the one that most affects us. There are others however that do have some caps on them. A lot of that has to do with changing heat pumps, for example, as part of that bill. There are some caps on those sorts of things. And then there are some things that are being figured out in terms of what the overall impact would be, and a lot of that is the domestic production and the domestic manufacturing, what qualifies for domestic manufacturing?

(07:17):

And generally speaking, that's something that is exciting to me to understand and I think is also good not just for the renewables industry but also good for the United States generally, is this domestic content piece. Anyway, I'm not sure if you've had an opportunity to look too much into that and what your take is on the domestic components of this, but it's certainly something that we've kept our ear close to the rail on to really understand what the impacts are going to be.

Tim Mohin (07:43):

Yeah, you're right. I don't profess to be an expert in this. I know that companies like First Solar and others in the United States have really made their mark. I worked in the semiconductor industry for a very long time. And many of my colleagues, because it's a similar technology, went over to the solar industry. But as you know, there are massive trade issues associated with renewable energy, undercutting of prices and now with the subsidies from the IRA where you're seeing movement from the European Union especially to answer in kind. And so I don't think we're quite done with this story yet. I think international carbon border adjustment mechanisms are going to go into place and you're going to see all sorts of different tit-for-tat trade issues now coming down on the issue of climate.

Dave Anderson (08:33):

Yeah. In the United States, it's tricky, right? Because on the one hand, you've got the regulations that make solar more affordable through the Inflation Reduction Act. Mostly it's an extension of the ITC. And then on the other side, there are these tariffs that are in place that create added cost to the solar industry as well, and so you've got attacks on one side and a subsidy on the other side. It has a lot of confusion.

(08:55):

So one of the things that I think a lot of countries have gotten right so in the case of Australia, for example, they have complete free trade and the costs, the turnkey costs as well as they have a single less bureaucratic, less distributed AHJ model where you have all these different authorities having jurisdiction that are essentially keeping the soft cost of solar high. You've got places like Australia that are deploying residential solar for probably a third the cost of what we're doing it here in the United States at the residential level.

(09:26):

And so what I'd love to see is some regulation around what are some things that can be done to help keep the soft cost of solar much lower so we can standardize some of the things like permitting? It's one of the things that actually comes up a lot on the Solar Podcast, but I'd love to get your sense on that. What are some of the things, bureaucratically that you think are actually impeding or getting in the way of sustainability and renewable projects or renewability or renewable initiatives like solar from being able to proliferate even faster than they are right now?

Tim Mohin (09:57):

You mentioned it, Dave. It's the red tape. So if we can just cut through the red tape on this stuff, we can probably do as much, if not more than the actual subsidies themselves. I think many utility grade down to residential are just tied in knots from permitting to land use to you name it. We have to find a way to just make it easier to actually install this. The capital cost is already enough of a deterrent, but when you layer on a lot of these regulatory requirements, it becomes a daunting mix to get there. We all know that the cost of solar is less than the price per kilowatt of fossil fuel, which is fantastic. We're seeing growth rates in residential of over 30%, which is amazing, and we need to continue that.

(10:45):

I think the subsidies are there now. A lot of them actually do have some additional bells and whistles. As you know, there's a lot of environmental justice concerns or additional provisions in the IRA, which are good, but I think as you add more and more requirements on top of the ability to add solar, you're seeing that that creates a burden.

(11:08):

So years and years ago, I was involved in something called Project XL. I'm dating myself. This is in the Clinton administration, but it was an initiative to cut through the red tape for companies that wanted to do the right thing, and this was on the issue of air pollution. And my company at the time, Intel, signed up for it. We were selected. There was a big White House ceremony. And in essence, we were able to build not one but four multi-billion dollar factories under a single permit without having to go back for permit renewals each and every time, which were costly and difficult. And so it's that kind of initiative that we're going to need to have from the government, from the administration to cut through the red tape in order to allow these installations to go faster.

Dave Anderson (11:56):

Yeah. We had Jan Rosenow, who's an expert on regulation in the EU, and he talked about that, this idea of being able to have a standardized permitting process rather than the individualized permitting process that we go through on the resi side. For big utility scale, maybe pulling a second through a third permit, while very expensive, it's not nearly as onerous as it is to the installation companies that are doing in the thousands of installs every month, trying to figure out how to get individual homes permitted and how to pull permits and build plan sets and build designs, which for the most part, it's really just reproducing what you've already done but doing it a thousand times in a row. Those sorts of things are things that I think certainly could help cut the cost. I actually didn't know of an example, a domestic example like what you had shared with your experience in Intel, so I'm thrilled to hear that it's actually happened somewhere in the United States.

Tim Mohin (12:48):

It was a while ago, and potentially the political conditions don't exist today but it's an interesting question. This is more of a conjecture on my part because when both parties can agree on something, it tends to happen. And I think both parties could agree on cutting regulatory red tape when it comes to renewable energy, so maybe we're on to something here, Dave.

Dave Anderson (13:13):

Yeah, I agree. There really are still, unfortunately or fortunately in terms of the checks and balances, there's some really loud voices that come from mostly the utility companies, at least on the solar and many of the renewable side. Outwardly, they certainly express a lot of interest and a lot of openness towards this transition to renewables and sustainable energy. But secretly or even in the background, it seems as though they're fighting pretty aggressively against it. California is facing a pretty dramatic change in the net energy metering program that exists for residential customers today. That goes into effect in the middle of April, and it happens pretty abruptly and pretty just one day, we'll have NEM 2.0, which is very favorable net energy metering program and a very successful net energy program in the United States. And the next day, we'll have NEM 3.0 where the economics change pretty dramatically to the homeowner.

(14:13):

Moreover, we have an industry that has very well established installation crews and a pretty well established process for installing systems. And again, as soon as that NEM 3.0 switch happens, the way that we install systems, the type of equipment that we have to procure specifically around batteries is going to change pretty significantly, and California is definitely going to feel a huge blip or decrease to the amount of solar deployment that they have.

Tim Mohin (14:41):

Yeah. I think one of the hidden stories in this discussion is the voluntary market. We're talking a lot about regulations, both the carrot and the stick, as well as the red tape, but so many companies now have made these net-zero commitments. I was in the big climate meeting, COP26 in Glasgow a couple of years ago where we had the financial industry, almost the entire world's financial industry come out and say they're going to have net-zero portfolios by 2030, 2050 in some cases, and many of them signed up for this without really knowing what that meant. But when you have most of the world's assets really focused on net zero, it drives this voluntary market because it's got to come from somewhere. And so I think by far, much of the new installations on solar are being driven by this voluntary demand.

Dave Anderson (15:42):

Yeah. A little bit of a change gears, but we've talked a lot about sustainability initiatives on the Solar Podcast. I think this is the first time we've ever had a sustainability officer on the podcast, which I'm thrilled about. So maybe for our listeners, if you wouldn't mind just explaining, what was the day-to-day responsibilities that you had as an officer within a large organization really just focused on the sustainability of the organization? I'd love to get a little bit of a day in the life.

Tim Mohin (16:14):

That's a great question and I hope this is still interesting to your listeners who are focused on solar. But I will say that we throw around this term sustainability like people know what it means, and it's actually probably one of the most used, least understood terms that's out there.

(16:30):

The best way I can answer your question is by going to what's the definition of that term? And when I ran GRI, I was the CEO of the Global Reporting Initiative. There were 34 different topics under GRI under the categories of environmental, social and governance. And so you can go deep on any one of those. We're talking today about climate change, energy and specifically renewables and specifically solar. So we've gone deep down one of those rabbit holes, if you will. But then if you start looking across the enormous range of what is included in this topic, the best way I can answer your question is a day in the life is like being a plate spinner at the carnival. You're always running to keep that next plate going. Today might be an issue about renewable energy, and tomorrow it could be diversity, equity and inclusion. Or when I worked for Apple, we were focused on labor issues in the supply chain.

(17:30):

And so you have to really be the jack of all trades, master of none kind of thing, but super good at leading through influence because typically, these functions, the functions within a company that can control the outcomes of these many, many issues are not under the purview of the chief sustainability officer. That person has to work with and influence basically all the company, and that's a tough ticket. As you know, I wrote a book about this, a lot of the skills are soft skills. And one of the best compliments I ever got on the book was somebody said, "I learned more about business than I did about sustainability from your book." So anyway, I hope that answers your question.

Dave Anderson (18:14):

Yeah, I think so. But as a followup, how often did what you were doing did you feel like you were making a business case to the other executives at the company as opposed to trying to just speak from a pure altruism perspective?

Tim Mohin (18:26):

Constantly. I call it the corporate immune system. So if you use the metaphor of the immune system, if you have an infection, the body rejects it. In business, it's the same thing. If you're not providing value, you don't last for very long. And so you need an elevator speech, a speech that takes about 30 seconds to get through about how your function adds value. Now, this has changed over the years but it was always about things like, first of all, brand, the largest intangible asset. On the balance sheet is the brand. How do we improve the brand? How do we improve the relationships between if you're even B2B customer relationships, stakeholder relationships?

(19:06):

And increasingly, what has come onto the scene is employee engagement, recruit, retain and engage in the war for talent. It's increasingly important to have a really solid sustainability program backed up by facts that the young people who are applying for jobs really want to know about and get involved in. This has become a real differentiator for companies as we go forward.

(19:33):

So those are some of the things I used to say, and every time I went to the board or the C-suite, I would have my three to four things of how we add business value because it's essential.

Dave Anderson (19:44):

Yeah, I agree with you. Those concrete numbers are fantastic. What were the data points that you would usually use or reference when you were talking to the board or the C-suite to really try to demonstrate the value of adding these sustainability programs outside of just the social benefits that the company was adding or providing?

Tim Mohin (20:05):

Well, there was a couple. I mentioned brand. So when I worked for Apple, depending on the year, it has the most valuable brand in the world measured in the hundreds of billions. And so it's really not hard to, once you attach yourself to a number that big, to say how are we moving the needle in terms of our reputation? There is a company out of New York called the Reputation Institute, and they did studies of how much of that brand value is associated with corporate responsibility, sustainability, whatever word we attach to it, and it turned out to be more than 50%. I'm sure that number is growing. We're seeing that also in things like the Edelman Trust Barometer where how companies act is vitally important to how the world thinks about these companies.

(20:56):

So I know it's somewhat intangible, but as you have market estimates of brand value, as you have market estimates of the percentage of brand value tied up in sustainability, then you have a real business case, but wasn't the only one. We did a correlation at one of my companies between ... We were trying to get to employee engagement. And the substitute we used for, well, we have engagement surveys so we know which employees are engaged and which aren't. This was mind-blowing to me. It turns out that most people are there for a paycheck. I didn't know this, but there's very few engaged employees, which is why we check this.

(21:34):

But it turned out that when we use a substitute for sustainability, we use employee volunteerism, the number of hours employees get involved at work through employee volunteer programs, and we correlated that to engagement scores. There was a huge correlation between the two. And it just dawned on me that when you can express your cause at work then work becomes your cause. There was an aha moment. We were able to say that our work in the sustainability department wasn't just doing good and helping others and planting trees. It was actually creating business value because engaged employees work harder and do better for the company. And so we had those two data points that we shared with the board.

Dave Anderson (22:26):

Yeah. And it's just a more pleasant place to work generally speaking. I would imagine that early days, the tailwinds, or for a lot of the sustainability programs that you're actually promoting as part of the work you've done professionally, have changed and molded a little bit from some of the more social issues probably to now some of the more renewable energy issues. You might actually think of those in the same vein, but I would think that the environment for doing what you've been doing for the last several decades has become a little bit more favorable or better and that the need for a sustainability officer or at least a sustainability plan within a business has become increasingly important as well. Is that a true statement or do you think it's always been important, it just never really quantified?

Tim Mohin (23:11):

It's an absolutely true statement but it's also a controversial position. I've had this argument with a lot of folks where, do we need a sustainability officer or a sustainability everybody's job? I have a real opinion on this one. We need a sustainability officer. It's like quality. Quality is everybody's job. But if it's everybody's job then no one is responsible. We all point fingers at each other. So back to the plate spinner analogy. You need that person in the center who's actually making sure it's getting done, creating the strategy, creating the KPIs and the management systems to ensure that the company is setting targets and meeting those targets. Vitally important.

(23:54):

But there's another nuance in your question, Dave, which is the profession has changed. I wrote my book over 10 years ago now, and if anything, I could sum it up by saying the profession has gotten kicked upstairs. It's now the purview of the CFO, the investor relations, the board has a committee on this thing. All of a sudden, we have investor pressure, which is really driving the regulators at SEC and other capital market regulators to require disclosures. All of this stuff has happened very, very recently, and so it's changed the skillset of that CSO position.

Dave Anderson (24:33):

You spent the last couple of years as the CEO of ESG Advisors, working with the C-suite, helping them to understand the things that you're talking about with us right now. More recently, you've made the change, like we said, to BCG. Maybe you can talk about some of the meaningful things that you were working on in the last couple of years and why or what's led to the transition to BCG. Certainly, the scope of working with BCG is much broader or wider, I would imagine.

Tim Mohin (25:00):

That's exactly right. My career has all been about one word, which is impact. And when I led you through my bio at the beginning of our conversation, I was trying to make choices that would maximize the leverage of my work to make impact, and I continued to do exactly that. I haven't changed in over 30 years. And when I was in ESG Advisor, I was basically leveraging all of the work that I did throughout my career to help companies that are just now on the beginning of their journey to discover what to do, how to set up a sustainability program, like a rent a CSO, if you will, partial CSO model. And that worked very good but it wasn't that scalable.

(25:44):

Boston Consulting Group is one of the premier consulting firms on the planet. They're basically working with the C-suite of many multinationals around the globe and over 25,000 consultants, over a hundred offices. And with that platform, with that kind of leverage, it's just amazing to me to see the kind of impact that we can have. This company has basically made this part of their moonshot. There's a separate P&L within the P&L, profit and loss, just around climate and sustainability. It's quite new, but they're hiring people like myself and other people that can really help drive this.

(26:25):

The last thing I'll say on this is I'm only four weeks into this job, but I've really never in my life encountered so many smart people. It almost feels like wherever you turn, there's somebody with that relevant experience. So we create these incredible expert teams around some of the toughest challenges that companies are facing.

Dave Anderson (26:45):

BCG has been the stepping stone for many a CEO out there. Obviously, it's a pretty amazing stop for many upper executives at companies. So I would imagine that you're probably working with maybe even some BCG alumni that are within these companies at this point.

Tim Mohin (27:04):

That's exactly right. In fact, we do have an alumni network, since you mentioned it, of former BCGers that are now in very senior level positions.

Dave Anderson (27:13):

Yeah. And how does BCG, how are you positioning yourselves in terms of ... because at some point, you have to put a line in the sand about what it means to be sustainable, and some of it is ethical and socially you feel an obligation and responsibility to say that there's a minimum threshold that every company should be not only striving toward but signing up for this minimum standard. So BCG, do you guys have a playbook that you're bringing in or is it really you're coming in from a consulting perspective and helping companies that maybe have no sustainability programs in place at all to write their playbook for the first time?

Tim Mohin (27:47):

That's a great question and it goes back to our discussion before around business value. So if you look at what BCG does, it's really around providing business value. My career has always been at the confluence of sustainability and business because I think that's where we can get the most done. Ever since I left the government, I felt like that's the future, and that's what BCG does. So instead of taking it from a pure compliance check the box standpoint or some other operational function, now we're at the most senior levels, we're looking at the whole trendlines of what's happening with investors, regulators and all of that. And then taking that body of information to a company and saying, "How do you create business value from this? How do you identify risks and avoid them, and how do you leverage opportunities in the profit pools that are being created around things like renewable energy?"

(28:45):

We're looking at the biggest transition I think the world has ever seen. We're shifting everything to a different way of powering our society. That creates huge opportunities. And so it's not just the regulatory side, it's the entire trendlines and trying to find business value for our clients.

Dave Anderson (29:03):

Many of the listeners of the Solar Podcast are small business owners, people that either have small sales organizations that work within the solar industry, some of them obviously much larger working on large utility scale, bigger solar type projects. But maybe speaking a little bit to those smaller companies that maybe don't have access to or aren't immediately going to go out and get a contract with a large consulting company, what would be some of the pointers or tips that you'd give to those smaller companies in terms of what they might be able to do? They might feel like they're too small to have impact statements or to have these sustainability objectives and goals. What would be some of the advice that you could give to those listeners?

Tim Mohin (29:44):

Yeah, I get this question a lot. It's a great question. I do think that someone once said that sustainability is a tax on big companies, and I don't want it to be that. I think it should be somewhat more democratized and available to big companies, little companies, and especially the listeners that you mentioned. In fact, there are entire businesses that their business model is to advance sustainability in a very real way. So you have this win-win, the company wins, and the environment wins when the company wins. So that's a wonderful thing, and it really is the key to the answer too. Don't try to do too much. Don't try to be all things to all people, but really have your sustainability program embody the values of your company and stick to those values.

(30:37):

We're seeing this back and forth political storm right now, and I get a lot of questions from a lot of clients about that. And I say, "Stick to your values. These cycles, they come and they go, but what are the values of your company and how do you embody those values in statements but much more important in actions?" That's what I always tell people. It's basic advice, but it is the advice that I give to small companies.

Dave Anderson (31:04):

I would imagine that every consulting opportunity you've had, people ultimately want to know what's the biggest bang for my buck? What's the thing that I can do that's going to be the most impactful given the limited bandwidth that every private company has? There's not unlimited resources in any private company. Are there any things that are universal in terms of big impact or is it really going to be different for every business from your perspective?

Tim Mohin (31:33):

It's largely different for every business. There are a couple of universal things that I will point to specifically on the employee side. I mentioned this before, but I find it super inspiring that younger employees come with this built in that they want to work for more than a paycheck, they want to have some impact, positive impact on the world, and appealing to that in their nature is really essential for any business. So finding ways to engage employees in either volunteerism, sustainability related events or have it built into their day jobs is really, really something that can be done at any size in any sector.

Dave Anderson (32:17):

I think Simon Sinek has made this fairly popular with his Golden Circle conversation that he's given on many TED Talks and lots of books. But I think the idea here is that there are a lot of people that would really resonate with these high impact social statements that you can make as a company, and they have to be true, of course. You can't just say them.

(32:36):

One of the things that we talk a lot about is the idea behind brand is not really the look and feel of your logo and the colors. It's the perception that others have about you through all of the things, through the way that you behave, through the way that you conduct yourself in business, through the way you conduct yourself with other partners and whatnot. That's really what creates brand. And for employees, I think with this idea of trying to be really impactful and trying to create a place for people that want to be socially and cause driven to associate themselves with a company that has similar values is of critical importance right now, and I think it's become more important than it ever has.

Tim Mohin (33:15):

You're absolutely right. Everything old is new again. When you want to inspire a bit of your culture, you role model that, you live it yourself and then you recognize and reward those behaviors in others. And I think it's the same with sustainability. It's even more important because as I mentioned, young people want this. And so role modeling it at the top, creating that recognition system for those throughout the company, that can go a very long way.

Dave Anderson (33:46):

So how often were the social programs or the sustainability programs that you instituted at a business level were actually for the benefit of the individuals? In other words, things that they could take home and put into practice in their own lives as opposed to things that were big corporate strategies or initiatives.

Tim Mohin (34:01):

That's becoming much more of a thing. This is much more of not firsthand but secondhand knowledge, but a lot of companies now are providing employee benefits in the form of carbon credits, if you will. So you could have a cafeteria style benefit plan where you know could get a subsidy for changing out your heat pump, for example. From your company, depending on your current situation, you could use that benefit in many different ways from upgrading your HVAC to putting solar on your roof to changing to an electric vehicle, etc. So you're seeing more and more of these kinds of bespoke cafeteria style benefits, and companies are there to support it.

(34:52):

There's this big industry now that didn't exist 10 years ago. Companies like WeSpire are providing software tools to companies that can help them provide these benefits to understand what employees want from their employer in terms of sustainability benefits and then providing that service. And so it's quite a growing industry. Again, I've been out of it long enough to not have that firsthand experience, but I'm seeing this happen across many different companies now.

Dave Anderson (35:26):

Yeah. I haven't seen too many examples of corporations that have created their own carbon credits and made those fungible tokens or fungible in some way that they could be spent within the business. I have, however, seen a lot more of ... Although, I think that that's a beautiful program. I'd love to see more of that, frankly. I think it's a fantastic idea. What I have seen a lot more of, however, are same type of thing, employee benefits where corporations that have sustainability initiatives with large companies where they extend some of the benefits of those initiatives down through the employees. Obviously, we're the Solar Podcast so we've actually helped to work on sustainability programs where corporations can put into place a benefit where one of the things that artificially inflates, maybe not artificially but certainly inflates the cost of a solar transaction is the high acquisition cost associated with solar and the finding and the marketing of it.

(36:20):

So if you can remove that and add it as an employee benefit where employees can actually go solar for less than they would be able to probably in a standard open market transaction, that's a way that companies can really expand their impact but also provide a company an employee benefit as well. And when done right, then we actually have worked to help to aggregate those data in a way to show the overall impact as part of the company's initiatives as well, something that think you can do at a small company or at a huge company.

Tim Mohin (36:54):

It's exactly right. It started with things like commuting incentives, which are pretty straightforward, but now that's just not good enough. As I said, I'm seeing companies now saying, "Here's a defined benefit. You use it however you want to, but it has to fit into our personal carbon calculator." And so each employee has a personal carbon calculator and they can use it to reduce their own global footprint. Where I think more work is needed is on the employee business travel side. We talked about this earlier as we are warming up here on the consulting work that I'm doing. This is my biggest part of my carbon footprint, is getting on airplanes, and here we are on a nice Zoom call. It seems to work well. I know there's no substitute sometimes for that personal interaction but that last bit is super hard to mitigate.

Dave Anderson (37:55):

Yeah. There has previously been a lot of social pressure to show me how much I care by flying out here and sitting in front of me. If there are any to talk about, but one of the maybe okay benefits of the pandemic is it's made a little bit more acceptable to have these what would've been previously impersonal meetings but doing them virtually or over the computer. I think that it's a really nice side benefit. I don't know that anyone has ever really tried to demonstrate what the carbon benefit was to the pandemic, but I would imagine from a travel perspective, it was pretty significant.

Tim Mohin (38:31):

Well, and I think it's still going to ripple through in the real estate market as companies are rustling with this back to work order and not getting very far with it. What happens to that class A office space that you're spending top dollar to maintain? I think that's going to ripple through the economy for some time.

Dave Anderson (38:54):

Yeah, I think you're probably right. In fact, we actually have a couple of different office locations, but our Salt Lake office tends to be quite full, but our California locations tend to be fairly empty. And so to your point, eventually those leases are going to expire and then there's going to be questions as to whether or not they should be renewed. I don't try to say that in any great way for us or for real estate, but yeah, there's obviously an impact when you talk going to work versus working virtually, and then you juxtapose that against just general employee engagement and employee utilization, all those things. It's not an easy answer for companies, and companies are certainly wrestling with it. It probably fits into a lot of the social stuff that you talk about, I would imagine, employee engagement.

Tim Mohin (39:46):

A hundred percent, it does. I had that experience when I was running GRI. The pandemic started and we had an office full of people. I was living in the Netherlands at the time. But by far, the majority of our employees were super young, super smart, and their number one complaint before the pandemic was, "I want to work from home more." And their number one complaint after the pandemic is, "I want to come to the office more." And so it was immediate complete reversal because it turns out that a certain amount of teaming, camaraderie, understanding the culture and how people behave to one another, super important.

(40:23):

So I don't think we found that middle yet. I think companies are still searching for that middle. I see carrots and sticks approach. We have free lunch at work. You should come to work. And I see if you don't show up to work every few days, there's going to be some compensation penalty. I've seen both approaches. I really think we're still in the middle of this thing.

Dave Anderson (40:46):

Yeah, there's probably going to be some employee mobility that needs to happen before you can find that equilibrium because many people went from, I'm working in the office but don't necessarily love it, to now I'm working at home and I do like it, but now they're telling me to come back but I already fell in love with working from home. And so there's probably going to be a little bit of equilibrium that needs to happen with people finding the right positions for them, and as companies try to also figure out what the right amount of mix is for them as well. These problems aren't simple. They're tough problems to solve.

(41:17):

But anyway, private market has tended to be fairly resilient through these catastrophic events and still working our way through a pandemic, but I have a high level of confidence that we'll figure it out or a high level of hope maybe is a better way to say it.

(41:34):

Tim, I know you're fairly short on the job. I know impact matters a lot to you, but maybe you can give us a little bit of what are the things that you're excited about working on? What are the big problems that you hope to help be a part of the solution on over the next little bit of your career?

Tim Mohin (41:47):

Yeah. I think that right now, what we're seeing is many of the companies that our clients and potential clients are focused on these net-zero commitments. They either have made a commitment and they're looking for a strategy to meet it, meaning the governance, the management systems, the KPIs, all of the basics of how you run a company have to now go into the climate setting. So that's a huge one, and it's a major, major transition for a lot of companies.

(42:24):

But the second one is this compliance issue we talked about before. We had, in my career, the instance of a company actually reporting on sustainability matters was kind of a man bites dog story. Why would a company ever voluntarily talk about their sustainability issues? But just recently, within the last six months, we saw a figure that 96%, 96% of the S&P 500 are now voluntarily issuing sustainability disclosure. So as we now see the policy coming along to say, okay, that's great, but now we're going to require it, not only require it to be disclosed but require it to be included in your financial statements that are audited and assured and carry penalties from misstatements, that's the big change that everyone is looking at it.

(43:19):

It's like we did this voluntarily, but now that it's being required in our financials, that's a big change. It changes the schedule. You have to add assurance. A different level of the company is involved. You're bringing the CFO in. And so that I think is motivating a lot of companies to really reexamine what they're doing in terms of climate change.

Dave Anderson (43:43):

And without outing anyone obviously, but from your perspective, is that reporting that's being done ... I actually haven't heard that number, 96% of the S&P 500, but it's obviously not part of the audited financials. So from your perspective, how accurate or how high fidelity is the reporting that's happening with these different organizations?

Tim Mohin (44:03):

The current state is very poor, which is why you're seeing the SEC, the European Union, the United Kingdom, Japan, Hong Kong, Singapore and others come to the table with regulation that's saying, "We have this 96% sustainability reporting rate," but the information is poor quality. It comes out at different times of the year. We can't compare one to the other because the companies are cherry-picking the issues that are most, let's say, advantageous to themselves. But when you throw in regulation, all companies have to report at the same time, with the same rigor on the same issues, and you get comparability, which leads to, this is where the magic happens, actually tying investment to sustainable business practices.

(44:50):

Before, it was more of a reputational exercise. And now, when you incorporate it into financials, investors can see where the risks and opportunities are and they can match that with their dollars. And so I think this is the big change that a lot of clients are coming to us saying, "We don't actually know how to make that change. We don't know how to get business value out of that change." And so that's really generating quite a bit of interest.

Dave Anderson (45:15):

Well, I might just ask you then. Obviously, given your private markets experience, your public markets experience and your government or regulatory experience, do you think that high regulatory oversight on the reporting of these sustainability issues is good or bad?

Tim Mohin (45:34):

I'm going to take the middle ground on that. Sorry about that.

Dave Anderson (45:37):

I was going to ask you to steel man your argument if you didn't so to take the middle ground is harder.

Tim Mohin (45:41):

Yeah, it's really hard. And the reason I'm taking the middle ground is because I was a regulator. I've been involved in regulation for some time, and regulation can turn into a pointless check the box exercise if we're not careful, in that companies usually figure out how to do it at the cheapest possible rate. It gets commoditized. They've ticked the box. They're in compliance. They move on. I would like to see, and this is where BCG I think really is coming in that, and I've called this coming wave of disclosure regulation the gateway drug to better business value. Because if you have to do it anyway, let's go through the process since it involves the whole value chain. We're talking about Scope 3 emissions up and down the value chain. Let's see where those risks and opportunities are. Let's maximize the business value and not just turn this into a check the box exercise.

Dave Anderson (46:37):

Yeah. And I think there has been some increasing standardization around how we can as companies report on these things in a way that's easily understood and hopefully factually accurate as well. But I think there's still opportunity for people to come out, and maybe this is what BCG is trying to do, and put a stake in the ground and say, "Look, this is the proper way to report. This is the proper mechanism. These are the correct stats that we should be both tracking and reporting." Because again, I think that there's been a little bit of ... And I would say that I think that the 96% of the S&P 500 that are already reporting on these things that have not been doing it obligatorily deserve a lot of, I think, credit, even if not the highest fidelity numbers. I think they deserve a lot of credit.

(47:30):

And others are certainly looking to the S&P 500 to figure out how they should model their own businesses and companies as well, not just around sustainability but around all things in business. And so the fact that there are as many companies, 96% that are already doing something, to me, it's great news. I'd love to see the private, I'd love to see corporations trying to solve these bigger problems, not just having to look to government to come in and sweep in and solve all of our problems for us.

Tim Mohin (48:00):

It raises a really important point that I think might be important to a lot of your listeners, is that this creates a career opportunity. So if you're a guy like me who's been in this space for a long time and you've worked on the sustainability side, you've created these reports that went into that 96% estimate, all of a sudden, these changes have open doors that were previously closed. Now all of a sudden, the CEO cares, the CFO cares, the board cares, and they're looking for the department within the company that actually has knowledge of how to create these estimates in a way that will stand muster and get into those financial statements. So all of a sudden, the CSO, like I said, got kicked upstairs and the job is bigger. But if you have those skillsets and you're ambitious and want to move up, I think now is a really good time. There's not enough ESG experts or sustainability experts to go around, and every company needs them.

Dave Anderson (49:00):

So I might just ask you then, what would be the natural career path for a person that was looking to try to become the next Tim Mohin?

Tim Mohin (49:08):

Yeah, that's a wonderful question because I would have said in the past it would be somebody like myself who has a deep background in environmental science or one of the other ES and G categories. Now, I would say that it's somebody who actually comes from the business environment, somebody with an MBA typically who's had that experience of working at the top levels of company to know how businesses run, to know how finances run, and then gains that experience of what is ESG to the extent that they can create business value out of it. So that's the change that I've really seen. And guys like me, we've got to catch up. I'm a dinosaur in this space. I'm learning as I go in BCG with a lot of the really smart folks that you mentioned before that are CEOs as they leave our company. So that's the confluence. It's the business expertise and experience and the sustainability expertise thrown on top.

Dave Anderson (50:07):

Yeah. A famous Silicon Valley investor, John Doerr, who is actually an investor in our business, made recently a very well published and well talked about investment into Stanford University. He invested $1.1 billion of his own net worth. Again, a person of his stature makes these sorts of investments, because he wants to make the biggest impact possible and made it a significant investment to start for the first time in 70 years a new college at Stanford University, and it's all around this idea of renewable energy and sustainability. And so you're going to see a new executive that's going to be coming out of the Stanfords of the world and all universities, frankly. You don't have to go to Stanford to make an impact. Again, it's a well-published article and well publicized investment that John Doerr had made into Stanford University.

(51:04):

So I think you're right. I think it is these people that don't have to just come from an E, S and G background or environmental science background, someone that comes from more of a strict business background because again, there is a strong business case to be made for these sustainability positions.

Tim Mohin (51:20):

I'm very familiar with John Doerr's work. He was an investor in Intel, and he's currently an investor in a relative's company called Lumeris. He signed his book for me, I've got it here on my bookshelf, about how to solve climate change, and I'm very aware of his investment in Stanford. I think it's exactly the right thing.

(51:43):

I would just add to all of that. There are a few universities that are trying to create these professionals now, and it's a difficult thing to do because it brings together multi-disciplines, multiple disciplines that typically don't work well together. I came from Duke University, and even way back then, they had a dual degree, MBA, Master of Environmental Management. But those were like you get two degrees, but they weren't fully integrated.

(52:12):

I would say that the university that's leading this charge right now, today, is University of Michigan. And I don't get paid for that endorsement, but they have this thing called the Erb Institute. The Erb family gave them a lot of money, but for whatever reason, they figured out a way to really truly combine the business disciplines and sustainability disciplines. I do a lot of guest lecturing for them and their professor, Andrew Hoffman, Andy Hoffman is a good friend, and his cohort of students I think is topnotch in terms of having that combined skillset that's going to be needed in the future.

Dave Anderson (52:52):

That's awesome. So yeah, there are other colleges and universities obviously that are coming up with those sustainability programs. You don't have to go to school for these sorts of things. But if you do want to make a big impact, follow the route of Tim Mohin. I think that these things are now being made more available than they ever have been, frankly.

(53:08):

So Tim, I got to tell you, it's been an absolute pleasure to have you come on the podcast with us today. We're thrilled for the work that you've done. We all benefit socially for the work that you've done. You spent your entire career dedicated to these sorts of things. Obviously, I, in my own way, working in solar, try to make my own impact, but it's great to see that there are corporations, the 96% of the S&P 500 that are trying to make their own impact and vocal outward statements of the things that they're trying to do for the betterment of all of us that we're actually doing things, not just talking about those things. So Tim, I got to, again, thank you so much for coming on and chatting with us today.

Tim Mohin (53:43):

Thank you, Dave. I've really enjoyed the conversation with you.