Sunday, January 27, 2008

Sustainable business

The McCombs School of Business at UT-Austin held their first Sustainable Business Summit this weekend, with keynote speakers from businesses like Whole Foods and GE's Ecomagination division. The focus of the summit, primarily, was on sustainable business practices, such as greening one's supply chain (i.e., removing environmental pollutants, reducing energy/water use or reusing waste products), though energy (be it efficiency or renewables) popped up more than once.

I went with a number of LBJ students, and chose to listen in two of the more corporate panels, including one on venture capital (VC) for green enterprises.

Joe Serface, the director of UT's Clean Energy Incubator (CEI), led the VC panel, and spoke at length on how entrepreneurial pursuits are the fastest way to spur innovation, especially at a time when the public's hunger for workable renewable energy technologies, ones that can take over some of the load of fossil fuel-generated electricity. Organizations like the CEI are working to put a business face on environmental advocacy, to help entrepreneurs learn to attract investors, and to show the corporate world that profit and environmental stewardship need not be mutually exclusive. Serface pointed out that VC firms have invested $5.2 billion to date in clean energy technologies and investment opportunities are only expected to grow. Two other speakers -- Terrence Cantorna of Babcock & Brown and Charley Dean of Silverton Partners -- both involved in financing wind and other energy startups, highlighted what aspects of energy project proposals are attractive right now: project-financed, highly-leveraged (where owners control less than a majority share), ones where the projects will yield 20+ years of income, where government subsides can augment private investment, and where the seed money is $15MM or less). Cantorna pointed out that since the subprime market collapse, investors are scrutinizing business plans and associated technology more closely than before.

Also, while clean energy technologies (i.e., solar (PV), wind turbines, geothermal, and solid-state) are likely prospects for investment, energy and water efficiency tech and smart grids are also of great interest, to save corporations and consumers on waste. Increasing efficiency is better for a company's supply-chain, better for a company's public relations, and in the worst-case scenarios, stretches out declining resources as long as possible.

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