Episodes – Page 66 – Impact Podcast with John Shegerian

Highlights from the Houlihan Lokey Conference with Houlihan Lokey’s Scott Sergeant

John Shegerian: Welcome to another edition of Green Is Good. This is the Houlihan Lokey edition of Green Is Good, and we are broadcasting live from the 10th Annual Industrial Conference and the guy who put it together is with us himself, Scott Sergeant. Scott is the Managing Director of Houlihan Lokey. Welcome today to Green Is Good, Scott. Scott Sergeant: Thank you, John. And thank you for giving me credit for this great event, but our whole firm puts this together every year and I’ve got a great group of 75 investment bankers in our industrials group who all contribute to putting this great event together. John Shegerian: They’re all great people but I know Scott the best and Scott is my point of contact at Houlihan Lokey, so to me this is Scott’s event anyway, and Scott has been so kind and asked us to come speak at these events. This year you invited Green Is Good to come and interview some of the great speakers and other folks that have come and enjoyed this amazing event. We’re very appreciative of that, Scott, it’s been just a delight to be here and some of the speakers you’ve had just have amazing brands. Scott Sergeant: Yeah. Every year we try to carve out at least one track of presenters. This year we had over 50 presenters across a whole variety of different industrial subsectors, but because the environmental services is such a big practice for us, we have at least a track full of high quality public and private environmental services companies. John Shegerian: That’s great. And for our listeners and our audience out there that want to learn more about Scott and his colleagues and what they’re doing at Houlihan Lokey, please go to www.hl.com. You can learn about all the services that Houlihan Lokey does. Scott, this is the 10th Annual Industrial Conference. Talk a little bit about the evolution, how you started it and why you started it originally and how it’s evolved and how it’s now one of the premier – if not the No. 1 – industrials conference in the world. Scott Sergeant: Well, the reason why we think it’s the best industrial conference…. John Shegerian: Yeah. Scott Sergeant: Is because it’s very unique in that we have both public companies and private companies. It’s not just a public company institutional shareholder/investor conference where we link up investors with public companies. This is a conference where we try to bring all constituents, all potential stakeholders and businesses for just a massive networking event. So what’s really fun is we bring opportunities to companies that could be future lenders, acquirers, other types of investors or they could be target companies that those businesses want to buy at some point. And a lot of great new partnerships come about. Alliances. It’s just a great way for people to get their brands above the radar and networking to create better businesses. John Shegerian: So for investors that want to meet and hear good entrepreneurs doing really neat things this is where they’ve got to come. And for entrepreneurs that want to get their story out, is this also where they’ve got a platform then? Is that sort of the platform that you’ve created here? Scott Sergeant: Yeah, so this year we’ll see how many folks. We were expecting at least 600 to 700 attendees today throughout the course of the day. John Shegerian: Wow. Scott Sergeant: And like I said, 50-plus industrial presenting companies. John Shegerian: Wow. Scott Sergeant: So of those attendees it’s a cross between corporate executives. John Shegerian: Right. Scott Sergeant: Business owners, private equity sponsors, hedge funds, lenders, other transaction intermediaries, so it’s a pretty diverse group of attendees. So anybody who is interested in meeting any of these companies or just generally networking with any of those folks or are generally interested across all these different industrial sectors, yeah, this is the place to be. John Shegerian: Thanks to you – and I really mean thanks to you, Scott – Green Is Good was allowed in today to interview and meet some of the great speakers and leaders that come to share their stories here. We had Organix Recycling on Green Is Good and RiverRoad Waste and RWL Water and so many great brands. Can you share some of your highlights from today’s amazing conference and some of the brands that were here and some of the things that you got to see and go to help facilitate that really make you proud of today’s great event? Scott Sergeant: So we had four great public companies – U.S. Ecology, Waste Connections, Progressive Waste, Great Lakes Dredge & Dock – these are four of the bigger brands of publically traded environmental services companies. The environmental services industry is – depending on how you measure it – a $200-billion, $500-billion industry. There aren’t that many billion-dollar-plus companies, and they’re actually aren’t a lot of pure publically traded companies. We’ve got a good chunk of them presenting here today. John Shegerian: That’s a good point. Scott Sergeant: Plus, four great environmental services businesses. Electronic Recyclers at the top of the list. Organix Recycling – as you mentioned – leading the food recycling business. John Shegerian: Yeah. Wow. Scott Sergeant: What we call NorthStar Services that does a variety of environmental remediation, deconstruction, decontamination services across both commercial and industrial subsectors. They’ve got a leading brand as well. So we have just a really nice mix. But my highlight of the day is basically setting up one-on-one meetings for all our main guests. The presenting companies and other attendees, we try to match them up in the setting of what we call one-on-one meetings, so we look at our roster of attendees and we try to do some matchmaking of again trying to match people with buyers and sellers and investors and potential targets and just general strategic alliances. Just being able to sit in on some of these and be a fly on the wall and hear how corporate executives are thinking about growing their businesses is really the highlight for me. John Shegerian: Got you. And then how many potential investors and other types of strategics come to meet all these great brands and speakers that are here? How wide a net are you casting for the investor population? Scott Sergeant: We’ve got our client base, which is pretty deep in the financial sponsor community, and all their portfolio companies and all the corporate executives that are part of our industry coverage. We had – I think – somewhere of 1,200 people registered for the event. And, obviously, not everybody makes it. John Shegerian: Wow. Right. Scott Sergeant: But we expect at least 600 to 700 people of those to show up. John Shegerian: For our listeners who just joined us and our audience that just joined us, we’ve got Scott Sergeant. He is the Managing Director of Houlihan-Lokey. This is the Houlihan Lokey special edition of Green Is Good. To learn more about Houlihan Lokey or to hire them to help you in some banking need that you have, please go to www.hl.com. Scott, there are a lot of people in our audience both in the United States and around the world that aren’t familiar with Houlihan Lokey. Share a little bit about how big and deep your company is not only nationally but internationally and what kind of services do you provide in the banking community. Scott Sergeant: So we are a full service investment bank, and we are a global firm. So we’ve got eight offices across the U.S. We have several offices across Asia and Europe. Australia now. So we are – again – full service investment bank. We are purely an advisory firm. So we are not a bank that underwrites securities and the like and that lends money ourselves. We don’t have necessarily a balance sheet. We act as a financial advisor to raise capital, equity, debt or to match buyers and sellers. So we have the leading M&A practice. I bet you we do more M&A deals than anybody else under – you name a metric – $100 million, $500 million, a billion dollars, $2 billion in transactions. We are usually the No. 1, 2 or 3 in terms of overall the number of transaction volume. We also have one of the leading practices of raising capital for our clients. John Shegerian: Wow. Scott Sergeant: Again, both debt and equity capital for a whole variety of reasons. We also have a very large opinion and evaluation practice. We provide evaluations for really any conceivable kind of situation whether it’s transaction related or non transaction related – we can go into a bunch of reasons why you need those. Then we also have the leading financial restructuring practice. So if a company or a creditor was in an unfortunately circumstance where there is some financial distress, we act as an advisor to either side of either the creditor or the debtor in helping them figure out how to negotiate a resolution to really fix the balance sheet of those companies. Then, lastly, we do have a consulting practice where we basically do strategic advisory to help do studies and other research for firms who are trying to basically starting to build business plans and want their party to research around their industries. John Shegerian: Wow. Scott Sergeant: That’s a relatively new practice for ours as well. It’s very complimentary to all three of those investment banking practices. John Shegerian: And your specialty specifically is in the environmental services platform? Scott Sergeant: Yes. So that is the area that I live and breathe on a daily basis. About four or five years ago, we started our environmental services practice. And I have been with the firm for 14 years and specialized in M&A really – just doing deals across a whole variety of sectors – and then over time I had done a handful of environmental related transactions and decided that this was an un-banked area, one that is extremely fragmented and one that is really target-rich in the middle market, which is our focus as a firm. And it was an area that I developed a passion for personally, because you get to work with some great companies that are helping other companies stay environmentally compliant. John Shegerian: Right. Scott Sergeant: And just do the right thing. So it’s a “feel good” industry, too. So all those things combined, we did a lot of work around how we could build a practice that was a success that was going to really keep us busy. So that was about four or five years ago and we have – we’ve done about two dozen environmental services-related transactions over the last three years. John Shegerian: Wow. Scott Sergeant: And so we think we’ve got very nice market leadership there. John Shegerian: So your environmental services practice now has become one of the biggest environmental services banking practices in the United States, if not the world? Scott Sergeant: That’s what we think. Yep. John Shegerian: That’s awesome. Scott Sergeant: So there are a lot of deals that get done. It’s a highly fragmented space, but we’re very proud to say that we’ve been associated with a lot of the higher profile transactions in this space with a lot of the market leaders. John Shegerian: The social trends that are going on with the Millennial generation and the generation coming in behind them being really on fire for sustainability that has to bode well for your banking environmental services practice in terms of sustainability is here to stay, and there are going to be more and more companies growing up and needing banking services to service society’s now needs in terms of – as you said – food recycling, electronic recycling, textile recycling and just straight waste and other recycling verticals. Scott Sergeant: There are a lot of macro trends that support these businesses. Regulation has always been a big supporter. John Shegerian: Right. Scott Sergeant: Regulations continues to pile on every year. John Shegerian: Right. Scott Sergeant: You never necessarily know when the next regulation is coming. John Shegerian: True. Scott Sergeant: It’s not highly predictable but you can guarantee that it’s never going to reverse itself. John Shegerian: Good point. Scott Sergeant: It’s never going to get more relaxed. So that’s a very nice catalyst for growth but also a nice barrier to entry. John Shegerian: That’s a great point. Scott Sergeant: But at the same time, even though in the cases where they’re not forced to do the right thing, companies increasingly feel compelled to do the right thing and really focus on environmental stewardship because it is good business. People aren’t necessarily going to make decisions that are not economical for them but they’re certainly going to try to do the right thing and find a way to make money doing it. I think that overall increased focus on sustainability and environmental stewardship is a huge tailwind in the industry supporting all these companies. Another area is just businesses that have figured out ways to identify waste or garbage or whatever and really not call it “waste” anymore, right? John Shegerian: Right. Scott Sergeant: To find ways to keep it out of the landfill, which is what everybody wants to do, and identify those waste streams and then convert them into something valuable. Not necessarily putting it in a landfill and calling it a day. They are identifying that material, and it may be at the end of its useful current life, but then there’s another life for it somewhere else. John Shegerian: Right. Scott Sergeant: And then be able to make money on that product on the back end. John Shegerian: Wow. Scott Sergeant: So there are so many businesses that fit that category. The U.S. is obviously one massive, very large market but like the food waste and used motor oil, used cooking oil, used tires. John Shegerian: It’s amazing. Scott Sergeant: There are a lot of subsectors out there with really smart people that are creating these businesses and building scale out of them. John Shegerian: You know, Scott, hopefully, we are invited back for the 11th Annual Industrials Conference. Give me a little visibility on what you’re hoping is going to grow in the next year or so. What other areas have you not touched on that you’re excited to maybe explore or go after in terms of banking opportunities? Scott Sergeant: I think that there is a whole host of professional services out there, too. John Shegerian: OK. Scott Sergeant: So businesses that are helping companies deal with their waste streams. John Shegerian: Oh. Interesting. Scott Sergeant: Or advising them in terms of how to become focused on sustainability issues. John Shegerian: Oh interesting. Scott Sergeant: So whether they’re analyzing their waste streams or helping them find a home for their waste streams or helping them deal with the increased burden of compliance in general – whether it’s safety related, environmental related. Just being able to comply with all these complex regulations out there with the Clean Air Act. John Shegerian: Right. Scott Sergeant: It’s complicated of all regulations out there related to the environment. There is still – I think – an untapped market out there that – again – is a very highly fragmented area. We haven’t done a lot on – the upstream professional service has done some. I think there is one area that we would love to do more in I think that would be one. Yeah. John Shegerian: That’s awesome. Well, we hope to come back next year and we thank you again for this year’s invitation. For all our audience members out there, this has been the Houlihan Lokey special edition of Green Is Good, and of course, we have “Mr. Houlihan-Lokey” with ourselves right now, Scott Sergeant. He is the Managing Director at Houlihan Lokey, and to find Houlihan Lokey online and to hire them to help you in your banking needs, please go to www.hl.com. Scott, you are a sustainability superstar and you make the world a better place every day. Thank you for all you do. You are truly living proof that Green Is Good. Thank you again for everything. Scott Sergeant: Thank you, John.

The Evolution of Waste Stream Management with RiverRoad Waste’s Dan McGowan

John Shegerian: Welcome back to Green Is Good. This is the Houlihan Lokey edition of Green Is Good and we are here in beautiful New York City, New York, and we are so excited and honored to have with us Dan McGowan. He is the Chief Operating Officer of RiverRoad Waste. Welcome to Green Is Good.

Dan McGowan: Thank you very much.

John Shegerian: Hey, Dan, before we get talking about all the great work you’re doing in sustainability at RiverRoad, can you share a little bit about your story? How you even got to this point in your life running one of the biggest waste companies in America.

Dan McGowan: Sure absolutely. I started off when I was younger. I grew up down by the Jersey Shore. I spent the summers down there. So really the passion for the clean ocean, making sure the beach was clean kind of developed at a young age and sort of led me down the career path and ultimately wound up – my career – working for a waste management asset company for the first 15-plus years of my career.

John Shegerian: Wow.

Dan McGowan: And then had the opportunity to join RiverRoad Waste about three years ago. It’s a unique opportunity because we truly get to partner with our clients to put waste and recycling programs into place to really help achieve sustainability goals and make sure that recycled materials are coming out of the waste stream and can be removed from a landfill.

John Shegerian: For our listeners out there and audience members that want to check out your great company – RiverRoad – they can go to www.riverroadwaste.com.

Dan McGowan: Correct.

John Shegerian: So explain what RiverRoad manages, how RiverRoad works as a company, what’s your real mission and essence for being?

Dan McGowan: Our goal is to align and partner with large national organizations and regional organizations that have multiple locations and really have them outsource their waste and recycling program to us. But our goals are aligned with theirs. We don’t own any assets. We don’t own and landfills, so really working to try and help them increase their sustainability goals while reducing cost as well.

John Shegerian: So a big chain comes to you – for this discussion, we’ll just call it “ABC Chain” – and they own 2,000 stores nationally. They come to you and you help them manage their whole waste stream better than somebody else.

Dan McGowan: Correct.

John Shegerian: So let’s do a comparison – you versus a large waste concern. Do you have advantages over them?

Dan McGowan: Sure. I think, No. 1, as compared with them, realistically, large waste companies do make money by having the waste end up in a landfill. It’s just where their profits are ultimately generated.

John Shegerian: Right.

Dan McGowan: Whereas for RiverRoad Waste, that’s not our motivation. Our motivation is truly to work to remove waste out of the landfills, how we can recycle more and really even work with our clients to determine what’s in their waste streams so they can go upside and try and remove that from the waste stream even right from the beginning of the process.

John Shegerian: So if I’m the person who is running the ABC retailing chain and you are now pitching me, not only is it a greener process and more sustainable handling of my waste stream now through RiverRoad, but also you’re going to be potentially saving me money.

Dan McGowan: Yeah, absolutely. I mean, looking to save money and then using that money too to implement other recycling programs even further increased towards our sustainability goals as well as reducing cost, which we know is important to a lot of clients.

John Shegerian: Do you bring to what is a legacy industry in so many ways – that is maybe a little even considered opaque sometimes – do you bring more transparency to the industry by the processes and procedures that you implement with your client base?

Dan McGowan: Absolutely. We’re fully transparent to our clients. They can go in at any point in time into – we have a proprietary system called “MyRoad” that we use as a client portal that they can log on to and at any point in time they can see all the other services at any location, the status of any work orders or tickets, but also it provides them the reporting they need that will track their sustainability goals as well their spend over periods of time so they can compare that and bring it and use that internally as a selling point as well.

John Shegerian: So talk a little bit about when you go in to a client and you come into my retail shops and you’re trying to figure out how to help me manage my waste stream better, which is probably historically unmanaged – let’s just say. Do you come in and do like a waste audit first and create some sort of accounting of what I even have to get rid of?

Dan McGowan: Yeah. So we’ll have a team of recycling specialists that will go in and audit the waste. I mean, actually go in and fully dumpster-dive and get in there and pull all the different respective types of material out, and they’ll weigh those different types of material. Then we’ll go back to the client and say, “All right, these are the opportunities to recycle something. So typically, what you’ll find is a lot of bottles and cans that are in the trash then “Is there an opportunity for single-stream recycling in that market?” “OK. Let’s move that out.” Is there an opportunity for organics with restaurant clients? And where can we remove that waste and separate that out for the client as well.

John Shegerian: So now you go do that audit process. Then comes education. How does the education process work? How do you gently or less than gently explain to me how badly we’ve been handling our stuff historically – and maybe I know it or maybe I don’t – and how you’re going to help us and really transform the handling of our waste process?

Dan McGowan: Yeah. Absolutely. I think that’s where the set audits help to give real data. And we’ll find in certain locations – particularly in more educated markets – that have had recycling for a longer period of time, that the recycling levels are higher. But certain other markets are not. So even while they may be a corporate initiative to remove this recycling out, you really get the perspective from the waste audits of what’s actually still going into the waste. So then it is an education campaign and working with those individual stores or marketplaces to provide materials back to them on a one-time basis or a monthly follow-up to how they continuously get that back to show them it’s the breaking down of cardboard to be able to fit more into that container or the understanding of what exactly does single-stream mean, because that could mean something different in each respective market, but educating each individual marketplace with those stores so they can increase that recycling.

John Shegerian: So RiverRoad is based out of here on the East Coast right? It’s in New Jersey?

Dan McGowan: Correct.

John Shegerian: So I assume – if I’m a retailer watching this show today or listening on the radio – you could handle any retailer in any zip code in the country.

Dan McGowan: Yeah. Absolutely. We manage over 25,000 locations nationwide.

John Shegerian: Wow.

Dan McGowan: And our largest client is a retailer with over 8,000 locations today, so really they are covered within every footprint within the 50 states as well as Puerto Rico and Canada.

John Shegerian: Wow. And how big is RiverRoad in terms of employees? How many employees do you have in New Jersey, and how many do you have around the United States?

Dan McGowan: Sure. We have 65 employees overall.

John Shegerian: Wow.

Dan McGowan: About 55 of those are in our corporate office in central New Jersey then we have 10 employees that work remotely that will go out and do site audits and travel around as well as doing client visits.

John Shegerian: And your CEO is actually a woman, which is a little bit of an anomaly in the waste industry.

Dan McGowan: Yeah. Absolutely. But she also comes from a background of an asset light facilities side so has had that experience and brought that to the waste industry as well but also shares the same passion for the environment.

John Shegerian: How many years ago was RiverRoad founded?

Dan McGowan: It was actually founded in 2004.

John Shegerian: In 2004. So you’ve grown now in 11 short years to be one of the largest waste management companies in the United States.

Dan McGowan: Correct. Our CEO came into the company in 2010.

John Shegerian: OK.

Dan McGowan: So we’ve had significant growth since 2010.

John Shegerian: Got you. And for our listeners and audience members who just joined us we’ve got Dan McGowan. He is the COO of RiverRoad Waste. To learn more about RiverRoad Waste, go to www.riverroadwaste.com. We’re going back to how the whole process works. You did the waste audit. You started the education process. How long does the optimization take of saving me money and getting me some documents that show how much is being really recycled and stuff of that nature?

Dan McGowan: Typically, it only takes 60 to 90 days. Once we come into a program, we like to make sure that over the course of the first 90 days we really understand the program. All the services that are in place are exactly what we have and we can confirm with the sites as well as the current providers. Then once we do that and make sure that everything is as the data says it is, then we’ll go and do the site audit during the course of those first 90 days and really at that 90-day point have a plan that we’re presenting back to the client for how we increased the recycling which increases recycling but then keep in mind we’re also looking to reduce the trash levels at the same time. So you get the benefit of the reduced cost and the trash along with increasing the recycling as well as we have an analytics team within the company that uses client data points – so it could be for a bank number of employees for a retail store, it could be case counts – to really estimate what’s the driving force to come up with the total yards of waste that they should have. So we will do that at the same point in time and say, “Hey, that store is getting an eight-yard container three times a week for service, but perhaps they only need one time a week of service,” so further reducing the cost, which again helps out with putting in additional programs for the company or additional recycling initiatives.

John Shegerian: That’s so interesting. I’m going to segue a little bit. You mentioned that you still have to work with some portion of their waste can’t be recycled, so you still have to dispose of a certain portion of their waste. So how do you interrelate with the waste companies now? Do you then work with the two biggest or three biggest waste companies out there? And how do they see you?

Dan McGowan: In certain situations, we do. There are a lot of franchise markets where the largest companies do provide service, but typically, we’re more on the large regional players and trying to partner with those and basically help them as acting as a national accounts wing but really we view ourselves as part of the supply chain and they’re not vendors to us. They’re really partners. And it’s working that partnership along a supply chain between the client and ultimately the service provider – whether that is a waste service provider or an organic service provider, whichever way it is – it’s really viewing ourselves along that, being able to provide consultative information back to our client as well as the data they’re reporting and – as importantly – one point of contact for customer service.

John Shegerian: Really? One point.

Dan McGowan: Yeah.

John Shegerian: So once you land a client – how many sales people do you have out there working on landing business? A lot?

Dan McGowan: No, we just have a couple of sales people.

John Shegerian: A couple of people. So then once you land it, does that client then get passed over to another point of contact to manage that account?

Dan McGowan: Yes. Then we have directors of national accounts who will help manage the program. So they will step in right away to manage the implementation process for the client.

John Shegerian: Wow. That’s so interesting. You mentioned earlier technology. You mentioned your tracking technology called “MyRoad.”

Dan McGowan: Correct.

John Shegerian: Can you explain to our audience members how important is that to create transparency and to create real-time tracking for your client base?

Dan McGowan: It’s real-time tracking. It’s web-based, so a client – again – can get on at any point in time and see all of their information. But it’s also very important in terms of the tracking to see are we making continuous progress for the client. So we like to pitch ourselves at RiverRoad as the one that provides continuous solutions. It’s great signing up and getting a new client on board, but where we really think we bring value to our clients at the end of the day is continually over the life cycle of the program looking at your waste stream, evaluating it and seeing how we can make continued improvement. So at every quarter, we’ll go back and look at opportunities for increased recycling, increased diversion.

John Shegerian: You’re never done.

Dan McGowan: We’re never done.

John Shegerian: That is so exciting. As a business enterprise, Dan, when you’re marketing against your competitors, what does the universe look like? How many competitors to RiverRoad are there out there?

Dan McGowan: Sure. I mean, there are really a few. We do have the large national waste companies that we are competing against that have national accounts programs as well.

John Shegerian: Right.

Dan McGowan: But again from our opinion as compared to them, we’re really sustainability focused. We’re really about aligning our goals with our clients’ goals, and we don’t make any more money by up-selling services to our clients. So that’s half of our segment. Then there are a lot of “waste brokers” – I’ll call them – that realistically are just a price play where they try and leverage volume of services and get the cheapest rate. But we are really in between those two. We’re really trying to provide the value to our clients, all of the technology benefits and be a sustainability consulting company that happens to provide great customer service and managing of the program.

John Shegerian: So one of your big trademarks is delighting your customers, giving great and amazing customer service.

Dan McGowan: Absolutely. All we are at RiverRoad at the end of the day is really people and technology.

John Shegerian: Right.

Dan McGowan: So providing customer service is extremely important and that’s what we found within the waste space. Companies with assets do a tremendous job of picking up waste efficiently.

John Shegerian: Right.

Dan McGowan: But in terms of managing the overall program for them – that great customer service experience – they can come to RiverRoad Waste and get one point of contact who understands their business and who understands them as a client so whether it’s the location in Spokane, Washington, or Naples, Florida, they’re calling one 1-800 number to get in touch with RiverRoad customer service.

John Shegerian: That’s so interesting. Share with our audience some of the more fun and better stories that you have on big wins that you’ve had. You don’t have to give names if you don’t want, but give us some examples of customers you’ve come in and turned around and literally taken a waste mess and turned it into a real positive.

Dan McGowan: There are customers when we started the program that didn’t know exactly what their waste levels were getting data from other clients and really putting it together and helping them fully understand what’s in their program and then taking it from that and setting a baseline of how do we increase the recycling and the diversion and we went out and put programs into place and ultimately even implemented back-calling programs. So the client went from even the recycling program where they were spending half a million dollars to a million dollars a year.

John Shegerian: Wow.

Dan McGowan: To all of a sudden getting a couple million dollars of rebates for their material sales, which for them they can use in a variety of ways and hopefully part of it goes back into additional recycling programs as well.

John Shegerian: So in some instances you’ve taken a negative and made a positive out of it.

Dan McGowan: Absolutely. We’ve taken certain costs that were in the program and were able to consolidate those, back all that material, take it to one central point and actually get rebates for the materials.

John Shegerian: Dan, with this cycle of business, 11 years isn’t that long of a time and you’re the leading brand in creating a new waste segment in the industry. What does the future hold? How big can you grow this, and what are you looking to do in the years ahead with RiverRoad Waste?

Dan McGowan: Sure. Absolutely. We still think there is an opportunity to grow within our core segment today of the standard waste and recycling.

John Shegerian: Right.

Dan McGowan: But we’re also branching out, and have branched out in other areas in managing other waste streams where our clients now have come to us and said, “Hey. You do a great job on the waste recycling side, how can you manage hazardous waste? Could you manage tires for us? Grease and oil for restaurants?” so we’ve added in all these ancillary services offerings to our programs and made sure when it comes to grease and oil – cooking oil is a rebateable product. A lot of companies don’t know that they should be getting rebates for those. So we are able to manage that and not only make sure that they get a rebate, but we’re making sure that they’re getting the appropriate rebate as well.

John Shegerian: That’s great. There are a lot of young people that watch and listen to this show both in the United States and around the world, Dan, and there are a lot of them that will watch you or listen to you today that want to be the next Dan McGowan. What’s the road that they should be taking educationally and from a work experience to become one of the leaders in sustainability?

Dan McGowan: Sure. Well, I think the first thing that comes into place is passion, right?

John Shegerian: Yeah.

Dan McGowan: So making sure you have a passion for what you do, and then it’s truly not work. It’s fun. And I think it’s learning about the different types of recyclable commodities that are out there and how they can be recycled effectively and efficiently. There is a lot of new legislation that is coming out and being on the forefront of looking into those different types of opportunities and seeing – there is a lot of composting organics legislation that’s how – what are the different ways that we can recycle that material where it’s effective. And get involved, and just do some research and start with a company like RiverRoad and be able to help out and start with the grunt work of doing waste audits and seeing what’s in the material, but ultimately then doing the research to figure out what’s the best way to really recycle commodities.

John Shegerian: Well, that’s perfect. We’re going to leave it at that today. We’re going to have you back another time, Dan, to continue the story of RiverRoad and the success of your great company. And for our audience members out there to learn more about what Dan and his colleagues are doing at RiverRoad Waste or to reach Dan and hire RiverRoad to manage your waste stream, go to www.riverroadwaste.com. Dan, you’re an inspiring entrepreneur, a sustainability superstar and truly living proof that Green Is Good. Thank you for joining us today.

Dan McGowan: Thank you very much, John.

The True Value of Water with RWL Water’s Henry J. Charrabé

John Shegerian: Welcome to another edition of Green Is Good. This is the Houlihan Lokey edition of Green Is Good, and we are here in beautiful New York City today, and we are so honored to have with us today Henry Charrabé. He is the President and CEO of RWL Water. Welcome to Green Is Good.

Henry Charrabé : Thank you. Thanks for having me.

John Shegerian: Henry, before we get talking about RWL Water and all the great things you’re doing to make the world a better place, can you first share a little bit about your journey leading up to running this great company?

Henry Charrabé : I was born and raised in Berlin, Germany.

John Shegerian: OK.

Henry Charrabé : I came to the U.S. in 1998 and soon thereafter – actually in 2001 – I started working for Ambassador Ronald Lauder in a personal capacity, and then over the last 14 years, in all sorts of different environments. At one point in 2010-2011, he said “Henry, I really want to get into the water space, why don’t we come up with a strategy and find a way that we can do well while doing good?”

John Shegerian: Wow. So “RWL” is for Ronald Lauder.

Henry Charrabé : That’s right.

John Shegerian: Wow. And for our audience out there, to learn more about RWL Water, please go to www.RWLwater.com. So water is such a hot topic now, Henry. I have a home in California and our business is based out of California, but wherever you go people are talking about – whether it’s what kind of water to drink or a drought or on so many levels – what is going on now? Where do you fit in? Where does RWL see its value proposition to make the world a better place?

Henry Charrabé: So that’s a very open-ended question.

John Shegerian: Yeah.

Henry Charrabé: But to drill it down, I think RWL Water was created because in the late 1990s and early 2000s we had an acquisitions spree that created three giant water companies.

John Shegerian: OK.

Henry Charrabé: GE Water.

John Shegerian: OK.

Henry Charrabé: Veolia – the world’s largest – based out of France. And Siemens Water – now called Evoqua. And so what happened is they basically created a void in the middle market where we are focused.

John Shegerian: OK.

Henry Charrabé: So projects, between $5 to $50 million, where we are working worldwide to treat municipal as well as industrial clients’ water both on the freshwater and wastewater side.

John Shegerian: Wow.

Henry Charrabé: So we have a different approach and I think globally speaking we have a great footprint and are one of the few companies that also offer project finance rather than the customer having to buy a $20-, $30-, $40-million plan outright on capex.

John Shegerian: Yeah.

Henry Charrabé: We finance it and they can buy it over the use of the water, over 20 years like you would do with your car.

John Shegerian: Wow. Or with a solar.

Henry Charrabé: Or your mortgage.

John Shegerian: Right. Solar.

Henry Charrabé: And then solar – obviously – is the idea behind that energy.

John Shegerian: Right. So share with our audience a little bit, what are some of the common misconceptions that are out there right now about water and the problems that are surrounding water?

Henry Charrabé: I think the biggest misconception is that we are waiting for this great breakthrough technology. I think all the technologies out there are available are tested, proven. Of course, you can always enhance it, and the biggest problem is energy efficiency, but we do not have to worry anymore about having to treat water. Any body of water anywhere in the world can be treated to drinking water standard. The problem is money. The problem is who is paying for it, how do you finance it, how do you make it available to those who have the least, and how do we make sure that we value that water and don’t just deep-well inject it into the ground or let it go to waste but really reuse it.

John Shegerian: So recently, I was reading in California, which of course is under massive drought stress right now, down in San Diego, they’re building this large desalination plant. Is that a solution for our water problem or does that create other inefficiencies?

Henry Charrabé: Well, I think desalinization is definitely a solution.

John Shegerian: OK.

Henry Charrabé: It can be one of a spectrum of solutions especially for areas – obviously – that have a drought like California.

John Shegerian: Right.

Henry Charrabé: Close to the coast, that’s a great source of water, if you know how to build it efficiently and make sure that – I think – rather than building one or two large plants decentralized plants of a smaller size make more sense, so you don’t have to pump and use electricity to them get water from place A to place B. But we have come up with smaller packaged water treatment plants that allow you to be close to the customer, so you don’t spend more money and more energy just pumping it through a sometimes very old network.

John Shegerian: So you’re up against big boys – Siemens, Veolia, GE – but you’re going after the middle market. Share with our audience a little bit some of the types of projects that you focus on and how can you create public/private collaborations that then can make their community – the world – a much more sustainable place.

Henry Charrabé: Right. So I think we can separate between two – the municipal side with the public/private partnerships and the industrial side.

John Shegerian: Right.

Henry Charrabé: So the biggest project today we have done is with Pacific Rubiales Energy – the largest Latin American oil and gas producer in Columbia. We’re re-treating 500,000 barrels per day of produced water – that is about 80,000 cubic meters a day – and more than 90 percent of that we reuse for irrigation. So the water that used to be just deep-well injected, like we do in the U.S., we are reusing for irrigation purposes, which makes all the sense in the world, and I think we ought to do that everywhere.

John Shegerian: Wow.

Henry Charrabé: That’s just on the industrial side. Now on the municipal side, the public/private partnerships – I think – are important where municipalities and states and state governments get involved and basically guarantee an off-take in which we then propose a solution, and all we want to make sure is that we have a guaranteed partner at the other side that makes sure that we get paid over 20 years, and I think that is very important, especially when you want to bring in private industry and don’t have the money from the public side to invest is just to make sure that you have a guaranteed off-take for long term so that you and I would put our money to work.

John Shegerian: When you wake up in the morning what is your marketplace for RWL? I mean it sounds like you could do projects here in the U.S. but the world is your marketplace really.

Henry Charrabé: Right.

John Shegerian: So how do you approach that?

Henry Charrabé: That’s the focus that we have to have.

John Shegerian: Yeah.

Henry Charrabé: Well, the U.S. is a great place especially now on the back heel of the fracking business and all the industrial expansion that we have and the great economic situation that some areas of the country are in. From the municipal side – obviously – we focus on Latin America and the Middle East. You have scarcity of water, you have sophisticated clients, you have money available and a competitive landscape that I think is advantageous to us because we work in that middle market.

John Shegerian: Go back to fracking here. Does fracking create opportunity for your company to come in and do reuse without water?

Henry Charrabé: We don’t focus on fracking.

John Shegerian: OK.

Henry Charrabé: But what fracking does create is it creates economic mobility. For example, Corpus Christi is the 10th fastest growing city in the United States right now because of the frack business. Other industries – plastics, aluminum – grow. They need water. They don’t have water – there is a drought in the southwestern United States – they come to us.

John Shegerian: Got you. How many other companies like RWL are chasing the middle market space and how do you then differentiate yourself from those other competitors?

Henry Charrabé: Well, first of all, I would say that we are always more customer-focused.

John Shegerian: OK.

Henry Charrabé: But I think, globally speaking, we are the only company that really deals with the middle market. Obviously, the companies you mentioned earlier could compete.

John Shegerian: Right.

Henry Charrabé: But they are likely going after the waste water treatment plant of the City of Chicago, which we don’t.

John Shegerian: OK.

Henry Charrabé: But then you have regional players. You have players in Asia that are very strong in that mid-market but regionally. Players in the Middle East that are very strong but in that region. You have other U.S.-based companies that are very strong – for example – in India. I think, globally speaking, with the project finance and the suite of technologies that we offer, we’re pretty unique.

John Shegerian: Talk a little bit about your technologies. What would be the suite of technologies that you offer, if I’m a municipality or if I’m an industrial potential client? Is there anything you can’t offer? And how big is the range of opportunities when it comes to water reuse?

Henry Charrabé: So I think, in general, we can offer everything.

John Shegerian: OK.

Henry Charrabé: Because the systems integrate us. But our core are the four companies that we acquired. So an Israeli-based company that focuses on desalination and membrane technology for brackish water and desalinization. We have an Italian company that focuses on industrial wastewater, where they take out organic matter of industrial wastewater, like in slaughterhouses or breweries, and turn that into a methane gas that becomes electricity.

John Shegerian: OK.

Henry Charrabé: Or you have the domestic waste water division here in the United States that focuses on sewage. When it comes to reuse, it all depends ultimately on price. I mean, economics is the key here. You have to make sure that whatever you offer the client at the end of the day saves them money and makes sure that there’s an economic value proposition then for them to recycle or reuse that water.

John Shegerian: When you talk about reuse water, you talked about one of your projects where it’s going now to irrigation.

Henry Charrabé: Yes.

John Shegerian: What percentage of the projects that you are doing are reusing it and going back to irrigation? What percentage are going back and actually going back to become drinking water?

Henry Charrabé: Drinking water, very few because there still seems to be an apprehension.

John Shegerian: Right.

Henry Charrabé: But the water that we normally would use to irrigate we can now use to drink.

John Shegerian: Wow.

Henry Charrabé: So it becomes a cycle in which if you used our water to irrigate, then you have more water to drink that most people feel more comfortable comes out of the faucet. But we have two projects in Cyprus – for example – 50,000 and 23,000 cubic meters a day where our water comes directly from the Mediterranean Sea and goes into the Episkopi drinking water system.

John Shegerian: Wow. And so is that considered a classic desalination deal?

Henry Charrabé: Yes, sir.

John Shegerian: And then recently about three or four months ago Bill Gates was famous or infamously on the Jimmy Fallon Show doing his “poop water” discussion. And I only bring that up, even though it’s funny and cute, really your technology is such – we were talking off air before we sat down together – you can also reuse “poop water.” You have projects. You have the technology to do the same thing he’s doing.

Henry Charrabé: Absolutely. I think Bill Gates’ attention to this problem and to make everybody aware is the right thing to do. However, as I said earlier, the technology is there. We’ve built the largest packaged wastewater treatment plant for the U.S. Army Corp of Engineers in Camp Victory in Iraq where the U.S. Army’s poop was recycled – if you will – and make sure that we leave the place in better shape than when we get there. So obviously, this technology is out there and it always becomes the question of who is paying for it.

John Shegerian: Talk a little bit about working with the Lauder family. Obviously, from your initials, RWL – I didn’t know that’s who you were working with – but then once that becomes known, how does that help you socialize your technology faster and get your technology out into the world to make the world a better place faster being that you have investors and owners like the Lauders?

Henry Charrabé: I think the biggest benefit for us is the credibility. Everybody knows that Ronald Lauder would not put his name to anything that is not accurate. We are not a fly-by organization that we are not there long-term and that we wouldn’t offer technology that is not worthwhile.

John Shegerian: Right.

Henry Charrabé: So I think for a new company to have that credibility and that name behind us is tremendously helpful. Also, Mr. Lauder’s involvement personally in speaking to heads of states or industrial leaders and promoting or help us introduce us to certain projects is definitely a great advantage.

John Shegerian: And for our audience members that just joined us, we’ve got Henry Charrabé. He is the President and CEO of RWL Water. To learn more about RWL Water, go to www.RWLwater.com. This is a relatively new company, and this issue is getting more and more publicity. What does the future look like for RWL Water, and what are your goals in the coming two to three years?

Henry Charrabé: So we are about four-and-a-half-years old, which in the water industry, if you look at our competition, is a nanosecond.

John Shegerian: Right.

Henry Charrabé: People have been around for 20, 50-on years.

John Shegerian: Right.

Henry Charrabé: So for the next two to three years, we’ve now seen a very nice uptake in projects. People have come to know us. We – I think – created a great team and now have the capability to execute those projects, so I think the next two to three years actually are surprisingly positive the way I see them. Then it depends on, ultimately, the sole shareholder – Mr. Lauder – exactly how he wants to continue to build this company. But I think the future is very bright.

John Shegerian: How many employees do you have right now?

Henry Charrabé: About 250 worldwide.

John Shegerian: Worldwide. And you have offices here in Manhattan and where else in the world right now?

Henry Charrabé: So the four portfolio companies are in the Mar de Plata outside of Buenos Aires in Argentina. In northern Israel. In Padua which is by Venice in Italy. And in Minneapolis here in the U.S. Then we have sales offices in Dubai, soon Egypt, Chile, Colombia and Mexico. And SoHo.

John Shegerian: Wow. Any last thoughts for our audience members before we sign off today with regards to the opportunities that exist? Although, the news loves to report bad news, because bad news seems to sell more than good news the good news is that companies like your exist. Technologies to face some of the biggest issues that we now have in water exist, and there is a lot of hope out there. Is that not true?

Henry Charrabé: Yeah. I would say if we put our minds and our efforts to it – the technologies – they do solve all the water and waste water problems. It’s important that we vote for officials who are happy to come up with water strategies beyond their cycle as politicians so we can invest into projects that will maybe take four, five, six, seven years and don’t only look to be reelected next year – I think that’s important – but that we certainly have the availability, the capability and the access to solve all that if we have a strategy surrounding it.

John Shegerian: That’s great. Well, thank you for your time today. For our audience members out there – again – to learn more about RWL Water or to contact Henry, it’s www.RWLwater.com. Henry, your company and you are an inspiring innovator, sustainability superstars and truly living proof that Green Is Good. Thank you for joining us today.

Henry Charrabé: Thank you very much.

John Shegerian: Thank you.

Finding a Solution for Food Waste with Organix Recycling’s Rick Shipley

John Shegerian: Welcome to another edition of Green Is Good. We are so excited. This is the Houlihan-Lokey edition of Green Is Good in beautiful New York City, New York – where I’m from actually – and we’re so honored to have today with us Rick Shipley. He is the COO and the co-founder of Organix Recycling. Welcome to Green Is Good. Rick Shipley: John, it’s my pleasure. What better place to be than New York City. It’s wonderful. A little cloudy today but all right. It’s sunny in here, right? John Shegerian: And before we get talking about Organix Recycling and what you’re doing here today at the Houlihan-Lokey Conference can you share a little bit about the Rick Shipley story before the Organix story? Rick Shipley: I’m a Midwestern kid. John Shegerian: OK. Rick Shipley: I don’t show it sitting down, but I am six foot eight, so I am a sports guy. Every sport, if it has a ball involved, if it has competition involved, I loved it growing up. I grew up just a typical Midwestern kid playing sports – a normal story – and as my life moved on and I got into a professional world, I started moving towards the recycling world just by accident almost and some awareness around recycling and the importance of it and the value that we’re bringing beyond just the dollars and cents. It has really changed the way I look at the world, and as I’ve had kids, all of those things have been very transformative and have come to center. John Shegerian: Wow. Rick Shipley: So I’ve got kids that are now becoming teenagers and I think now about what the world is going to be like for them as we go forward. So my mind as a kid growing up, I don’t want to say it was wasteful, but I wasn’t conscious. And now as I’ve grown and I’ve had kids, I’m becoming much more conscious of the world around me and so I’d like to think I’ve matured. Some say 0:01:40.8 to losing my hair but I would say I’ve matured over the years. John Shegerian: And what year did you have the “aha” moment and the epiphany to start Organix? Rick Shipley: It was late 2009. Organix is a food waste recycling company. John Shegerian: OK. Rick Shipley: We take product that is not sold, not eaten, not utilized and we recycle that. But that was about late 2009-early 2010 an idea was created that there is a major problem with this country and being from a background of logistics and recycling other types of commodities. John Shegerian: OK. Rick Shipley: It was kind of a natural fit for my partner and I to start this company and we’ve now taken it to new levels that haven’t been seen in this country yet in this sector, but it’s one of those things that you don’t think about, John. When somebody says, “food waste,” you say “Well, what is food waste?” John Shegerian: Right. Rick Shipley: And then when you explain it to people and they say, “I’ve never thought of that,” you know you’re on to something when you give them that “aha” moment and they say, “I never thought of that.” John Shegerian: For our audience members that just joined us, we’ve got Rick Shipley. He is the COO of Organix Recycling and to learn more about Rick’s great company, go to www.OrganixRecycling.com. So 2009 you and your partner come together to start this. Did you just put your own money in? Did you raise some money? You have an idea. We have so many audience members in the United States and around the world that want to make the world a better place like you’re doing with Organix but they want to understand how you’re doing it and not only how the business operates but how do you start a good idea. Rick Shipley: It is. It starts from an idea. John Shegerian: Right. Rick Shipley: And some of it is right place right time. Some of it is the background you come from. Obviously money is a key catalyst to any of those things. John Shegerian: Right. Rick Shipley: Fortunately, we come from a background of recycling of the types of commodities that you mentioned. John Shegerian: OK. Rick Shipley: So there was some familiarity with what it would take both structurally, operationally and then financially. So we were able to raise that money privately. John Shegerian: OK. Rick Shipley: And start the company and it just exploded from there. But the foundation of any company is an idea and meeting a need. I don’t care if it’s recycling. I don’t care if it’s product based. I don’t care if it’s service based. It’s meeting a need that someone has. John Shegerian: OK. Rick Shipley: Sometimes people aren’t even aware that they have that need until you bring that opportunity to them and again it’s back to that “I didn’t realize that, you’re correct, let’s talk.” And that’s kind of how this thing took off in the early years. John Shegerian: What city did you start it in? Rick Shipley: We started in Chicago and we just branched out from there. Now we’re in 34 states, the whole Eastern Seaboard. John Shegerian: Wow. Rick Shipley: Midwest, the South all the way up to the Southwest. John Shegerian: So 34 states and approximately how many cities now? Rick Shipley: Cities. John Shegerian: A lot? Rick Shipley: Essentially, every city in the states that we can. I don’t have a map here so. John Shegerian: Hundreds of hundreds of cities. Rick Shipley: Yeah. Thousands, if you will. John Shegerian: Thousands of cities. Rick Shipley: We provide service to more than two-thirds of the population of the United States. We have the ability to service that. John Shegerian: So talk about what Organix Recycling’s proposition is. I am the city manager of XYZ city in America. You come in and you say, “Hey. I’m Rick Shipley. I’m with Organix.” Give me the pitch. Rick Shipley: There are two or three different areas we hit. John Shegerian: OK. Rick Shipley: First of all, financially, we’re creating value from what traditionally has been a waste product. John Shegerian: Wow. Rick Shipley: That has been thrown into a landfill to die forever. Not just die but emit methane gasses and all the harmful things that organic material can. John Shegerian: And fill up a landfill. Rick Shipley: Absolutely. So, first of all, we’re creating value from what was previously a waste. So financially, we bring a proposition that says, “We can do the same thing that your traditional waste hauler was doing, but we can do it for less money for you.” John Shegerian: Wow. Rick Shipley: That’s number one. John Shegerian: OK. Rick Shipley: Number two, environmentally. It’s very harmful and damaging products, very acidic products when you talk about food waste. John Shegerian: OK. Rick Shipley: It has strong odors. It attracts insects. There is a lot of badness – if you will – to food waste. John Shegerian: OK. Rick Shipley: Let us take that away and control that and handle it in a more appropriate manner and not just have it running out of your leaky compactors and out trucks and things like that as they’re running down the street. We control that. Thirdly, from a social aspect. It’s not just the right thing to do. That’s a very generic statement. But the social awareness that we have in this country – and really around the world now – with social media and just the availability of information. Socially, when people become aware of what the problematic issues are with this waste and what the recycling processes can do to eliminate those, there is no one that says “no.” We just now have to put the puzzle pieces together on the desk to make it work, but no one ever says “no” to that proposition. It’s just putting those puzzle pieces together. John Shegerian: Wow. And in terms of waste streams, how big is the waste stream in the United States, and how big is your opportunity? Rick Shipley: It’s staggering. We throw away in the United States on an annual basis, and it grows every year, 35-38 million tons of food waste goes into a landfill every year. For perspective, every man, woman and child – even the baby that was just born two seconds ago… John Shegerian: Wow. Rick Shipley: On average is throwing away 220-225 pounds of uneaten wasted food into a landfill every year. John Shegerian: Wow. Rick Shipley: Now there are large amounts that are recycled every year. Organix will recycle somewhere in the neighborhood of 450 to 500 thousand tons of material this year, but we’re still throwing 35-38 million tons into a landfill. So the problem is two-fold. We are a wasteful society in general because we are a wealthy society in general. John Shegerian: Right. Rick Shipley: We also are very particular shoppers when it comes to supermarkets. We shop with our eyes. So when we walk into a supermarket, we want the pretty produce, right? We don’t want the ones with blemishes. John Shegerian: Right. Rick Shipley: So the ones with blemishes go uneaten, unsold and go to waste if they can’t be donated. John Shegerian: Wow. Rick Shipley: They’re very good. You cut the bad part off, they’re still able to be eaten. There is nothing wrong with the dates on them. They just have a small bruise on them. So it is a societal issue. It’s a shopping issue from a consumer standpoint. But it’s also we’re a wasteful society in general. So a long-winded 35-38 million tons still goes into a landfill every single year. John Shegerian: So, truthfully, in terms of your business proposition – and we are here at Houlihan-Lokey’s big environmental services conference. You’re speaking today and you are speaking to a group of media, you are speaking to potential investors, potential partners all around the United States. Even potentially around the world. It’s really the top of the first inning for your company, even though you’re so successful already at what you’re doing. Rick Shipley: To use you baseball metaphor, I would say we’re still in batting practice. That’s the way we really look at it. When I tell people, I say I don’t want to do an injustice to the phrase of “scratching the surface.” I’m not sure we’re even scratching the surface yet. We’re doing marvelous things with the product we’re collecting. John Shegerian: Right. Rick Shipley: Marvelous things for the customers and the clients that we service. But the world of this food waste is so big. We are an environmentally conscious company, we are a transportation company, we are a recycling company – at the end of the day we’re a problem solving company. John Shegerian: Right. Rick Shipley: This is a problem John Shegerian: That’s right. Rick Shipley: In this country and around the world really. John Shegerian: That’s right. Rick Shipley: Hunger is a major issue and we’re throwing away massive amounts of food in this country alone. John Shegerian: Wow. Rick Shipley: So there are ways to take this product and not just reduce waste – that’s number one, reduce what we waste – but after that what can we do with the product that we are wasting to benefit those in need? And one of the things we try to do outside of just straight donation programs is we take a lot of this product and we feed it to animals that ultimately feed people. John Shegerian: Ah. Rick Shipley: Whether it’s proteins, whether it’s milk, different kind of animals, but we try to put that back in the food chain indirectly and make sure that that food stays available to people that need it from a hunger standpoint. John Shegerian: So from a circular economy standpoint, which seems to be the new buzz-term in things of that such, you’re really taking a problem and putting it in the whole circular economy. You’re making another solution out of that problem. Rick Shipley: Solving two problems. You’re right. John Shegerian: Right. Rick Shipley: We’re hoping to solve a waste problem and then hopefully we’re making some dent in some way into the hunger problem at the same time. Correct. John Shegerian: If you’ve just joined us now we’re got Rick Shipley. He’s the COO and co-founder of Organix Recycling. To learn more about Rick’s great company, go to www.OrganixRecycling.com. Rick Shipley: How about that originality? Put that “X” in there just to throw them off right? John Shegerian: I mean, just to throw us off, so I would say that and people remember that. Rick Shipley: You have to say it so people remember it. John Shegerian: Exactly. So, Rick, you are now the No. 1 company in this space. Talk a little bit about when food comes in. Because there are going to be people who are watching or listening to this show who are going to be the socially aware or socially conscious restaurant owner, city manager, ecopreneur who wants to bring you to their community. How does the whole system work? How do you pick up the food? Is it different in each state and different in each city? How do you pick up the old food waste, and then where does it go? Do you have one facility? Do you have 20 facilities? Where does this stuff get processed? Rick Shipley: Good question. So let’s start at its core. John Shegerian: Yeah. Rick Shipley: The product we collect – as a rule – is 85 percent water. H20. John Shegerian: Wow. Rick Shipley: So one that makes it by definition a very, very regional business. There is no money moving water very far. John Shegerian: Got it. Rick Shipley: There is no value in that aspect. John Shegerian: Got it. Rick Shipley: So it’s a very regionally based business. But our collection model today, generally speaking, looks much like a traditional waste hauler would look. We go to a store, we’ll collect the product, we go to the next store and collected the product – and we have a route-based business. Then, we also then partner or we own/operate/partner with local recyclers within a given marketplace. Again, so we don’t have to haul it a long distance but from an economical standpoint and a carbon footprint standpoint. John Shegerian: Got it. Rick Shipley: But we want to keep that local. Then we recycle it right there in the marketplace. So what we do is we create micro-businesses all over the country. So we are a large business with 34 states plus Puerto Rico, but really what we have are hundreds of small businesses. In Dallas, Texas, we have a business and in Houston, Texas, we have a business and in Chicago we have a business and in Philadelphia we have a business. John Shegerian: That’s great. Rick Shipley: We look at each of these in the aggregate, but we also look at them on a micro level and we identify what are the uniquenesses of that market whether it’s geography, topography. What are the best recycling methods within that market? What are the weather aspects that allow us to do different things with it, cause the collection process to change? So there are a number of variables and that’s why we have to look at this on a very, very micro regional basis and make our decisions on those aspects. Certainly, there are global ways we run our business and we have certain themes that we want to cross our platform, but we run it on a very local basis because it is a local business. John Shegerian: So you bring in all this product right now and you “recycle” it. Is it using proprietary technology or some other? Without giving away your secret secret sauce, what’s the proposition to our listeners and our viewers today? Where does their old food go once it comes to Organix Recycling? Rick Shipley: First and foremost, everything we do – because of the size, scale – we have to follow a number of federal and state regulations. John Shegerian: Got it. Rick Shipley: DOT to EPA to FDA because we are in the feed business as well. So again this is geographically driven. In certain markets we’re making compost out of the product. John Shegerian: Got it. Rick Shipley: In some markets we’re making energy out of the products via [inaudible] digestion. John Shegerian: So interesting. Rick Shipley: In other markets, we’re feeding the animals where animals are prevalent. So we don’t get stuck into a hole of saying “this is the way our business looks” back to the micro aspect of our business. We give reporting back to our customers so that they know exactly what their generation to help with their purchasing practice, their handling practices to hopefully reduce that waste. We also have full chain of custody all the way through the process so they know where it starts from, where it ends up. We’re transparent in that aspect. So we are unique to traditional waste hauling from a transparency standpoint to from a reporting standpoint. John Shegerian: Which by the way, Rick, is very important because now they’re going to turn back to both if they are a public traded company to their board, to their C-suite and to their constituents and be very transparent about all the good green things they are doing because they are able to share your reporting back with them. Rick Shipley: Generally speaking, when we walk into – and I’ll call it a “client.” John Shegerian: Yeah. Rick Shipley: A municipal entity or whatever. They have no idea what they’re generating in our space, because it has never been tracked and segregated. John Shegerian: Right. Rick Shipley: Once we start feeding that data back to them, it’s surprising to them the volume that’s being generated, the constituents of the product that’s being generated and again they then can act upon that and make better business decisions at their business because of the things we’re doing on the backend. Not just the great thing we’re doing for recycling – those are all great, the social aspect, the recycling, those are fabulous. John Shegerian: Fabulous. Rick Shipley: But we also help their business at the same time. John Shegerian: Right. So and then all that – what’s measureable – is manageable, holds true. Because now you’re finally giving them a measurement they can manage this even better and report it even better. Rick Shipley: Right. John Shegerian: So you’ve got the transparent reporting and you’re saying it’s a push-pull business. You have the economic drivers and the social reasons people want to do this now, but it’s also being pushed on them from different states because the laws are different in each state. Rick Shipley: Right. John Shegerian: And then you’re modeling, you’re creating – like you said at the top of the show – specific solutions wherever you go geographically, because geographically it’s not a one-size-fits-all business. Rick Shipley: The needs are different in all aspects. Compost is more valuable in Phoenix than it is in the Midwest just by definition. John Shegerian: Wow. Rick Shipley: There are good soils – as a rule – in the Midwest. There are not good soils in Phoenix. So we look at all those aspects and I think – again – when we get pigeonholed into a very singular narrowly faced business, it’s probably the end of our business. John Shegerian: Talk a little bit then, why it’s so important for a founder, an ecopreneur, an innovator like you to come to a conference like this conference today – the Houlihan-Lokey Conference – and evangelize what you’re doing? Rick Shipley: More than anything it’s education. John Shegerian: OK. Rick Shipley: Because there is general awareness of waste problems in the United States but until you say it out loud and you hear it from somebody’s mouth you don’t realize the micro problems of food waste problems or electronics problems and all of these different sectors. John Shegerian: Right. Rick Shipley: So what we’re hoping to do is to educate the attendees today of the issues at hand and some of the solutions that we believe we’ve come up with. We don’t believe that we are the only people that have every answer or we don’t believe we have every answer, but we want to collaborate and we believe there are very intelligent people that attend these conferences both from the private sector, the public sector, the investor sector that there are collaborations that can take this to other levels that individually any of these entities can’t do themselves. John Shegerian: That’s right. Rick Shipley: So we think education at this level and education at the student level – educating our children – on being less wasteful, being wise with purchasing, being wise with usefulness. John Shegerian: Right. Rick Shipley: All along the spectrum. We’re not going to change our wastefulness overnight. John Shegerian: That’s right. Rick Shipley: You have to start with education to start turning that pendulum. John Shegerian: Speaking of education. So how much of your time is spent on the road educating, evangelizing, being a great composting organic recycling ambassador across the United States and maybe even internationally? Rick Shipley: If you ask me or are you asking my wife? I think you will get two different answers to that. John Shegerian: OK. Rick Shipley: I do spend a significant amount of time doing a number of things – speaking, educating, business development, working with our employees. John Shegerian: Right. Rick Shipley: So I do spend a lot of time on the road. All of it to the core of – this is a very simple statement – doing better with this waste. John Shegerian: Wow. Rick Shipley: And it’s reducing waste, it’s handling it more properly, handling it more efficiently, recycling it more efficiently, recycling it into better products. It’s this whole containment. The only thing that is the solution is stopping the waste from being generated. As much as we all say we’d love to have it. John Shegerian: Come on. Rick Shipley: It’s not going to happen. John Shegerian: Right. Rick Shipley: Certainly in my lifetime. John Shegerian: Right. Rick Shipley: So now we have to say “What can we do just to reduce the amount generated?” John Shegerian: Right. Rick Shipley: Knowing it’s not going away now what do we do in this other part to recycle it more efficiently into better products that are in demand and that help people’s lives. John Shegerian: How old are your children, Rick? Rick Shipley: Fifteen, 12 and 10. John Shegerian: So you have got to be the cool dad now because you are really doing. Rick Shipley: Again, who are you asking? John Shegerian: I mean, from your kids’ perspective because you’re doing something that’s really – my son and daughter are 28 and 22. They think sustainability is amazing. When we were kids, it really wasn’t on our radar. Rick Shipley: It wasn’t even a word used, right? John Shegerian: But, I mean, because you are doing something that’s so meaningful that has so much societal benefit and makes the world a better place, your kids must really be proud. Rick Shipley: I think my kids will be the first to tell you that – we could be on a beach, we could be in an airport, we could be wherever, a restaurant. John Shegerian: Right. Rick Shipley: And somebody will just generically say, “Well, what do you do for a living?” John Shegerian: Right. Rick Shipley: And they just say, “Oh boy. Here we go,” because they know the excitement I have about this and not just the business but what we’re doing. John Shegerian: Right. That’s awesome. Rick Shipley: And it’s a 20-minute conversation. When they’re at their schools and see the waste and they talk about recycling. John Shegerian: Yeah. Rick Shipley: They can raise their hand and say, “Hey. I know something that we’re not talking about.” John Shegerian: That’s really great. Rick Shipley: And so I think it has changed our family’s mindset towards waste and recycling both. John Shegerian: Yeah. Rick Shipley: Because again there are two different things. John Shegerian: Wonderful. Rick Shipley: Reducing waste is still the ultimate answer. John Shegerian: That’s right. Rick Shipley: Reducing waste is the only answer but we’re just not going to get there in my lifetime. John Shegerian: And you’ve got to deal with the problem as we know it today and that’s what you’re doing. Rick Shipley: Yeah. John Shegerian: We’re almost out of time here, Rick, but I do want you to end on the future. Where are you going? Let’s just be clear. You are the No. 1 company in this space in the U.S. right now. Rick Shipley: We are the largest collector and recycler of supermarket waste in the United States, yes. John Shegerian: Wow. And so what is the future? You are into this now six years or so. Where are you going to be going with it in the future? Rick Shipley: Well we are very narrowly focused in our business today. We collect mainly from supermarkets which only represents about 10 percent of all food waste in the United States. So first of all we’ve only penetrated about 13 percent of that market so there is a large opportunity just to continue maturing that business. But now we have to address the other 90 percent of food waste out there. So we think that ultimately with all of the things that we’re doing ultimately technology and product generation is the ultimate answer because once you make products that have real value in a given marketplace everything else makes sense financially, it makes sense socially, it makes sense. All these other things that people say “yes” to make even more sense when you’re creating real products that have value in the marketplace. John Shegerian: Wow. Rick Shipley: Financial values, social values, environmental values. All of those things have value in general. John Shegerian: Right. Rick Shipley: And so as technology catches up to logistics and some of the other aspects of our industry that would be the catalyst to making this thing not just grow rapidly but absolutely explode when technology starts transforming the products we’re generating. John Shegerian: Right. Rick Shipley: Are creating. John Shegerian: Right. Rick Shipley: Into higher values. John Shegerian: So a year from now, when you come back on Green Is Good, you’ll be in all 50 states hopefully, right? Rick Shipley: Our goal is to be world dominant now. John Shegerian: Seriously? Rick Shipley: No, we believe somebody needs to do this coast-to-coast. There are pockets that still aren’t being covered. So to your point, yes, we want to be a national company. John Shegerian: And I’m sure you get international phone calls for that matter, and is that a possibility down the road? Rick Shipley: We don’t say “no” to much and sometimes that gets us in trouble, but we say “yes” to most everything and we explore every option that’s out there. Obviously, it has got to make financial sense to us – we are still business people – but it maybe doesn’t have to make the financial sense that it might to somebody making a product only whereas we can do the right things and still make some money while we’re doing that. John Shegerian: Well, we’re going to leave it at that today, Rick. We’re going to have you back on Green Is Good to continue the story or Organix Recycling. To learn more about Rick Shipley’s company, go to www.OrganixRecycling.com. You are an inspiring innovator. You are making the world a better place. You are a sustainability superstar and truly living proof, Rick, that Green Is Good. Thank you so much for joining us today. We really appreciate it. Rick Shipley: My pleasure.

Greening the Brewing Industry with Fremont Brewing Company’s Sara Nelson

John Shegerian: Welcome back to Green Is Good. This is the GoGreen edition of Green Is Good and we’re so honored to have with us today Sara Nelson. She is the Co-Founder and in charge of Special Ops at the Fremont Brewing Company. Sara Nelson: Yes. Thank you for having me. John Shegerian: Welcome to Green Is Good. Sara Nelson: I’m thrilled to be here. John Shegerian: And we’re going to be talking about not green beer in terms of St. Patrick’s Day or something like that but the sustainability revolution coming to the brewing industry. Sara Nelson: Yes. John Shegerian: Sara, before we get talking about Fremont Brewing can you share a little bit about your journey in sustainability and leading up to the founding of Fremont Brewing and then the greening of Fremont Brewing. Sara Nelson: OK. So my personal history is that I am a long time do-gooder and I decided to get a PhD in Anthropology because I wanted to change the world through blowing students minds like mine was blown in college. That’s why I came up to Washington from California – to get my PhD in Anthropology, realized that academia wasn’t for me, ended up working for a local council member – Richard Conlin – who had a very strong sustainable agenda and in the course of implementing his policy initiatives I learned a lot about the City of Seattle’s sustainability programs. I learned about zero waste principles. I learned about incentives. I learned a lot about the nexus between municipal government and the private sector, and it’s great because I was able to see really that local government is not as sexy as national or international politics, but in local governments you really can see decisions implemented on the ground. Right up the street from us the new transfer station is being built that Richard and I helped design. So the point is that it was through government work and academia that I became interested in sustainability as a core value. My husband who was an environmentalist went to law school to become and environmental lawyer. There are about five jobs in environmental law in Seattle so you have to be Harvard, Yale or Georgetown. John Shegerian: Wow. Sara Nelson: But he was a home-brewer and so he got funneled into beverage law and realized that he wanted to make his dream come true instead of continue contracting and establishing wineries and breweries. So long story short, we decided to start up the microbrewery in about 2008. John Shegerian: OK. Sara Nelson: At that brink of the financial disaster. That’s a different story. So we were founded then and we started with two used fermenters and now we have 19 and we’re up and running. John Shegerian: And where did you start the business? Sara Nelson: In Fremont. So Fremont is a neighborhood in Seattle. Pretty much in the heart of Seattle. John Shegerian: OK. Sara Nelson: And we never thought we could afford square footage right in town, but we found a warehouse that needed to be completely gutted and reworked and so we rented that. We sublet half of it to a company that used our spend grain to make clean energy, so that was a startup. John Shegerian: Wow. Sara Nelson: So we got our rent partly paid for and started that relationship, got us on the map as a green brewery with sustainable principles and then just grew. And part of our growth was starting a beer garden right in the neighborhood because it’s a really – for those of you of your audience who might not know, Fremont it’s right across the street from a bike trail, the Burke-Gilman Trail. John Shegerian: Beautiful. Sara Nelson: Runners, riders, lots of tech companies, but it’s also funky artists and independent businesses, and so the community welcomed us and we were happy to be there and it was a great synergy. John Shegerian: Wow. And for our audience members out there to learn more about Sara and her husband’s great company, Fremont Brewing Company, go to www.fremontbrewing.com. So now let’s talk about Fremont Brewing and the green revolution from 2008, when you started, to 2015. How has the journey been both in terms of growth as an eco and entrepreneur but also in terms of sustainability and then extending the recycling of your grains and what other things have you done? So let’s walk through the last seven years. Sara Nelson: So small businesses are usually on mission critical crisis management all the time. John Shegerian: Right. Sara Nelson: So the big constant has been this value and the value and sustainability that we have tried to maintain as a core value and giving beer to all environmental organizations and schools. We fuel the overbidding of options across the region. John Shegerian: Wow. Sara Nelson: So we buy what we can afford. Basically, the low hanging fruit is easy. So when that startup left and we had all this spent grain, we now produce 8,000 to 10,000 pounds of spent grain a day so what are we going to do with that? Well, it’s a higher and better use to provide it to farmers than to put it in the city’s waste stream or into Cedar Grove at Cedar Grove Composting. John Shegerian: Right. Sara Nelson: So we have found relationships with farmers to take our spent grain. We made the decision to use cans and not bottles because the recycling content in cans is vastly higher. It’s lighter. Less emissions to travel. It stores better. Less refrigeration required. So the production processes decisions that we’ve made reflect our sustainability and just trying to make sure that the people that we’ve got with us also share our values. Our employees are great. Sustainability isn’t just environmental. It’s also social and economic. So we treat our employees well – free health care, 401k with three percent match. So it’s about creating a community that can reflect our values and that generates business so we have money to grow and continue doing the right thing. John Shegerian: It is fair to say that being sustainable and being green and messaging what you’re doing is good for the bottom line? Sara Nelson: I think so. I would like to think so. In our community, yes. We have that reputation. Right now we’re just situated in Washington. As we grow beyond Washington are the people in – I don’t know – Idaho going to know about our reputation when they’re choosing a beer off their shelf? No. Is the executive at Kroger going to really care? I don’t know. So profitability and sustainability, I have to say, we do it because it’s the right thing to do. John Shegerian: Got it. Sara Nelson: I wish that I – I mean. John Shegerian: It’s part of your DNA and culture. Sara Nelson: Yeah. And we don’t have very many investors, so I don’t really have to make a business case for everything that we do. John Shegerian: Right. Sara Nelson: And how do you put an ROI on writing a check for an organization to plant trees? And plus when we have to buy a big piece of equipment, that is an upfront cost and the financing is not driven by our return on investment. “In five years we’ll be saving this money on our water” or whatever. So yes, it’s important and a lot of it is value driven. John Shegerian: Right. But those values have allowed you to not only have a cultural and DNA quality that has been attractive to your client base here, which is the City of Seattle, which is the more you look around, walk around and see the business base here and the community, pioneers, innovatives and sustainability seem to be – the three of them – the pillars and common themes of this whole community. Sara Nelson: Right. And that reputation gives us that platform to participate in not the Washington Business Climate Declaration but the National Brewery Climate Declaration and that has a national reach. I go to D.C. to advocate for the craft industry in federal excise taxes against the big breweries. So I guess in answer to your question we’re getting to a more nuanced issue about sustainability. John Shegerian: Yeah. Sara Nelson: There might not be a clear benefit month to month with the cash flow but what we are doing is we are setting an example. We are giving policy makers some cover and that’s important. John Shegerian: Sure. Sara Nelson: And we’re not going to be able to regulate our way out of the climate problem. What we can do as businesses is the right thing and help other businesses do the right thing. John Shegerian: But because you and your husband have this in your DNA anyway to make the world a better place, the success of your business, and because how you’ve run it, has now given you a bigger platform so you truly do have the opportunity from the top down to make the world a better place. Sara Nelson: Right. John Shegerian: That’s great. Sara Nelson: Can I tell you something about our industry though? John Shegerian: Yeah. Sara Nelson: So it turns out beer is big business. Craft beer. Just craft beer. The number of new craft breweries increased by 19.7 percent just last year. So now we are at about 3400 craft breweries across the country. John Shegerian: Wow. Sara Nelson: Washington State is the fastest growing, 83. John Shegerian: Really? Sara Nelson: New York, 57. California, 52. New breweries last year. John Shegerian: Wow. Sara Nelson: So what does this mean? What this means is that we’re all buying really expensive equipment, and besides the jobs they give, we’re buying a bunch of people and we’re buying local and all that trickle down benefit to our communities. But I am hoping to become industry leaders in incentivizing technologies that are scaled to small brewers. So I was just in this panel talking about the fact that nobody is making a CO2 recapture system for my-sized brewery. Sierra Nevada has one that costs almost a million dollars. But what I’m hoping is that through our activism and our example and the power of craft beer that technology and green tech companies will take notice and start thinking about scalable solutions for us. John Shegerian: That is just wonderful. For our audience members that just joined us, we have Sara Nelson with us. She is the cofounder and co-owner of Fremont Brewing Company. To learn more about Fremont Brewing and all the sustainable practices they use, go to www.fremontbrewing.com. We’re here today at this GoGreen edition of Green Is Good, and this is a wonderful conference. Talk a little bit about the panel you were on today and what the panel’s topic was. Sara Nelson: OK. So I was on a panel. It was basically the city and the private sector bridging to make going green easier. John Shegerian: Right. Sara Nelson: So they wanted to present their efforts to make it easier for businesses to go green, and so the more that they can consolidate their businesses – when I started out at the brewery, I had to go to three different offices to figure out “what are the incentives for changing our light bulbs?” So they are in a constant process of consolidating their services to be a one-stop shop for businesses and just make it easy for us small business owners who don’t have time to – they don’t know who to call, let alone three people. So basically the panel was about their efforts and asking me and the owner of a wildly popular pizza company, Pagliacci, what could they do better? So that’s what we were talking about today. John Shegerian: Let’s talk about, you just said “wildly popular pizza company.” You’re very humble. Talk about Fremont Brewing. How big have you grown in the seven years in terms of regional breweries are you one of the larger breweries in Seattle or in the region? Sara Nelson: Yeah. So we’ve had about 50 to 100 percent growth a year. John Shegerian: Wow. Sara Nelson: And it depends on are you talking about sales or production etc., but we’ve grown very fast and we are now a regional brewing company. John Shegerian: Wow. Sara Nelson: So once we surpassed 15,000 barrels – it was 18,000 last year. John Shegerian: Yeah. Sara Nelson: Now we’re regional. Yes, we are the fastest growing small brewery in Washington State. It depends on which net books you use. Sales-wise we’re very successful. So we are growing very fast, that presents its challenges. John Shegerian: Sure. Sara Nelson: And now we’re going to be engaging in a massive expansion in our production. John Shegerian: So people buy your beer both on premise in the beer garden, but they also can find it in local stores in bottles. Sara Nelson: Yeah. In cans. John Shegerian: In cans. Sara Nelson: When we started out we were going to be a wholesale. Sell kegs to bars. John Shegerian: Right. Sara Nelson: And that was because we always wanted to can and we couldn’t get a loan until a couple years ago to buy a canning line. So we finally got a canning line. Now our main business, more than bars and restaurants, is grocery stores, convenience stores. So that’s our sort of off-premises market and then we have a beer garden that is open seven days a week, it’s kid- and dog-friendly, we just keep building more tables and taking over the parking lot and people keep coming. So that is fun for us because it is our front porch and it’s many people’s first encounter with our brand. John Shegerian: And beer and food or is it? Sara Nelson: No. John Shegerian: Sorry. Sara Nelson: We don’t want to lose any more money. That’s what people say, “When are you going to get food?” We are licensed as a tasting room, because we are a production facility. Remember, my husband was a lawyer. John Shegerian: Right. So it’s just a tasting facility, beer garden type. Sara Nelson: So it’s, basically, we give away pretzels and apples, and then people can bring – Pagliacci Pizza, they can bring their food, they can have it delivered. We have menus of local restaurants. We also didn’t want to compete against food establishments. John Shegerian: Right. And that’s how it works. Sara Nelson: So people can eat at our place, but we don’t serve. John Shegerian: And how many lines of your beer are in cans? Sara Nelson: We have two regulars all year-round. Our IPA, our inter-urban IPA in the yellow can – people say, “I love your yellow can” – and our Universe Ale Pale. Fremont considers itself the center of the universe, so that’s why we called it “Universe Ale.” So two year-round and then four seasonals. Right now, it’s the summer seasonal ale. John Shegerian: And where else can people buy Fremont beer in cans? Is it just in this region or it is outside of the region already? Sara Nelson: It’s in Washington. John Shegerian: That’s it. Sara Nelson: Well, we’ve – don’t tell Portland – we’re dipping our toe into Oregon. We’ve got a few accounts in Colorado and a little bit on the Idaho border. John Shegerian: And when California? Is that coming? Sara Nelson: When we get our new facility open, and then we can make more. So we are at capacity now. We cannot make more. John Shegerian: And where is that new facility going to be? Sara Nelson: It’s going to be in Ballard, right down the street. John Shegerian: OK. Sara Nelson: So it is in the next neighborhood over and it’s just going to be production. It has places for big trucks to come and go and we’ll have a lot more there. John Shegerian: And what happens to the original brewery then? Sara Nelson: It will become the small batch experimental facility. John Shegerian: Whoa. Sara Nelson: We’re keeping our tasting room because people love it. We don’t want to move, and we’re called “Fremont Brewing Company,” so we can’t be in Ballard. John Shegerian: That’s right. You need your roots. Sara Nelson: Yeah. John Shegerian: You need your roots. Sara Nelson: So it’s just basically an expansion. John Shegerian: Talk a little bit about the steam, your element of using steam to heat your water and how is that unique in the brewing industry? Sara Nelson: So it is not necessarily unique, but it’s what the big boys do. John Shegerian: OK. Sara Nelson: It is much more efficient to heat water with steam. Partly because the latent heat retention and also our kettles are designed to have the steam wrap around them. Long story short, it reduces our natural gas usage by 50 percent. John Shegerian: Wow. Sara Nelson: But it was a huge upfront expense. I don’t know when the ROI is, but we did it knowing that it was the right thing to do for emissions, and also as we grow, it will become more efficient. John Shegerian: Got you. And when you go to Whole Foods or other fine establishments to buy your fruit and produce now things are becoming labeled more and more organic. And we see that. We’ve had many wineries on. You’re our first sustainable brewery that we’ve had on Green Is Good. Is the organic labeling of products now coming to the brewing industry, and where is Fremont in that process if it’s coming at all? Sara Nelson: I think organic will become more and more important, and we are embarking on organic certification for a couple of our beers that have organic hops and will have organic grain. And our hops are salmon-safe. So yes, it will be important. I think it will be a differentiator in the market. John Shegerian: Got it. Sara Nelson: The difficulty is that organic green sourcing is difficult because they are big farms. We’re talking about big operations and it’s difficult for breweries of my size to find a dedicated source of organic barley so those relationships have to exist. What we’re trying to do is incentivize sustainable grain growing locally, so that not only do we have the option to buy organic we also have the option to buy local grains because that is a big part of sustainability is local versus organic from far away. So there is always that balance of decision you have to make. John Shegerian: Got you. We’re down to the last two minutes or so, Sara. Can you share with our audience members the Cowiche Project? Sara Nelson: Cowiche Canyon. That is west of Yakima – the biggest hop growing region in the country – and one of the growers there wanted to grow organic crops on his property at the mouth of the Cowiche River that comes down from Rainier and he needed a buyer to ensure that somebody would buy his hops. So we entered into this relationship in 2010, and it is delicious so we buy all of his hops and they’re trucked over the mountains and put into our kettle within 24 hours and that becomes our Cowiche Canyon organic fresh hops. John Shegerian: Wow. Sara Nelson: Pretty much all beer people drink has pelletized hop. So fresh hop beer and then the proceeds go to the Cowiche Canyon Conservancy. John Shegerian: That is just awesome. That is just awesome. Sara, please come back on Green Is Good to continue the story and the journey of Fremont Brewing and the success, especially as you expand and get bigger and continue to grow the green message at Fremont Brewing. It has just been a delight having you on today. For our audience members out there to learn more about Sara and her colleagues and husband and what they are doing at Fremont Brewing Company in sustainability and green please go to www.fremontbrewing.com. Sara, you are both an inspirational ecopreneur and entrepreneur and sustainability superstar and truly living proof that Green Is Good. Thank you so much for being with us today. Sara Nelson: Thank you very much for spreading our message.

Sustainability in Health Care with Virginia Mason’s Brenna Davis

John Shegerian: Welcome back to Green Is Good. This is the GoGreen edition of Green Is Good and we are so honored to be here in downtown Seattle at this amazing GoGreen Conference. Today we have got Brenna Davis. She is the Director of Sustainability of Virginia Mason. Welcome back to Green Is Good. Brenna Davis: Thank you. I’m happy to be here. John Shegerian: I’m happy to have you on. We don’t get to talk enough on this show about sustainability in health care, so to have Virginia Mason on and to have you, Brenna, on talking about sustainability in health care is really important today for our audience members. But before we get talking about that, I want you to talk about Brenna Davis a little bit. You haven’t been on the show yet, so this is your first turn on Green Is Good. Talk a little bit about when did green start becoming part of your life? Your upbringing? College? High school? Who turned you on to this whole sustainability thing? Brenna Davis: Thank you, yeah. Well, I have been doing sustainability work for about 20 years. John Shegerian: Wow. Brenna Davis: I got started in – I was raised in the Pacific Northwest. My family is from here and I spent a lot of time in the forest and in the parks in Seattle, and I really loved nature, and because of that I was more interested in studying the environment. John Shegerian: Really. Brenna Davis: And I went and got a degree in Environmental Science from Huxley College of the Environment, which was actually one of the first environmental colleges in the country and that was amazing. I had great mentors there. And my first job right out of school, I worked in my field and I’ve been doing that for about 20 years. John Shegerian: So you really had it as a part of your DNA growing up, because you grew in this area and you were enjoying and really appreciating the outdoors a lot. Brenna Davis: I did. I did. And I had a lot of mentors growing up. My family really loved the outdoors. My grandfather was an avid fisherman. Both of my grandfathers were avid fishermen. I guess you can’t be in the Northwest and not be. John Shegerian: Yeah. Brenna Davis: So I was around nature my entire childhood and it really did inspire me to want to protect it for future generations so that nature can be there for my nieces and nephews and those that are coming. John Shegerian: You can leave the world a better place. Brenna Davis: Yeah. That’s right. John Shegerian: So we are here today in this beautiful city of Seattle, very sustainable, one of the hubs of innovation in this whole country. You are the Director of Sustainability for Virginia Mason. Why has Virginia Mason chosen to be very involved today at this great conference? Brenna Davis: Oh, thanks. Well, Virginia Mason views sustainability as just integrated into everything we do. Because human health is so linked to the environment, if we don’t have a healthy planet, we can’t have healthy people. John Shegerian: Great point. Brenna Davis: Yeah. John Shegerian: Good point. Brenna Davis: Thank you. So it’s really our mission to figure out how can we reduce our environmental impact and, beyond that, inspire health care as an industry to do more. John Shegerian: And your organization is one of the sponsors here today. Brenna Davis: Yes. John Shegerian: And your boss spoke on a panel today. Brenna Davis: Yes. She was great. Yes, Secretary Chapman. She is our Senior Vice President and she is a hospital administrator at Virginia Mason and she is actually a microbiologist, which is how she got into her field. She is amazing. Smart woman. John Shegerian: What was the panel speaking to today? What was their topic? Brenna Davis: Their topic was on the Washington Business Climate Declaration. The Climate Declaration was a call for business to get engaged on climate and Virginia Mason led that call. I chaired that group. It’s called Washington Businesses for Climate Action. We put the Climate Declaration together based on Ceres’ existing climate pledge and made it sort of more specific to Washington State. Then we went out and recruited businesses to sign on to this declaration calling for action on climate. And when we rolled it, out we had 100 businesses. Now we have over 180 businesses signed on to call for action on climate in Washington State. John Shegerian: So great. So although climate change is this big global issue, you have made it very local in your call to action. Brenna Davis: We did, because we felt like Seattle and Washington State, we have such a culture of innovation and we have such a pioneering spirit that sometimes we need our own declaration, our own thing so that we can feel that we own it a little bit more and that reflects the culture here. John Shegerian: That makes sense. And for our audience members out there, to see what Brenna and her colleagues are doing at Virginia Mason, you can find them at www.VirginiaMason.org. Let’s talk a little bit about Virginia Mason. What is the mission? It’s a .org. What does Virginia Mason do in sustainability and health care? Brenna Davis: Well, Virginia Mason is a health care system. John Shegerian: OK. Brenna Davis: We have a large hospital downtown and then we have seven regional medical centers around the region. So we are really focused on providing the highest quality health care, and we are award-winning in terms of our quality. We were the first health care organization to adapt the Toyota production system into our work so that we could ensure that there is the highest quality. Just like you expect the highest quality car, why wouldn’t you expect the highest quality health care? John Shegerian: No kidding. Brenna Davis: Yeah. That’s a huge part of how we make all of our decisions in our culture. So we do that and we also have a Virginia Mason Institute, which teaches the Virginia Mason production system and how to integrate quality work into you day-to-day operations. John Shegerian: Talk a little bit about that. What does that mean? That system? That Toyota system that you mentioned? Brenna Davis: So when you think about how Toyota makes cars, they use a production system to identify areas of waste. John Shegerian: Yeah. Absolutely. Brenna Davis: You just say you’re making a part and you don’t need to do these extra steps, you don’t need to move this part here and it takes extra time or money. So our CEO, Dr. Gary Kaplan, and the senior leadership decided in 2002 to use this production system for health care. So now we use it. For example, if you are a cancer patient. In the past – maybe four years ago, five or six years ago, I don’t know when, but in the past…. John Shegerian: Yeah. Brenna Davis: If you were a cancer patient and you came in, we measured and we found out you had to walk something like 2,000 steps. So you’d have to come in and go to the doctor, go to the radiologist, go somewhere else. So we were asking our sickest patients to walk something like a mile to get their care. So using the production system we identified all this waste in movement and the waste of walking and we used a system to change the way we did things so it was centered on the patient. So now the patient comes in, they sit down and everyone comes to them. John Shegerian: Oh my gosh. Brenna Davis: If you were there as a cancer patient, that’s a big benefit is that everything comes to you and it’s patient-centered. So the same thing with sustainability. We use our production system to identify waste, to implement green ideas. If people bring new green ideas, to measure them so that we can understand what’s the actual impact of this idea, and if it is successful, let’s spread it across the organization and use that idea. John Shegerian: Just so our listeners and our audience can get a little bit of a feel – how many beds or how many patients does Virginia Mason service? Brenna Davis: We have 295 licensed beds. John Shegerian: OK. Brenna Davis: I’m not sure. At the moment. John Shegerian: Right. Brenna Davis: And then we have about 326 beds total. John Shegerian: Wow. Brenna Davis: So at any time, it’s around 300 beds. I’m sorry I don’t have the numbers in front of me for today. John Shegerian: No, that’s fine. That’s just a general idea. Brenna Davis: It’s around 300 beds. John Shegerian: Right. Brenna Davis: Yeah. John Shegerian: So you are one of the big health care providers here in Seattle and the Seattle region. So sustainability in health care. How long have you been the Director of Sustainability at Virginia Mason? Brenna Davis: About two years. John Shegerian: Two years. Brenna Davis: Yeah. John Shegerian: Was there a director of sustainability before you? Brenna Davis: No. John Shegerian: So this was a new position? Brenna Davis: Yes. John Shegerian: You truly are a pioneer at Virginia Mason, which is probably – if I were to guess – one of the leading health care agencies in America who have integrated sustainability in healthcare. Brenna Davis: That’s right. John Shegerian: So let’s talk about all the opportunities. Now, you are not a rookie anymore, but now you see how much can be done. Brenna Davis: Yeah. John Shegerian: Talk a little bit about what you’ve accomplished in those two years in sustainability and healthcare but talk a little bit also about the future if you don’t mind, Brenna, on how big the universe can really be when it comes to health care and sustainability. Brenna Davis: Sure. Well, I can give you some highlights. John Shegerian: Yeah. It would be exciting. Brenna Davis: Before I arrived, we already had a culture of sustainability and it just wasn’t as organized as our senior leadership wanted it to be, and they saw there was more interest in it, and they saw the value in it, so they created my position and brought me on. What’s interesting and very cool about Virginia Mason is they started their energy efficiency work in the 1990s and they have been working on it ever since then. So we are saving so much energy – and you can look more on the website. We are saving 6 million gallons of water every year just from the work we are doing in trying to eliminate waste. John Shegerian: So you are saving water. Brenna Davis: Saving water. John Shegerian: Another one of our biggest issues. Brenna Davis: I know. Especially in California John Shegerian: In California and around the globe, though. Brenna Davis: Yes, around the globe. John Shegerian: So you are saving water and then you are saving energy…. Brenna Davis: Yes. John Shegerian: Great. And then obviously you have also made the great case about patient care. Brenna Davis: Yeah. Yeah, that’s right. John Shegerian: The steps. Bring the care to the patients, not make the patients go to the care. Brenna Davis: Yes. John Shegerian: So what other things have you gotten under your umbrella? Brenna Davis: So we have been working on water. We have been working on waste. We decided that 80 percent of the landscaping that we plant on our campus is native plants or pollinator-friendly to reduce water and create habitat for plants and pollinators, which we are really passionate about. We do food. Thirty-six percent of our food is all local and sustainable that we serve, and we are working on expanding that and doing more from scratch cooking and just innovating that whole side of it so that hospital food is delicious and local and sustainable. John Shegerian: I want to come back to that. I just want to give a shout out. To our audience members that just joined us, we are so excited to have Brenna Davis with us. She is the Director of Sustainability at Virginia Mason, and to learn more about Virginia Mason, it is www.VirginiaMason.org. It’s a health care agency here in Seattle. In Seattle today is where we are at Green Is Good. This is the GoGreen edition and to learn more about GoGreen go to www.gogreenconference.net. October 6th in Portland. You can buy tickets to come to that conference. It’s an amazing conference. We are so honored to be here. Let’s go back. I’m a vegan. Brenna Davis: Are you a vegan? Good for you. I just ate a vegan meal. It was delicious. John Shegerian: I had a vegan meal last night in your great city here in Seattle. Most of us tie health care and hospitals with ubiquitous horrible food, unfortunately. Brenna Davis: Yeah. John Shegerian: Talk a little bit about the importance of nourishing your patients. And as you just said, you are sourcing some of the food locally. Is some of the food also then being – like you just said – made from scratch? And are we taking more nutritional elements into it and health care elements that we know now are true, plant-based food and other opportunities to organic products to your patients? Brenna Davis: Yes. Virginia Mason is part of the Healthier Hospitals Initiative. We partner with them on a challenge – it’s a healthier hospitals challenge – that we’ve implemented on a free nutrition side. So we have expanded organic. We serve organic and local whenever possible whenever in season. John Shegerian: That’s great. Brenna Davis: Yeah. It is great. Then, recently, we are moving towards buying more, higher vegan, but we are really towards inspiring antibiotic-free meats. John Shegerian: Wow. Brenna Davis: And we are doing more and more of that. And then we just recently were certified. We are the first self-operated hospital in the world to be certified by MSC – the Marine Stewardship Council – to serve Marine Stewardship Council fish. John Shegerian: Wow. Brenna Davis: So we serve fish that is captured sustainably and from healthy fish stocks. And then we do hormone-free dairy. We do cage-free eggs. John Shegerian: So you have taken food as a very important mission in the ecosystem of how you treat your patients. Brenna Davis: Absolutely. Because health is so tied in nutrition and the food that we eat, and so we have the idea of how can we just eliminate as much as we can sugary sodas. Get the sugar out of our cafeterias. We are transitioning to eliminating fried foods. We take it very seriously. And we want it to be delicious so people want to eat it. John Shegerian: Right. Brenna Davis: So we have an amazing chef, Brian Brooks. He is a trained chef, and he used to own a place called “Hunger.” His wife is an amazing chef, too. So anyway, he does all of our cooking now and he is working really hard to transition into it so that the food is healthy, sustainable and delicious. John Shegerian: That is just wonderful. Talk a little bit about other initiatives that you are working on at Virginia Mason. Brenna Davis: Well, climate change is a huge one that we have been really leading on in the industry. Climate change – as Piteri shared – is a major human health concern of the CDC and the World Health Organization, the Obama Administration and the Health and Human Services. They are all still concerned about it, and you probably know that the Surgeon General recently came out with a Twitter chat on climate and health. John Shegerian: Yeah. Brenna Davis: And that was amazing. We’ve been partnering with the Healthier Hospitals Initiative on a national level to basically expand the involvement of health care on climate so we are part of the Health Care Climate Council – it’s called. John Shegerian: Share what that is and share also for our audience members what Healthier Hospitals is. Brenna Davis: Healthier Hospitals Initiative is an initiative by a group of hospital leaders to reduce the environmental impact of hospitals and the health care system. We are part of that and we’ve been partnering with them. John Shegerian: How big is the growth? Brenna Davis: It’s international at this point. John Shegerian: Really? So hundreds of hospitals are part of it. Brenna Davis: Yeah. But the Climate Council, it started out we were invited to join very early on by a group Health Care Without Harm, which kind of created the Healthier Hospitals Initiative. There are only eight health systems engaged. We were invited to participate. And it’s continuing to grow. We were invited to go meet with the Obama Administration, so I went to the White House and met with the President’s staff, John Podesta and some of his cabinet members in Health and Human Services, Secretary Burlock – basically looking at how can we create health care organizations that are resilient to climate change and that are ready when the climate change impacts come down the pipe. We’re already feeling them but when we really start, the pain starts coming. John Shegerian: Right. Brenna Davis: And the people at the table had experienced Hurricane Isaac, Katrina, Sandy and they had seen health care organizations just be crippled. I mean, they were just decimated because of these storms and so the idea was, how can we deal with this as a climate resilience issue so that we can be centers of climate excellence as health care organizations so that our communities can come to us when they need us the most? And making sure that we are available and that care is available to the community. John Shegerian: That is so amazing. What other things are you working on? Brenna Davis: My dream, one of the things that I would really like to do is to eliminate bottled water. And we are in the process of that. John Shegerian: Process of that. Brenna Davis: It’s been a process, so that is one of the things I would like to work on. John Shegerian: You mentioned earlier at the top of the show, Brenna, that your CEO – about the Toyota principles implemented. Brenna Davis: Oh yeah. John Shegerian: Talk a little bit about some of the pain points that exist for patients when they go into a hospital. I know most patients always complain about constantly being woken up or excessive light noise. Are some of those things part of your initiatives too? Or some of the things that you can possibly work on in the future? Noise reduction and light reduction for proper resting? Brenna Davis: Yes. Thank you. You make a very good point. John Shegerian: OK. Brenna Davis: And I have to say I am an environmental scientist not a clinician. John Shegerian: OK. Brenna Davis: But we have implemented using the Toyota production system. We worked really hard on raising that patient satisfaction level in our hospital so that people – when you are injured or trying to heal, you need that quiet. John Shegerian: Right. Brenna Davis: You need that calming time to sleep and recover, and so we’ve been winning awards consistently on patient experience and lowering the noise that happens. The biggest source of sort of dissatisfaction with hospital stays is associated with who your roommate is. So if you get a bad roommate. So we are trying to work and shift that so it’s not as contingent on that. John Shegerian: That is so exciting. Brenna Davis: We don’t know. But you know how it is. John Shegerian: Right. Brenna Davis: Maybe you don’t mesh with the guy. John Shegerian: Right. For our audience members out there that are in health care, are there any resources you could share with them or any points of inspiration in terms of how to green or make their health care agencies more sustainable? Brenna Davis: Oh, absolutely. The two major most incredible organizations to share with those folks is first of all Practice Green Health. John Shegerian: Practice Green Health. Brenna Davis: Practice Green Health is an organization that works on integrating sustainability into our everyday work as health care. John Shegerian: OK. Brenna Davis: And you have to be a member, but I’ll tell you it’s worth every penny because their staff will help you integrate sustainability principles and you can learn from other health care organizations. Health care is really at the beginning of this journey, and they are there to kind of help you. John Shegerian: It’s www.PracticeGreenHealth.org or something like that? Brenna Davis: Yeah. www.PracticeGreenHealth.org. John Shegerian: OK. Brenna Davis: Amazing people. Hermine is my facility person. She is amazing. John Shegerian: OK. Brenna Davis: And then also I would say Health Care Without Harm and Gary Cohen and Eric Lerner over there. Two incredible people that are just passionate about reducing the environmental impact of health care, and they are working on a global scale. They are getting ready to go to Paris. We have been working with them on a global rollout of the 2020 health care challenge, which is basically we are one of eight organizations globally to roll this out. Kenderson Health and Kaiser Permanente are friends there and us and then the British government and a Korean Hospital, another one in South Africa, we all work together to rollout this global challenge. Health Care Without Harm really is working on climate change and health care has such a unique voice on climate because we have this moral authority. People trust us. John Shegerian: That’s true. Brenna Davis: We are in every community. We are focused on data so we are working hard to get health care to speak up and start being the leaders that we are on health and health impacts in climate. John Shegerian: Health Care. Brenna Davis: Without Harm. John Shegerian: .org? Brenna Davis: Yeah. John Shegerian: www.HealthareWithoutHarm.org. Brenna Davis: And it might be www.HCWH.org. Sorry. I apologize for that. John Shegerian: OK. But if they type that into their search engine, they’ll be able to. Brenna Davis: Yeah. Amazing people. John Shegerian: But isn’t that one of the credos of even becoming a doctor or a medical practitioner? Do less harm? Brenna Davis: Do no harm. John Shegerian: Do no harm. Brenna Davis: Yup. And we take that seriously. Harm includes harm to the environment, because when we harm the environment we harm people. John Shegerian: Two last questions. Now with you becoming the Director of Sustainability at Virginia Mason, has this set off sort of a sustainability race? Are other hospital and health care organizations now putting that position in and really highlighting and making that role very important? Director of Sustainability? Brenna Davis: There aren’t many Directors of Sustainability in health care, and that was really a decision by our senior leadership to make it a senior-level position. John Shegerian: Right. Brenna Davis: And I hope there is a race. John Shegerian: Right. Brenna Davis: I have been working with – I started a group of health care sustainability professionals and we meet quarterly to talk and support each other. John Shegerian: Right. Brenna Davis: So we are pretty collaborative, even though we compete, but we are very supportive. John Shegerian: That was my last question. Do you share best practices? Brenna Davis: We do. We share. And I hope it creates competition. I hope that it creates more action on the part of other health care organizations and if it did that would be wonderful. John Shegerian: That’s perfect. Brenna Davis: And I am so supportive of my colleagues. John Shegerian: We hope you come back on the show and share more of the journey in sustainability at Virginia Mason and in the health care industry. Brenna Davis: Thank you. John Shegerian: Brenna, thank you for your time. And for our listeners out there, we’ve had Brenna Davis on. She is the Director of Sustainability at Virginia Mason. To learn more about Virginia Mason and all the great health care practices they’re using in sustainability and sustainability practices they are actually using, in health care go to www.VirginiaMason.org. Brenna Davis: Thank you. John Shegerian: www.VirginiaMason.org. You know, Brenna, you are an inspiring health care professional and also sustainability superstar, and truly living proof that Green Is Good. Thank you very much for being with us today and sharing with our audience all that is going on at Virginia Mason. Brenna Davis: Thank you and thank you for your important work. John Shegerian: Thank you.

The Intersection of Sustainability & Mobility with Ford’s Dave McCreadie

John Shegerian: Welcome to Green Is Good. This is the GoGreen edition of Green Is Good and we are so honored to have with us today back on the show again Ford Motor. But this is the first time for Dave McCreadie. Welcome to Green Is Good, Dave. Dave McCreadie: Thanks, John. It’s great to be here. John Shegerian: You know, Dave, you’ve got an amazing title. I’m going to take your card and read it for our audience. You are the Manager of Global Electrification Standards and Sustainable Business Strategies. Dave McCreadie: It’s a mouthful. John Shegerian: It’s a lot. It’s a mouthful, but it’s an important title. And let me just tell you before our audience members – and we shared this a little bit off the air – the Shegerian family, my son, Tyler, is a proud owner and driver and user of your Ford Fusion plug-in car. It is just an amazing car. Not only luxurious inside, but I’ll tell you what, it just floats on the ground and he just loves it. I mean, he just. And it saves all sorts of energy. Dave McCreadie: That car has really been at the heart of our electrification strategy to give a lot of flexibility. And it sounds like your son uses it that way too. John Shegerian: Loves it. Dave McCreadie: If you need to take a long trip on a weekend that goes beyond the electric range of the vehicle, you have always got the gas there, but for people who are living in the city and can do the frequent plug-ins, as you mentioned your son is doing. John Shegerian: Yeah. Dave McCreadie: I mean, you can go without gas for a long, long time. John Shegerian: But you overcame with that car, which we will get talking about all your products in a little while. You overcame that range anxiety so you gave everybody – like you said, there is something for everyone in that car. Before we get talking about Ford – and for our audience members most of you know how to find Ford, but I’m just going to shout it out again: It’s www.Ford.com. Dave, share a little bit about your journey. You have a very important title and a very important role at Ford in basically the redefinition of what Ford really means in terms of the opportunity to offer new cars for a new economy. Did you grow up green? Did you get the green bug in college? What was your journey like? Dave McCreadie: I think I’ve always sort of had that mental slant to me about the environment. John Shegerian: OK. Dave McCreadie: Through the time that I’ve been at Ford while I was working on the vehicles themselves a lot of that was spent working on electrified vehicles, so our pure battery electrics and our plug-in hybrids like the Fusion Electric. I did that. I worked on that car. John Shegerian: Wow. Dave McCreadie: As I progressed through a lot of that development, I started to become actually a bit more aware of and interested in sort of the larger issue of electrification. So going beyond the nuts and bolts of the car and making sure it’s quality and safe and all that. Just how can we spur more adoption of electrified vehicles, make it easier to plug-in, all of the reasons that people might cite right now for why they might not want to buy one of those cars those are the issues that I wanted to work on, and so at that point in my career, I was able to sort of make a right-hand turn over into this other sustainable business strategies group and that’s what I do now. John Shegerian: That’s awesome. Dave McCreadie: Yeah. John Shegerian: And we’re lucky you do that, let me just tell you that. Let’s talk a little bit about GoGreen. This is the GoGreen edition of Green Is Good in beautiful downtown Seattle. What is your role here today? What are you speaking about? What kind of panel? And why are you excited to be here? Dave McCreadie: I’m very excited to talk about an initiative that we kicked off earlier in the year and that our CEO, Mark Fields, made an announcement of at the consumer electronics show back in January. John Shegerian: Yeah. Dave McCreadie: And that is the Ford Smart Mobility Initiative. John Shegerian: OK. Dave McCreadie: And so that is what my talk is about later this afternoon. And really the essence of what that is is how when you look across – and globally now – the challenges that face these megacities. We can look across some of the U.S. cities and think, “Oh, traffic is horrible and congestion,” and it is, but frankly when you compare that to what other parts of the world are dealing with, it’s pretty small peanuts. John Shegerian: True. Dave McCreadie: So there are some very large and almost intractable issues that are related to transportation everywhere around the globe and Ford wants to reshape itself into a mobility company. For the first 100 years of that, following our founder Henry Ford who wanted to provide mobility to the masses, this is sort of a new way to do that. So for the first 100 years, that meant basically selling a high quality and well-priced car or truck to someone right? Well, that is changing and it’s changing rapidly, and it’s good because it’s helping to address some of these global issues. So now as a major automaker, I mean, yeah, we still make our money by selling cars and trucks, but we are starting to rethink ourselves in order to address these global issues around mobility so that we can stay true to Henry Ford’s vision of providing mobility to the masses, but now we’re going to be doing it in a way that you might not think as a traditional way for an automaker. Things like car-sharing and bike-sharing and some of the other programs that we are looking at through these mobility experiments are really what we are talking about today. John Shegerian: I want to come back and talk about specific cars like the Ford Fusion in a minute. But you brought up Mark Fields. And Ford has been on the show numerous times – I want to say four or five – and we’ve been honored to have Ford on Green Is Good. I saw Mark on television a couple times recently making a couple big announcements. One talking a little bit about the future of driverless cars. Dave McCreadie: Right. John Shegerian: Is that in the future for Ford? Do you foresee driverless cars? I know that he said the technology exists and that you’re working on it. Is this something that you are really excited about yourself, Dave? Dave McCreadie: Oh, most certainly. And those autonomous vehicles – and they are starting to become now different degrees of autonomous vehicles and one of these mobility projects that I’m working on is maybe what you’d classify as semi-autonomous. But what Mark has been saying is really critical to the mobility efforts that we have going because, I mean, it’s no secret – besides Ford – all the major OEMs are working on autonomous vehicles now. John Shegerian: Sure. Dave McCreadie: And for me, my perspective is it’s less of a question of “if” they’re coming but more so “when” they’re coming. John Shegerian: Right. Dave McCreadie: And frankly, and what I think you’ll hear in the industry, is that the technology is probably going to be ready sooner than the rest of society is. John Shegerian: Ah. Dave McCreadie: Meaning there are a lot of regulatory issues, public policy issues. Think about the insurance implications. All these things have to be worked through. John Shegerian: Worked out. Dave McCreadie: And there are still a million more discussions that need to happen on those things. John Shegerian: If you were to guess today – and I don’t want to put you on the spot but just as s fun guesstimate for our audience – if you were to foresee out when all those major issues non-technical to Ford when those policy issues can be worked out, when do you foresee autonomous cars as a whole becoming part of our society fabric like Uber and Lyft are now as you say the shared economy? Dave McCreadie: Right. It’s a fun question. John Shegerian: OK. Dave McCreadie: And I think. John Shegerian: Give a range. Dave McCreadie: Yeah. I think maybe 10 years. John Shegerian: OK. Dave McCreadie: Fifteen years from now. Because what there is going to be is that I think there is a certain group of people who already understand – and maybe it’s the younger set. John Shegerian: Yeah. Dave McCreadie: Who have already shown an inclination that they don’t necessarily want or need to drive, and especially if they live in urban areas. The fact that you would be able to go from point A to point B like you can on mass transit and read the paper or listen to music or generally not pay attention to where you are going. I think there is a certain set of people, though, who love to drive, love the experience of driving, and I think those people are going to be a little bit slower to come along. John Shegerian: So in the future, Ford will buy Uber and then we can be in an autonomous Uber car. Dave McCreadie: I think you just solved the problem right there. John Shegerian: There we go. Going back to some of your specific great and amazing cars. Like I said we’ve been blown away by the experience we’ve had with the Ford Fusion. Talk a little bit about the reinvention of Ford in your specialty. In the electrification of cars. And what models do you have for our audience members out there that you are excited to share with them now and what do you have in the immediate pipeline coming out later in 2015 and maybe 2016 that you can share and get our audience members looking and taking test drives in Fords? Dave McCreadie: Sure. Great. So right now Ford offers three plug-in vehicles. John Shegerian: OK. Dave McCreadie: The Focus Electric, which is a pure battery electric vehicle. Then there is the C-Max plug-in hybrid and the Fusion plug-in hybrid like what your son has. John Shegerian: Right. Dave McCreadie: So the range on the Focus battery electric is 80 miles. John Shegerian: Wow. Dave McCreadie: The range on the plug-in hybrids just the battery itself can give you about 20 or 21 miles of electric range and then like we were talking about earlier you’ve got the gasoline power train to back that up. John Shegerian: Right. Dave McCreadie: So one of the exciting things where the industry is heading now and certainly Ford is included in this is taking the range of these electric vehicles and really upping the ante. It’s pretty clear that range is still a major consideration – and rightfully so – for people who are considering buying an electric vehicle, although there is so much data out there in terms of the average and even the 95th percentile person how much they drive every day. And automakers are smart. They size the batteries according to that data yet people still are weary of “what if I get stuck” or whatever. John Shegerian: Right. Dave McCreadie: And part of what can help that of course is public infrastructure that’s there to help you plug-in the vehicle when you are getting short. John Shegerian: Great point. Dave McCreadie: And so there are a few things that can be done on the infrastructure side to really help the adoption of the vehicles. but the point I was going to make is that what you’re going to start to see is the range of these vehicles start to become more and more so that whereas the first generation of battery electrics you see were between 70 and 80 miles, this second generation that is coming out from Ford and others is going to be. John Shegerian: Break 100 soon? Dave McCreadie: Significantly more. I mean I can’t really talk through what exactly is coming. John Shegerian: Right. But soon it’s going to be extended from 80 and above. Dave McCreadie: Right. Yes. John Shegerian: So more and more people will be enticed to come in and get over their range anxiety. Dave McCreadie: That’s right. John Shegerian: That’s exciting. Dave McCreadie: And like I said coming along with not only having more battery to help you get where you need to go. Through the progression of the last number of years there has been a great inflow of public infrastructure out there whether you’re talking what some people classify as slower charging, which is just a lot of the chargers that you’d see around the city right now. John Shegerian: Yeah. Dave McCreadie: But what is also coming to support is high-powered DC chargers. John Shegerian: Wow. Fast charge. Dave McCreadie: Fast charging, which is almost more akin to the time that you spend – five minutes – at the gas pump. John Shegerian: So you’ll be able to run in, pick up your dinner at Whole Foods while you’re charging your car there, and literally, you’ll have a full charge for the next day. Dave McCreadie: That’s exactly right. John Shegerian: That’s awesome. For our audience members that just joined us we’re so excited and really lucky to have with us Dave McCreadie from Ford. Let’s just say, he is one of the top bosses in electrification and also sustainability. Dave McCreadie: Wow. You’re really pumping me up. This is good. John Shegerian: At Ford. We’re talking about some of your products. So right now you have three in the car category. What other lines are going to get electrified in the coming months and years do you think? Dave McCreadie: Well, I think what you’re going to see and it’s not only because of consumer demand, but there is also another driver for the auto industry which is regulation. John Shegerian: Oh, OK. Dave McCreadie: Throughout the U.S., there are states that are classified as “green states,” and there are mandates in those states that every automaker needs to sell a certain percentage of their total fleet to be zero emission vehicles or partial zero emission vehicles. John Shegerian: Wow. Dave McCreadie: And if that doesn’t happen, there are pretty stiff penalties to the automakers for not doing so. So like I said, there is a consumer poll here and there is also a regulatory. John Shegerian: Push. Dave McCreadie: Government policy push as well. So in order to get to those numbers, what you are going to see is the technology start to proliferate across the lineup beyond just the small stable of cars, which Ford is out with right now. John Shegerian: So when you come on a year from now, more of your vehicles will probably be electrified and succeed. Dave McCreadie: That’s the direction in which things are headed. John Shegerian: That’s exciting. Let’s talk a little bit about social awareness and consumer adoption. Let’s talk geography. We are sitting here in this beautiful city of sustainability and innovation, downtown Seattle. They are lucky that the GoGreen Conference – this is the GoGreen edition of Green Is Good for our audience members that just joined. We are here today – you and I and other thought leaders – at this conference and Seattle, Vancouver, San Francisco, Portland, L.A. Dave McCreadie: Right. John Shegerian: Is the adoption of your great electric cars and vehicles going left coast to East Coast or is there some other sort of social adoption going on that you can share with our audience members? Dave McCreadie: It’s a great question, John. Your perception is largely correct. John Shegerian: OK. Dave McCreadie: I mean when you look at the markets in which Ford is selling the majority of its plug-in vehicles, it’s definitely on the West Coast here. John Shegerian: OK. Dave McCreadie: And that is perhaps because of social attitudes and greater awareness perhaps of the environmental concerns. John Shegerian: Interesting. It seems like also there is a Millennial movement. Just employees of my company and others that want to migrate to Seattle, Portland, San Francisco. There is also a movement of Millennials to some of these innovation and sustainability hubs and cities that have leaders that really get it so maybe there are also concentrations of potentially – like my son who is 22 – your user base who is really excited about electric cars. Dave McCreadie: That’s right. John Shegerian: So maybe some sort of combination is going on. Dave McCreadie: There is. John Shegerian: Yeah. Dave McCreadie: And I want to key off a point that you just mentioned about leaders in some of these cities that get it. John Shegerian: Yeah. Dave McCreadie: So here is a great example of something that is not in the West Coast. I’m not sure if you are aware but the city of Atlanta over the course of the last, I think, couple years now has been the highest rate of adoption – I don’t know if it’s per capita or whatever. John Shegerian: Yeah. Dave McCreadie: Of electric vehicles in the country. Even with California. John Shegerian: No kidding. Dave McCreadie: And it’s because of the incentives that have been placed on the vehicles through the state and local government. So, I mean, that is still very much – that is another one – getting back to some of the issues with adoption. John Shegerian: Yeah. Dave McCreadie: One of the hurdles that the automakers are still working through and trying to get over is the fact that in general when you are talking about two comparable cars, one is an electric vehicle and the other is not the electric vehicle is usually more expensive. John Shegerian: Right. Dave McCreadie: And it’s because of the battery and these batteries are very expensive singular components of the vehicles and so while all the automakers and others in the industry in general are madly rushing to try to invent the cheaper, long-lasting, quickly recharged battery and things are heading in that direction, but in the mean time, customer adoption really needs to be helped by continued government involvement with incentives and things like that. John Shegerian: That’s a great point. I never thought of it that way, but just in California when my son was buying his car, we saw that if he put the label on – the sticker – outside of his car, you get to ride in the carpool lane. Dave McCreadie: That’s a big incentive. The HOV lane. John Shegerian: The HOV lane just with one person and in the city. And other city leaders such as Santa Monica not only do they have lots of charging stations and Whole Foods and other great brands that are really getting excited about this revolution, but also you can park on the streets there and you don’t have to feed the meters. Dave McCreadie: That’s right. John Shegerian: For free. Dave McCreadie: That’s right. John Shegerian: So I mean like you said there are lots of great government leaders now both locally and on a statewide basis that are pushing the adoption of your great and very innovative cars. We’re down to the last three or four minutes or so, Dave, and I want to go back to Mark Fields and combine that with what you are doing. Recently, he also announced that you guys are opening up an office and innovation hub in Silicon Valley. Dave McCreadie: That’s right. John Shegerian: Talk a little bit about how that interrelates with what you are doing exactly in mobility and what can we expect to be coming out of Silicon Valley. Dave McCreadie: Sure. That’s a great question. So yeah we just were out there in late January for the grand opening of that lab. John Shegerian: Yeah. Dave McCreadie: And it’s very exciting and really dovetails just perfectly into the innovative nature of Ford Motor Company. And really the charter out there is kind of coming from a confluence of factors not the least of which is the connective car and the wireless mobile networks and the bandwidth and low latency that they have and just really the ubiquity of – I mean, everywhere you go now your cell phone works, right? John Shegerian: Right. Dave McCreadie: And works well. And that pipeline into the vehicles is allowing for enabling so many innovative features – many things we haven’t even thought of yet – for just services that you can one day have as a customer while driving your vehicle. And so that lab out there really has as part of its purview is to embrace that connected car and to help Ford navigate through where we want to go, what services can we provide, again, for not only just electrified vehicles but all vehicles, from everything ranging from technology to help you park easier to just overall connectedness. John Shegerian: That is so interesting. You know which can help also with real-time traffic reports. Dave McCreadie: Very much. John Shegerian: Or also shortcuts to get places so you save energy getting to places. Also, some folks have told me outside of the car industry is there is actually technology coming to cars that is somewhat akin to the wearables that are now coming out in Apple Watches and other great electric wearables such as you’ll be able to – when people are holding the steering wheel and touch the steering wheel – be able to get your…. Dave McCreadie: Vital signs. Yeah. John Shegerian: Vital signs and other things that are downloaded to either your car and announced to you or on your dashboard or something. And is this part of what the innovation lab over there at Ford is doing? Dave McCreadie: Yeah. I mean it’s really wide open. John Shegerian: So exciting. Dave McCreadie: There are so many things that are on the horizon for that and that lab is squarely right in the middle of a lot of it so it’s been really exciting. John Shegerian: Well, we are going to let you go today, Dave. We know you have a panel coming up but we are going to invite you back to continue the journey. Dave McCreadie: I’d love to be back. John Shegerian: To continue the journey of sustainability and mobility at Ford and keep sharing with our audience which is very interested in these important topics. For our audience members out there to learn more about everything Dave is doing with his colleagues at Ford, please go to www.Ford.com. Dave McCreadie, you are an inspiring business leader, sustainability superstar and truly living proof that Green Is Good. Thank you very much for being with us today. Dave McCreadie: Thanks so much for having me, John. John Shegerian: Thank you very much. Dave McCreadie: Great.

Creating a New Paradigm for Energy Utilities with MEETS Coalition’s Rob Harmon

John Shegerian: Welcome to another edition of Green Is Good. We are so honored to have with us Rob Harmon. He is the Director of the MEETS Coalition, among other things, which we are going to talk about today. Welcome to Green Is Good, Rob. Rob Harmon: Great to be here. Thank you. John Shegerian: You know, Rob, this is the GoGreen edition of Green Is Good. Tell me about why you are here today and why the GoGreen conference is so important to what you are doing and trying to accomplish at the MEETS Coalition. Rob Harmon: Well, there are a lot of people here who are really interested in solving big problems. John Shegerian: OK. Rob Harmon: And the MEETS Coalition was created and the MEETS transaction structure for energy was created to try and get around the things in the energy efficiency marketplace that are preventing us from doing energy efficiency at scale. So I like to go after problems where you’ve got a lot of people who want to do something and a lot of people who want to have it happen and something that is broken in the middle, and I like to try and figure out if I can fix that broken thing, and we did it with this so I am pretty excited. John Shegerian: And we are talking about today creating an energy utility that really works for the future. Rob Harmon: Yeah. We’re talking about how the utilities that already exist today can survive in a world where society is asking them to do much deeper energy efficiency. And in the existing transaction structure that they use, when they do energy efficiency, they sell less of their product. John Shegerian: Got you. Rob Harmon: And we don’t normally ask businesses to do that, right? And there are good reasons why we’d ask them to do that and there are good reasons for them to do it, but it is still a real challenge if you want to do it at scale. It’s one thing if you were to ask an apple farmer to sell one less apple, but if you ask him to stop selling half his apples…. John Shegerian: There’s a problem. Rob Harmon: It’s a bit of a problem. So we think we’ve got a solution that will really help utilities address that problem, which will also help building owners go deeper in their building and investors be able to invest for longer terms and a bunch of other things that are important. John Shegerian: Before we get talking about the MEETS Coalition and your being the Director there, plus also the other company, the EnergyRM, where you are the President and CEO, I want to talk a little bit about the Rob Harmon story. Talk a little bit about your journey in sustainability, where you got inspired, how you got fired up about it, which led to this great leadership role that you have today. Rob Harmon: Well, it’s a long story, and it started probably when I was 16 and my father put together an energy expo in Brooklyn, New York, where I lived. John Shegerian: Really. Rob Harmon: This was 1981. John Shegerian: Wow. Rob Harmon: And I saw my first electric car. And what I also saw there was a group of people – the vendors, the same kind of people you see here today – who were making a living doing things that helped other people and helped the planet they were living on. So they were helping the economy and helping all of us and helping the planet, and I went, “Well, what’s wrong with that?” And I kind of never looked back. Now when I went to college, I was a Financial Aid student in college, so I had to do a work study and I saw in the college, I guess it was the newspaper, there was this job for “energy assistant.” And so I read the description and I went to talk to the guy who was the energy manager on the campus and we hit it off, and so I was the guy on the campus that would go around and read the energy meters and put insulation up on the walls and weather stripped the doors. John Shegerian: That’s great. Rob Harmon: This was in 1982. John Shegerian: And which college was this at? Rob Harmon: Hampshire College in Western Massachusetts. John Shegerian: Western Massachusetts. OK. That’s awesome. So you really had the bug very young. Rob Harmon: Really young and I built my whole career around it. So it’s all I’ve really got. John Shegerian: And so you’re a Brooklyn homeboy? Rob Harmon: South side of Chicago and then Brooklyn. John Shegerian: Which are two cities and two areas of this country that are on fire for green right now and sustainability. RG: That’s right. John Shegerian: That is just great. So going back to where we are today at the GoGreen conference here in beautiful downtown Seattle and this MEETS Coalition, which you are the Director of. And for our audience members out there that want to learn all about Rob and his colleagues’ great work, you can go to www.MEETSCoalition.org. What are you doing at MEETS, and explain the interrelationship of your job at MEETS and also EnergyRM and how they interrelate and how you’re really helping change the world and make it a better place. Rob Harmon: Well, EnergyRM – the technology company that I run right now – provides the energy efficiency meter that is the underpinning for the transaction structure. John Shegerian: Got you. Rob Harmon: And when I came on to serve as the CEO, the idea was that EnergyRM was going to be the development company with a meter that did all these developments. And what we discovered of course very early on as we moved through it was that you couldn’t really be the meter company and the developer, because nobody is going to buy stuff from you if you’re telling them how much they’re going to buy. So what we decided to do was to separate the meter company from the folks working on the transaction structure. At the moment, I’m wearing both of those hats and we’re working through – in the early days you’ve got to wear multiple hats – but the idea here is that the MEETS Coalition structure is much more of a nonprofit structure where we’re educating people around the transaction structure that’s why it’s a .org. John Shegerian: Yeah. Rob Harmon: And EnergyRM is really a straight up technology company. John Shegerian: That sells technology for a profit. Rob Harmon: It’s a SAS company. Software and service. It’s all in the cloud. John Shegerian: Talk a little bit about energy utilities. What is broken with the model, and why is your model better? Rob Harmon: Well, really nothing was broken about them for a really long time. It’s important to understand the reason we set them up was to electrify the country, and we started this probably about 100 years ago. When we were doing that, there weren’t that many people, but the population was growing fast and there was an awful lot of resource so we put incentives in place to make them go and extract resources and burn them and build a whole bunch of power lines and electrify the place like crazy because there was this great correlation between extracting resources and improving the quality of lives. John Shegerian: Right. Rob Harmon: It was a direct correlation based on the more you can dig up and burn the better it got for everybody, right? John Shegerian: It’s all about speed and growth. Rob Harmon: Well, that’s right and that works really well when you have a relatively small and growing population and you have a lot of atmosphere or a lot of resource. John Shegerian: Right. Rob Harmon: When you start running out of the atmosphere’s ability to absorb all of that and you have a big huge population, those incentives get you the wrong outcomes, right? John Shegerian: That’s right. Rob Harmon: They don’t get you the outcomes you want, and so what’s happening now – we’re beginning to see everywhere now – is that the rapid extraction of especially fossil fuel resources the faster you extract those now the lower the quality of life. John Shegerian: Right. Rob Harmon: It’s going the other direction. But all of the incentives are still 100 years old, right? So it wasn’t set up wrong to begin with – it was set up right to begin with – now we just need a different set of outcomes. John Shegerian: We need to shift the paradigm. Rob Harmon: Well, we do. And the problem of course is that people are used to the old incentive structures, and actually, it functions kind of like an addiction. “Well, this is the way we’ve always done it.” “This doesn’t hurt me.” “I’m only doing my little part.” It kind of has some similarities to addiction. And what happens is now that the regulators are saying to the utilities, “We want more energy efficiency out of you.” What they’re saying is, “But wait a minute – if this scale, we’re selling half the units we’re selling now, how do we survive in that world? If we’re not building power plants and we’re not building big transmission lines, which is where we make all our money and our unit sales are going away, I thought you guys wanted us to be around to give you electricity and stuff,” you know? So we’re at this kind of train wreck place. So what we did with MEETS, which is the Metered Energy Efficiency Transaction Structure. John Shegerian: OK. Rob Harmon: Nickname. That’s why we call it “MEETS” because that was way too long. John Shegerian: Right. That’s good. I’m glad you framed that out. Rob Harmon: But the idea here is that building analytics and software is finally good enough that you can build the piece of technology that the EnergyRM team built. John Shegerian: OK. Rob Harmon: And what it does to keep it sort of at a very high level. John Shegerian: Yup. Rob Harmon: What it does is it meters the difference between how a building would perform or did perform pre-retrofit. John Shegerian: OK. Rob Harmon: And how it’s performing after the retrofit. John Shegerian: OK. Rob Harmon: How it’s performing after the retrofit is pretty easy because you have the utility posts, right? John Shegerian: Right. Rob Harmon: So what you’re really trying to do is maintain an algorithm that tells you how the building would have performed had it not been retrofit, which is really not as hard to do as you think it might be. So I’m not going to get into all the details. John Shegerian: No, no. Rob Harmon: But essentially, think about it this way. If you have that upper line, which is how the building would be performing if it hadn’t been retrofitted. John Shegerian: Right. Rob Harmon: And you now have the new utility bills, all you have to do is subtract one from the other and you know how much energy efficiency you are getting. John Shegerian: Wow. Rob Harmon: What happens now is you have another meter reading on the building. Your first meter reading is the normal utility bill. John Shegerian: Right. Rob Harmon: Your second meter is how much energy got saved. John Shegerian: Wow. Rob Harmon: And they are both measured in the same units. Let’s say kilowatt hours for electricity. What happens then, because you are metering it, you can start to transact on it as a real thing. So normally what we do with energy efficiency is we say, “Hey, we’d like you to install energy efficient light bulbs; here is five bucks. Why don’t you go do it?” and then we kind of hope you do it after we gave you the five bucks. John Shegerian: Right. Rob Harmon: Maybe you put it in a closet and you never turn it on. We’re not metering any of that usually, right? John Shegerian: Right. Rob Harmon: So what this does is it allows the utility to see on a meter how much energy efficiency the building is producing. John Shegerian: Wow. Rob Harmon: And there are two big problems with the energy efficiency paradigm today. One of them is what’s called “split incentives” and what that means is, let’s say you own a big commercial office building and it’s full of tenants and they pay the energy bills. That’s the way it usually works, right? John Shegerian: Right. It’s a pass-through. Rob Harmon: So now some guy comes to you and he wants you to upgrade your building because it’s the right thing to do, right? You say, “OK, so I’m going to go borrow a million dollars and my tenants’ energy bills are going to go down. How do I pay back the million dollars?” and the answer, of course, is “Well, you can’t,” so you don’t do anything, which is the reason that all the commercial office buildings in America – the vast majority of them – are really, really energy inefficient. John Shegerian: Got you. Rob Harmon: Because there is no investible proposition, because the tenants’ bills go down so the tenants get all the benefits of better lighting and all that stuff and their energy bills go down and then a year later they leave and they don’t care anyway. The tenants in the buildings, they’re trying to make coffee or run a law firm. John Shegerian: They’re transient. Rob Harmon: They’re transient and they have another business they’re paying attention to. John Shegerian: Right. Rob Harmon: And their energy bill in the commercial office building is a very small portion of their operating expenses. John Shegerian: That’s the noise to their core business. Rob Harmon: Exactly. So oddly, what we’re doing in the current transaction structure is we’re giving them all the cash flow even though they don’t care and we’re taking the cash flow away from the investors and the building owners that we would need to pay back the loans that we used to upgrade the building so no wonder it doesn’t work, right? John Shegerian: Right. Rob Harmon: And at the same time the utility is seeing the energy bills fall and all their units go away. So you’ve got two pretty broken things here. So utilities are having a hard time liking it. Even the regulators want them to do it, so they do what the regulators tell them. John Shegerian: The landlord is not all that happy. Rob Harmon: Well, that landlord doesn’t really care because the tenants are paying the bills and he is not going to borrow the money and the tenants don’t really care. That’s kind of broken. So what we did, because we can meter the energy efficiency, we take that meter rating and we deliver the meter rating of the energy efficiency in kilowatt hours to the utility. John Shegerian: Got it. Rob Harmon: The utility then takes that meter reading and says to the tenants in the building or the building owner, “You now have two meters on your building. One of them is the energy we’ve delivered to you in kilowatt hours and the other is the savings in kilowatt hours.” John Shegerian: OK. Rob Harmon: If you add those two together what you get is the old energy bill for the building. John Shegerian: Right. Rob Harmon: Savings plus current use is the old use. John Shegerian: Right. Exactly. Rob Harmon: And all of a sudden two things happen. The utility no longer loses revenue because they are charging the building for both things. So they are charging the same amount to the building that they’ve charged before which means that they don’t have any lost units in the system and they don’t have any lost revenue so the utility is happy. John Shegerian: They’ve been made whole. Rob Harmon: They’ve been made whole. The other thing that happens is you have all this cash now that is in the transaction because the utility just collected it all. It didn’t go away. John Shegerian: Right. Rob Harmon: So the utility then takes a chunk of that money and maybe some incentive money they have because now they have an extra kilowatt hour they can sell somewhere and they combine those numbers in some fashion that they are comfortable with into what they call a “power purchase agreement” which is the way they buy energy from wind farms and gas plants and nuclear power plants and other things. The way utilities tend to transact on buying energy is either with facilities they own or facilities that they contract with in the public sphere. So what the utility can then do is sign a power purchase agreement for energy efficiency. And what we did here in Seattle with Seattle City Light and the Bullitt Center was we put together a 20-year power purchase agreement between the Bullitt Center – and actually it was the Bullitt Foundation who was the investor – and Seattle City Light. So the Bullitt Foundation, which ponied up all this money to make the building greener, now has a 20-year stream of revenue coming from Seattle City Light – very credit-worthy enemy – to repay those loans. And the tenants get this astonishingly beautiful space and they pay the same energy bills they’d pay in a regular space so, what, no one cares, right? John Shegerian: Right. Rob Harmon: So all the cash flow gets restored, the utility remains whole and the investors have a 20-year stream of cash flow to repay the investment. You have now basically taken the model we’ve used to build power plants for 100 years, and you have used that model to transform the energy market again. The utilities use this model to build all this infrastructure and now we’re going to let them use the same model to transform the infrastructure into green infrastructure. John Shegerian: That’s amazing. Rob Harmon: It’s marvelous. John Shegerian: So you’ve done that here at the Bullitt Center? Rob Harmon: Mmhmm. John Shegerian: A couple of questions. Is this now the new paradigm, and now can you take this nationally? Can you take the show on the road? Rob Harmon: Well, the reason we have the MEETS Coalition is because there are people all over the country who are interested in trying to do this, and what we want is to be able to get them all the information. It took a long time to do what a colleague of mine calls “running the pipe cleaner through the transaction structure.” I mean you have got to have a meter services agreement. You have got to have a PPA contract – power purchase agreement contract. John Shegerian: Right. Rob Harmon: You have got to have agreements between the investor and the building owner. All this paperwork. And when you do it for the first time. John Shegerian: Not easy. Rob Harmon: It’s not easy. I have now done three things in my career that people told me couldn’t be done. John Shegerian: Yes. Rob Harmon: Every one of them takes three years to do the first one, right? John Shegerian: Right. Rob Harmon: Once you’ve done the first one and kind of look at it and kind of photocopy, it it goes much faster. John Shegerian: Right. Rob Harmon: So we’ve penned this deal and it’s underway. John Shegerian: OK. Rob Harmon: And people around the country have been calling in saying, “How do I participate in this? How do I learn more? How do I get the documents? I don’t want to write this thing.” John Shegerian: Recreate the wheel. Right. Rob Harmon: And I have a four-year-old son. I don’t want them recreating the wheel. I want them to do this as rapidly as possible. John Shegerian: Right. Rob Harmon: So we created the coalition around the idea that this information – the coalition is to cover its own costs, but it is not designed to make a profit. John Shegerian: Right. Rob Harmon: So the idea is that people can join. They get all the materials. They get some access to the people who know stuff about how MEETS works, etc. It’s kind of like going to a conference but you’re in it for the whole year. John Shegerian: That’s awesome. So what is the next step? What does the future hold now? Rob Harmon: Well, it will be really interesting to see what happens now as the deal rolls out. I have been very focused over the last couple of years on getting this deal right and I really have found that you can waste a lot of time in your life. I have old stories I could tell you, which we don’t have time for, about how when you’re doing something like this you can get too spread out. So I get very, very focused when I work on stuff like this and now that the deal is underway I think what we’re going to start doing is demonstrating to people in other places how they can do the deal the same way. So we are in the “OK time to go, show time” phase of the game, and we are really looking forward to that. John Shegerian: Now the Bullitt Center was a new building. Rob Harmon: Yeah. John Shegerian: It’s going to work on new buildings. Rob Harmon: Yup. John Shegerian: Will it also work on retrofits of older buildings? Rob Harmon: Yes. In fact, it was originally designed to work on retrofits of older buildings. We chose the Bullitt Center because there were fewer moving parts, basically, and if you want to clean out the transaction structure, you don’t want to be waiting on the utility to agree to the transaction structure while somebody is waiting to do construction. John Shegerian: Right. Rob Harmon: So the construction was already underway, and we were really just contracting around how the energy efficiency gets paid for. In a retrofit, it’s actually to some degree easier because once everybody is clear on the transaction structure, it’s easier because you already have the energy data from how the building used to perform. You know how the building performed in the past so you can project that information forward dynamically – that’s another complication of this. John Shegerian: Got you. Right. Rob Harmon: You can project that forward and then it’s really obvious the difference between what the utility used to have to deliver and what the utility is currently delivering after the retrofit. So all you’re doing is metering the difference between the old building and the way the old building would have kept performing and the new building. John Shegerian: What are the odds that this thing becomes the new paradigm that goes national and beyond in the coming years? Rob Harmon: Well, that’s a great question. What we’re seeing is we’re seeing two things. We’re seeing utilities and regulators getting concerned because they’ve already given away all the light bulbs. How do they get more energy efficiency, right? So they’re running into those problems. The other problem is that a couple utilities are losing nuclear power plants. Being nuclear power plants, how do you replace that power? Well, you can’t build a fossil facility near a population anymore. People won’t let you do that anymore. John Shegerian: Right. Rob Harmon: So how do you replace that? You can’t replace all of it from far away because you need some support locally. So if they can meet that power need from efficiency at scale, then they don’t need to build the next power plant. John Shegerian: Got you. Rob Harmon: Right? John Shegerian: Got you. Rob Harmon: But you can’t do that giving away light bulbs. You’ve got to do it by retrofitting these buildings deeply. John Shegerian: Right. Rob Harmon: Which is of course exactly how you get more jobs; it’s exactly how you free up more energy stability for your economy; it’s how you lower rates over time. There are all kinds of other benefits to it, and it just hasn’t been possible up to now because we haven’t been able to meter the energy efficiency. Now that we can meter the energy efficiency the world is our oyster. John Shegerian: Sky is the limit. Rob Harmon: Sky is the limit. John Shegerian: Sky is the limit, and that is a great ending for our visit with Rob today. Rob, just very inspiring stuff. For all of you that want to learn more about the MEETS Coalition and this new paradigm that Rob and his colleagues have created, please go to www.MEETSCoalition.org. You know, Rob, you are an inspiring sustainability innovator and truly living proof that Green Is Good. Thank you for being with us today. Rob Harmon: Thank you. John Shegerian: Thank you.

Being a Sustainable, Profitable Business with Keeney’s Office Supply and Interiors’ Steven Sterne

John Shegerian: Welcome back to Green Is Good. This is the GoGreen edition of Green Is Good. We are here in beautiful downtown Seattle and we’re so honored to have with us Steven Sterne. He is the General Manager of Keeney’s Office Supply and Interiors. Welcome to Green Is Good, Steve. Steven Sterne: Thank you. It’s great to be here. John Shegerian: First of all, you’re wearing the perfect shirt for GoGreen and for Green Is Good. You’ve got the green shirt on. We’ve got the whole thing covered here, the green tie, the green shirt, we’re set. You know, before we get talking about Keeney’s and all the great stuff that you’re doing in green there, we have some wonderful products here. Can you share a little bit about the Steven Sterne story? Where did you grow up, and where did you get so excited about and interested in sustainability and green? Steven Sterne: I grew up in New Orleans, Louisiana. John Shegerian: Wow. Steven Sterne: I studied Science in Society in college in Connecticut in the 1980s, double-majored with Theatre. I moved to Seattle to go to graduate school to get my MFA in Directing Plays and studied at the University of Washington from 1985 to 1987, got my degree and realized you can’t make any money directing plays. A friend of mine who did a lot of theatre with me in college worked part-time at Keeney’s Office Supply so he got me an interview. I had done retail my whole life, and I came to work as a retail sales person and I’ve been at Keeney’s since 1988. John Shegerian: Wow. Steven Sterne: Yeah. John Shegerian: Twenty-six or so, or 27 years. Steven Sterne: Twenty-seven-plus. John Shegerian: Wow, that’s awesome. So share with our viewers out there that have never heard about Keeney’s before – and for our audience members, it’s www.keeneys.com – what is Keeney’s and what does it represent here in Seattle and why is it green? Steven Sterne: Well, Keeney’s is a woman-owned, locally-owned company founded in 1947. John Shegerian: Wow. Steven Sterne: The founder, Bob Keeney – no longer with us – sold the company to his daughter, Lisa, in the early 1980s. John Shegerian: OK. Steven Sterne: Bob was an outdoorsman, fisherman, lived on Whidbey Island and on the East Side, and believed in wilderness and preserving wilderness. He passed those values on to Lisa. Lisa had our company as one of the leaders in green offices in the 1990s. We have a plaque on our wall from 1993 showing that we were a sponsor for Offices in the Green. John Shegerian: Wow. Steven Sterne: And it was a great fit for me having studied Science in Society and the impact of technology on the environment to work for a company that had such a great sustainability story. John Shegerian: And Lisa is still the boss? Steven Sterne: Lisa is still the boss. John Shegerian: How big is Keeney’s, and how many stores do you have? Steven Sterne: We don’t run stores anymore. We closed our retail in the early 2000s to focus on commercial business. John Shegerian: OK. Steven Sterne: We are the vendor to King County, the vendor to the Seattle Mariners. We have contracts with the Port of Seattle, the City of Seattle and many, many smaller entities, law firms, Zeus theaters. John Shegerian: So you’re selling your product online and office supplies online and interior stuff online? Steven Sterne: We mostly sell interiors by having our sales people go out and do consultive selling with sales people. John Shegerian: OK. Steven Sterne: A big part of our supplies business as well. But we do have an open website. We can set up anybody to buy on our website any time. John Shegerian: At www.keeneys.com. Steven Sterne: www.keeneys.com. John Shegerian: So talk a little bit about buying green supplies without overspending. Steven Sterne: Sure. John Shegerian: I’ve got some of them here. Share that message and why it’s important and very doable. Steven Sterne: Completely doable. About seven years ago, the City of Seattle went out to bid for green office supplies. They provided anybody who wanted to bid a list of items they bought the most and our jobs as vendors were to come back with pricing on those items and then pricing on greener alternatives that cost no more than 10 percent more and that taken as a package would result in cost savings, and we were able to do that. John Shegerian: Wow. Steven Sterne: We have always believed in carrying green products in our own warehouse, so we buy them better than the products we sources through wholesale channels, and we can save people money as long as we know the full story of what they’re buying and how they’re using office supplies, and that’s why our consultive selling is so important when we want to set up a new customer to buy office supplies from us. We want to know what they’re buying, how they’re using it. We want to know if they’ve set their printers to duplex. If they’re not buying remanufactured toner, we’ll get them a cartridge from Magnum our local toner remanufacturer to try. Tremendous cost savings there without any loss of quality at all. John Shegerian: Steven, why is sustainability and buying locally so tied together and so imperative? Steven Sterne: You want to sustain your local community as well as the greater environment. John Shegerian: Right. Steven Sterne: One of the best ways to do that is to keep dollars in the community. There have been studies done over the years showing anywhere from three times to seven times the value of your dollar to your community if you spend it with a locally owned company. A locally owned company invests more, does their charitable donations to local companies, all of the employees are local. John Shegerian: Speaking of employees how many employees do you have at Keeney’s? Steven Sterne: Thirty-six employees. And just a year ago we had 30 so there’s tremendous growth. There is a furniture boom happening in Seattle right now. Our interiors division is doing better than ever. And we’ve added project management help, outside sales people, installers, delivery people, warehouse people. John Shegerian: And you say “furniture boom,” has it been a sustainable furniture boom? Steven Sterne: Yes. The people that we’re selling furniture to care a great deal about buying projects that help them get LEED points, that help their workers work more sustainably, lower panels, better light, better airflow, tons of sit-to-stand. John Shegerian: That’s so nice. So 36 employees. How do you make “green” your culture and your DNA? Besides the owner and besides you, how do you get the other 34 or so employees into sustainability as much as the both of you are? Steven Sterne: It’s not difficult. We live it in our office, at our warehouse, our break room are all set up to be sustainable. We had Waste Management and the City of Redmond come out and help us become a zero-waste facility a few years ago and that took work from all of our employees. Our warehouse managers found a place for us to take all the Styrofoam we get in packaging and get it recycled. John Shegerian: Wow. Steven Sterne: We used to go to Kent to the recycler for Styrofoam once a month. Then our sales people started saying, “Why don’t we do this for our customers?” So now we pick up Styrofoam, and we go to Kent with Styrofoam a couple times a week. John Shegerian: Wow. Steven Sterne: We’ve gone from having four dumpster pickups a week and one recycling pickup a week to eight recycling pickups a week and a dumpster pickup every two weeks. John Shegerian: We’re here today at the GoGreen conference here in downtown Seattle. Why is it so important for Keeney’s to be at GoGreen, and what is your role at GoGreen today with this wonderful conference? Steven Sterne: We have been at every GoGreen Seattle. This is the fifth year that GoGreen has been here. John Shegerian: Wow. Steven Sterne: We’ve been an exhibiter and a sponsor every year. It is our biggest marketing event of the year. We budget for it. We provide furniture for the stages here, furniture for the lounge. We give away a tremendous amount of useful, sustainable, imprinted swag, which we also sell to anybody who wants to buy it from us. It’s a great day for us. Our best prospecting day of the year. John Shegerian: So you don’t actually speak at the event; you actually have a booth here. Steven Sterne: We have a booth here. We did a little mini-session on ergonomics earlier. We’ll speak if they ever ask us to. John Shegerian: Talk a little bit about ergonomics and sustainability. How are they tied together? Steven Sterne: Again, it’s a matter of sustaining the employees in the work environment. You want your employees to be able to work productively and happily. If that means finding a way for them to stand part of the day, they have a chair that supports them, a keyboard tray that puts the keyboard at the proper height that they can work in alignment. All of that creates a sustainable workforce that reduces insurance claims so it’s good for the bottom line and it means that you have less turnover. John Shegerian: Talk a little bit about sustainability and green products. Show us some of the green products you’ve brought here today, and how big is your line of green products? Steven Sterne: We have tens of thousands of green items. John Shegerian: Wow. Steven Sterne: Almost anything you can think of we have a green alternative for it. These notebooks come in different sizes. This is a little tiny one with our logo on it made by Guided Products. They’ve changed their name three times. I still want to call them “Rebinder” because they started out as a binder company. They’re called Guided Products; they’re in south Seattle; they make binders, notebooks, CD holders, 100-percent recycled paper stock, 100-percent recycled covers. Great product. Very inexpensive and easy to get imprinted. Cardboard pen – bamboo clip, recyclable plastic on the bottom, refillable. Great product. This is a rapid stapler, a little tiny one that we’re giving away today for people at GoGreen, 100-percent recycled plastic. This is a great product to talk about. Whiteboard marker – you can refill this marker four times. John Shegerian: No! Steven Sterne: Yes. Yes. John Shegerian: I’ve never heard of such a thing. Steven Sterne: It’s no odor at all,so it’s completely non-toxic and it doesn’t ghost. No VOCs. John Shegerian: Oh wonderful. Steven Sterne: So it’s cost savings and it’s a sustainable product. Sustainability means you don’t waste anything and that it has to save money. John Shegerian: Who is in charge of sourcing all these amazing products? Steven Sterne: We have a great purchasing department. I would lie and tell you it was 30 people, but we only have 36 total. It’s two people. They are incredible dedicated. They do all of our purchasing, but they have tremendous depth of knowledge in sustainable products. John Shegerian: No kidding. So so many of your products are as green as these so that is what the differentiator is for Keeney’s versus any other office supply type of company. Steven Sterne: It’s partly that. Though everybody in the office supply business has access to many sustainable office supplies. The difference with us is we have the expertise in our staff from purchasing to customer service, sales, sales management, sales administration. We can take the list of things you buy now and give you a list not only of sustainable alternatives but the cost difference and the reason we consider it sustainable. We leave the customer in charge of that. We’re not “green Nazis” by any means. We’ll sell people whatever they want to buy. But we have the expertise to guide them to make the choices that their business wants to choose in order to reflect their business’ values. John Shegerian: Got you. For our audience members that just joined us, we’ve got Steven Sterne. He is the General Manager of Keeney’s Office Supply and Interiors. You can find Steven and his colleagues at Keeney’s at www.keeneys.com. We’re at the GoGreen edition of Green Is Good. Steven, one of the most important things when it comes to sustainability is carbon footprints. What does logistics look like for Keeney’s in the delivery process, and how involved is Keeney’s with greening the logistics of you delivery process? Steven Sterne: It’s a constant, constant place that we pay attention. Every time we need a new truck, whether we’re expanding routes or something breaks and we have to replace it we look at every alternative that we have. So far we’re buying diesel trucks. That’s what we buy. We’ve looked at liquid natural gas, for instance, but there are only three places in our area where we can buy it, so we’d have to waste so much time idling in traffic to get to it it doesn’t make any sense for us to convert our fleet. John Shegerian: Right. Steven Sterne: So what we do is we have smaller sprinters, which get 25, 26 miles to the gallon on our more distant routes, where the trucks are less full and the distances are greater. In the core of downtown Seattle, we use Isuzu box vans. Their gas mileage isn’t so good, but we don’t need that many of them on the road where traffic is congested in order to make all the deliveries because they are bigger, higher capacity. We have flexible routing, so every day the truck that goes on route three might have some route four stops and route two stops if route three is less busy that day. Our warehouse manager works very hard to make sure that everybody is out before rush hour and everybody is back before rush hour because in Seattle traffic is very bad, especially at the ends of the day, and we want to beat that on the early side both ways. John Shegerian: So your plant warehouse manager manages the logistics of the whole company. Steven Sterne: Daily. John Shegerian: Wow. Steven Sterne: Daily. He is a very, very smart guy. His name is Charles Jackson. He not only has done that for our routing, he is really the guy who took us from being a 20-percent waste stream company to a zero-percent waste stream company. John Shegerian: Zero waste. And Waste Management helped you as you said. Steven Sterne: They helped us and they certified it. They inspected our garbage, and they gave us a little plaque. John Shegerian: Amazing. That’s so wonderful Steven Sterne: It’s nice when your garbage can win awards. John Shegerian: Yeah. That’s true. That is very true. So as you shared at the top of the show, Steven, your company is really grounded in green, grounded in sustainability from its founder to now the current owner – his daughter – and with you leading the way. But sustainability is a journey. Here we are sitting in 2015. You were way ahead of the curve. Your owners were way ahead of the curve. America’s sustainability revolution is really taking hold now but there is still so much more we can do. How do you wake up in the morning, how does your owner wake up, and what do you talk about amongst yourselves and making Keeney’s even greener in the months and years ahead? Steven Sterne: We’re going to keep looking at alternative fuel delivery vehicles. We talked with the people here from Freewheel who deliver in the core of downtown by bicycle. John Shegerian: Wow. Steven Sterne: Now some office supplies you can’t deliver by bicycle. Cartons of copy paper 55 pounds each, not a good fit. But we talked with them earlier today is there some way for us to give them downtown core deliveries that are small and light. We’re continually looking at new product. We’re putting pressure on our suppliers and manufacturers to do better at not only producing green products but giving us concrete, tangible, measureable statements as to carbon savings with each product compared to alternative traditional products. John Shegerian: Got you. Steven Sterne: The more sophisticated of our customers want to know “Well, if I buy this greener product, exactly what is the carbon impact compared with buying a traditional product?” It’s very hard for us to answer that right now, but it’s something we want to get better at. John Shegerian: With regards to we’re sitting in a city that is steeped in in the pillars and foundational elements of both pioneers and pioneering people and businesses, sustainability, innovation and innovation then has a subsector of technology. Steven Sterne: Right. John Shegerian: You have the homes and birthplace of Starbucks and of Costco and Amazon. Steven Sterne: Right. John Shegerian: How has technology affected Keeney’s for better or for worse over the years? Steven Sterne: It’s a great question. The office supply business has been shattered by technology. If you look at what you used to do on a pad with a pen you now do it on an iPad. John Shegerian: That’s right. Steven Sterne: I bought an iPad the first day they were available with a cellular connection and I’ve had an iPad with me ever since, and as a result, I use a lot less paper and ink than I used to and that’s a great thing for sustainability, right? It’s not so great if all you’re trying to do is sell the most possible office supplies to the same customer every year. John Shegerian: Right. Steven Sterne: So in order to survive we have to get better at branching into other markets. Technology gives us a whole new set of challenges for ergonomics. We’ve gotten very good at solving those problems for customers. We have a great sustainability program developed with the City of Seattle that we can now offer to any business in the region. Anyone who wants to come to us. So as we’ve seen, like customers spend less and less money and we’re helping them do that as aggressively as they want, we’ve branched out and gotten more and more customers. Very few office supply companies in the United States had a growth in the office supply category last year, but we did by having more customers. John Shegerian: That’s just great. And we’re going to leave it on that note, and we always welcome you back, Steven, to share the journey and sustainability about Keeney’s and Keeney’s great story in sustainability. We really appreciate your time today. For our audience members out there, to learn more about Steven and what he is doing with his colleagues at Keeney’s and then to buy from Keeney’s Office Supply and Interiors, please go to www.keeneys.com. Steven, you are an inspirational business leader, sustainability superstar and truly living proof that Green Is Good. Thank you so much for being with us today. Steven Sterne: Thank you.

Staying Ahead of the Sustainability Curve with Seattle City Light’s Sephir Hamilton

John Shegerian: Welcome back to Green Is Good. This is the GoGreen edition of Green Is Good and we are here in downtown Seattle with no more fitting a guest than Sephir Hamilton. He is the Chief of Staff for Seattle City Light. They keep the lights on here. Welcome to Green Is Good. Sephir Hamilton: Well, John, thanks so much for having me. What a great event this is. John Shegerian: This is a great event and talk a little bit about what you came here to speak about today, Sephir. Sephir Hamilton: Well, I came here representing Seattle City Light and moderated a fantastic panel earlier today on what businesses are doing here in Seattle but also nationwide and across the globe to promote green energy efficiency and sustainability in their businesses. John Shegerian: That’s great. And talk a little bit about – for our audience – your journey leading up to becoming Chief of Staff at Seattle City Light. Did you grow up here in Seattle? Sephir Hamilton: Actually, no. I was born, interestingly, in a commune in upstate New York. John Shegerian: Wow. Sephir Hamilton: So my parents taught me how to be one with nature and all that, and that’s where I got this interesting name here. John Shegerian: This was in your DNA and your blood from the beginning. Sephir Hamilton: It was in my blood. Yeah. My dad was a plumber growing up and he got into – very early – some of the geothermal and energy-efficient heat pumps. So I got the bug from him and went into engineering so I could do what he wasn’t able to do as a plumber. John Shegerian: Being born in a commune and growing up a little bit on a commune you were already doing the circular economy, which has now just come to the greater United States. Sephir Hamilton: That’s right. It was on the fringe then, but I think it’s pop culture now. John Shegerian: It is now pop culture. So here we are in Seattle and you just moderated this panel. How did it go? Were you excited about how the whole panel was received? Sephir Hamilton: I was excited. And I’ll tell you what really gave it great energy was the entire audience was here to really learn and understand. We talk about “green” but it means so many different things to so many different people and the audience just had great questions, the panel members gave great experiences and the energy was really about “Hey, we can continue to do more,” and that was great to hear. John Shegerian: That is so great. And that is such a great message for our audience in terms of sustainability. It’s a journey and we can all continue to do more. It’s never over. Sephir Hamilton: It’s never over. And it was interesting to see the three panel members we had today. One was from Harley Marine Services here in the port in Seattle. It’s an industrial organization but they are investing money in creating LEED-certified buildings even though they don’t have to. They think it’s a really important part of the thing. Starbucks, who has got a global mission to be sustainable as well as serve great coffee, talked about all the work they were doing and committed to sourcing 100 percent of their energy from renewables worldwide and reducing energy by 25 percent and what they were doing to get there. It was great to hear. The most impressive part for me was hearing about – from Rob Harmon, President and CEO over at EnergyRM – this model that he created in partnership with Dennis Hayes over at the Bullitt Center to completely revolutionize how energy efficiency upgrades are financed. Seattle City Light has been in the conservation game since the 1970s because we said we don’t want to invest in nuclear energy to meet our own growth. We’d rather invest and help our customers save energy. John Shegerian: Good point. Sephir Hamilton: To me, we have been at that for almost 40 years, and this new model has an opportunity to completely revolutionize how we do energy conservation in the United States. John Shegerian: Sustainability is a top-of-mind issue. Sephir Hamilton: Yeah. John Shegerian: And you’re the Chief of Staff of Seattle City Light – and for our audience members out there that want to see all the green things that are going on at Seattle City Light, it’s www.seattle.gov/light. So talk a little bit about energy conservation and efficiency, and what does that mean with regards to Seattle City Light? Sephir Hamilton: Well, as I mentioned the entire industry in utilities was built on “generate power and transmit it to your customers.” We were fortunate in Seattle. Our founders were visionaries, and they built up our hydro resources so that we had clean renewable energy for almost 100 years. In the 1970s, we faced a choice of “we need to build new power plants,” and that’s expensive. John Shegerian: Right. Sephir Hamilton: And there weren’t a lot more hydro we could build at the time so the question was “do we invest in nuclear power or not?” And as a publicly owned utility, we are here for our customers and we answer to our customers and our customers said, “We don’t want to invest in nuclear power,” and we’d rather invest in conversation and helping our customers save energy so we don’t need to build the next power plant. So that was back in the 1970s, and the vision and foresight of Seattle led the way for the whole country of getting into conservation ahead of the rest of the country. John Shegerian: That’s so great. Instead of more nuclear and all that other kind of stuff. We’ve had Solar City on show on various occasions. What has the rise and the coolness now of the whole solar revolution done to Seattle City Light, and how do you now work with the whole solar generation that now is upon us? Sephir Hamilton: Well, just like conservation, solar and other renewables is something our customers want. John Shegerian: Right. Sephir Hamilton: And as a publicly owned utility, we give our customers what they want. So we’ve been long supportive of solar – even in Seattle where we don’t get as much sun as other areas of the country or world – and we’ve innovated some things around solar as well with community solar. We were one of the first utilities to own and operate a community solar, where the utility builds a community-based solar maybe in a park or at a customer’s location and we give all of our customers the option to buy into that and be investors in that community and solar plant. And then we do virtual net metering so that the power that is produced, they get that share credited on their bill. So everyone – even if you’re in a multifamily or don’t have enough sun on your house – can participate in solar in a real way. John Shegerian: So everyone is cheering on the solar revolution at Seattle City Light because they can actually be a real benefit for more solar happening to all the residents and all the users that buy their electric from you. Sephir Hamilton: We are. We’re a supporter. That said, the entire industry is grappling with “OK, what does this mean to the utility business model,” because the more solar that comes on, the more battery storage – Tesla is coming out today with an announcement we think will impact the utility industry with battery storage. John Shegerian: Right. Sephir Hamilton: And controls whether it’s Nest thermostats or some of the controls we’ve seen. We think the entire industry that’s been operating the same way for 100 years is going to be going through a lot of change in the next few years because of that and so “business as usual” is not going to work and so we need to look at that. John Shegerian: We’re going to come back and talk a little bit about that change in a second. For our audience members who just joined us, we’re honored to have with us Sephir Hamilton. He is the Chief of Staff of Seattle City Light. To learn more about what Sephir and his colleagues are doing, go to www.seattle.gov/light. Talk a little bit about the change. We’ve had thought leaders on the show before, energy specialists before. Their theory is that about half the energy that is produced in the world is wasted. So what we’ve seen now and part of the sustainability revolution here in the United States is energy management taking hold. And you mentioned just a minute or so ago the advent of Nest and other smart home devices and other smart energy management devices. How do you work with that whole part of the revolution to continue to reinvent your brand to stay ahead of the sustainability curve? Sephir Hamilton: Well, I think that’s a great question, John, and every utility in the nation and the world is at a fork in the road. John Shegerian: Yeah. Sephir Hamilton: Do we defend the status quo? Do we say, “Hey. This is the structure we have,” and we talk about stranded cost and fixed cost recovery, and that’s important stuff and we’ve got to take it seriously and have a real discussion. And there a real opportunity to engage in a discussion around “OK. Well, with this technology changing, is it an opportunity for us to offer services to our customers to partner with some of these technology providers?” As the nation’s greenest utility we’ve got a responsibility to our customers to be proactive and say, “What can we do to adapt? What can we do to give customers, what they want and still make sure that we’re able to pay our linemen to keep the lights on and do all of that?” John Shegerian: As the leading green and sustainability utility, all eyes must be on you in terms of how the paradigm is going to be reinvented. Sephir Hamilton: Well, I think that’s what’s really exciting here in Seattle. And we’re in a fortunate place where because of investments made 100 years ago in hydro we have the lowest power of any large city in the country. John Shegerian: Wow. Sephir Hamilton: And that gives us some time to really think about and do this right. So we’re not in emergency mode like maybe some of our peers in Hawaii, for example, where they’ve got a lot of sun and high-priced electricity. We’ve got some time to make sure we’re doing it right, and we think there is an exciting opportunity in Seattle to think about what does the utility future look like? How can we help lead the country in a way that’s going to be good for the bottom line and good for green and good for our customers? John Shegerian: Everything that I hear and learn and I feel here, it’s a city whose foundation is innovation. I mean, not only do we have great companies like yours, Seattle City Light, but you have – this is the birthplace of Amazon, Starbucks and Costco and the home for Alaska Air, the greenest airline in terms of energy consumption and things of that such. Carbon footprint. Sephir Hamilton: Greenest and best customer service. John Shegerian: The best customer service. And also services Fresno directly, so of course we’re very proud of that. It seems as though this has really become not only one of the core hubs for innovation but also sustainability, which then gives you an edge to continue your leadership role as the paradigm in public utilities is reinvented now and redefined. Sephir Hamilton: And that’s what’s so exciting. John Shegerian: Wow. Sephir Hamilton: For us, it’s not a choice between “do I make the right choices sustainability or do I make the right choice for the bottom line?” The two are the same. And you mentioned earlier, if we are wasting half the energy we produce, I want us to save energy. Our CEO who is retiring, Jorge Curasco, was on the board chair there recently, and the work they’re doing is on energy productivity. This is not about conserving or doing with less. This is about the economic engine that is crippled because we’re wasting energy. And so if we can continue to find ways to put every kilowatt hour to better use that’s not just good for the environment, that’s good for the bottom line. John Shegerian: And we’re going to leave it at that today, Sephir, but you’re always welcome back to continue all the great messaging and journey that you’re on and how you’re redefining how great companies should be run. And for our listeners out there to learn more about what Sephir is doing with his colleagues at Seattle City Light please go to www.seattle.gov/light. Sephir, you are an inspiring thought leader, a sustainability superstar and truly living proof that Green Is Good. Thank you very much for your time today. Sephir Hamilton: John, a pleasure. Thank you. John Shegerian: Thank you.

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