Decision Vision Episode 30: Should I Implement a Sustainability Program in My Business? – An Interview with Troy von Otnott, Massive Technologies

Troy von Otnott is the CEO of Massive Technologies, a clean technology and sustainability consulting company in Atlanta, Georgia. Massive is currently pursuing business opportunities in commercial/industrial solar asset financing and deployment in Puerto Rico, development of graphene-enhanced ballistic products for the U.S. and Canadian militaries, and is currently consulting with a major Chinese investment bank on a strategic plan to significantly reduce China’s carbon emissions and pollution by helping to transition some of  their electric generation assets from coal to cleaner burning natural gas.

Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Intro: [00:00:01] Welcome to Decision Vision, a podcast series focusing on critical business decisions, brought to you by Brady Ware & Company. Brady Ware is a regional full-service accounting advisory board that helps businesses and entrepreneurs make vision a reality.

Mike Blake: [00:00:20] And welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic. Rather than making recommendations because everyone’s circumstances are different, we talk to subject matter experts about how they would recommend thinking about that decision.

Mike Blake: [00:00:37] My name is Mike Blake, and I’m your host for today’s program. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast? If you like this podcast, please subscribe on your favorite podcast aggregator. And please also consider leaving a review of the podcast as well.

Mike Blake: [00:01:01] So, our topic today is sustainability programs. And whether the issue or the conversation has revolved specifically around global climate change, whether it has been around local pollution, whether it’s been about economic sustainability and recycling materials, whether it’s been about land conservation, some elements of the environmental movement and, by extension, sustainability, I think, is in everybody’s corporat⁠e⁠—everybody’s consciousness.

Mike Blake: [00:01:35] And maybe it’s considered polarizing, maybe it’s not, but it’s not something that nobody has an opinion on. And there’s a sense that companies have⁠⁠—at a minimum, all companies have an opportunity to be constructive in terms of environmental sustainability, and how they impact the environment, and what their footprint looks like, and are they reinvesting back what they’re taking out of the environment to conduct their commerce?

Mike Blake: [00:02:03] And then, I think where there’s a disconnect is, what is the obligation of the corporation to, somehow, either ameliorate the impact that they themselves have on the environment, or even to be a net positive contributor to the environment, even beyond whatever impact that they have? And I don’t think it’s fair to say there’s a right or wrong answer to the question. But if you’re a business leader, you’re faced with the question of, should we be doing something to be promoting the environmental, ecological sustainability of our business? Should we be doing more than we’re already doing? Or in some cases, are we doing too much? Should we be scaling it back? Because there can be a cost to this, at least, in the short term.

Mike Blake: [00:02:50] And that’s particularly noteworthy in the public markets where the public markets reward investors. Frankly, they reward managers based on short-term metrics and short-term gains much more than they do long-term metrics and long-term gains. And so, to some extent, there actually can be a fundamental financial and economic disconnect that maybe, otherwise, prevents some behavior that managers, in fact, would like to do but, somehow, feel constrained.

Mike Blake: [00:03:23] And so, the decision really that’s, then, put before us as business leaders is, should we be thinking about the environment more? Should we be thinking about the environment around us, not just as a publicity exercise, but is this something that we can and should be building into our business plan? And most importantly, we’re often told that there’s a palpable cost, there’s a tradeoff that, well, you can plant some trees, you can save a polar bear, you can help rising sea levels, but this is going to cost you something to do that. And maybe we’re going to challenge a little bit of that perception today or maybe we’re going to confirm it. And that’s about as much as I know. So, I’m going to stop talking about that myself and bring on our guest.

Mike Blake: [00:04:12] I’m very pleased to introduce Troy von Otnott. Troy is the CEO of Massive Technologies, a clean technology and sustainability consulting company here in Atlanta, Georgia. Massive Technologies serves as a consultant to renewable energy and sustainability-focused companies. The company also facilitates sustainable mineral and fuel commodity transactions on behalf of a large Chinese investment bank, helping to mitigate their pollution and climate change challenges, which we know are myriad. And we probably don’t know the full story because they’re not exactly the most transparent country in the world when it comes to their own issues. Troy is also the ambassador for Cleantech Open, a national nonprofit program that encourages entrepreneurs to develop technologies to address environmental sustainability challenges. Troy, welcome to the program. Thanks so much for coming on.

Troy von Otnott: [00:05:02] It’s great to see you, Mike.

Mike Blake: [00:05:04] So, we almost missed the podcast because we are talking so much before the podcast. You got so many interesting things to talk about. And I’m going to dive right into what was a fascinating backstory that I did not know. How did you become engaged as you have been with the sustainability? This is not something you necessarily grew up from as a kid thing thinking, “I’ve got a—this is my thing,” right?

Troy von Otnott: [00:05:27] No, not at all. In fact, I’m from New Orleans. And as you know, Louisiana is one of the largest oil and gas production states in America and a petrochemical production center as well. And so, being an environmentalist in Louisiana is kind of weird, and you’re thought of as a bit of an outlier.

Mike Blake: [00:05:50] Small club, right?

Troy von Otnott: [00:05:51] Yeah. And so, it’s not something that I ever thought about being involved in. In most of my adult life, as I was mentioning before the podcast began, I spent most my life doing event production. New Orleans produces a lot of events, and I was enjoying that career. But in 2005, my world and all my fellow citizens in New Orleans worlds changed due to the impacts of Hurricane Katrina. And we lost a lot. We lost over 2000 lives, billions of dollars of property value. And I, personally, lost an entire career.

Troy von Otnott: [00:06:34] And so, it was at that moment that it made me start to reflect and think about why was this particular storm more damaging, more impactful than others. And after doing a substantial amount of research, I started to understand a little bit more about global climate change and felt like I needed to direct my talents and my skills to try to play a small role and do something to have an impact and try to rebuild the city in a more sustainable way.

Mike Blake: [00:07:09] And I mean, it really was a much more impactful storm because let’s face it, New Orleans gets hurricanes, right? I imagine—I don’t know, I grew up in Boston, we got one hurricane every 20 years, and it’s a category one. I imagine, New Orleans, wake me when it’s a Category IV, and then I’ll start to get excited.

Troy von Otnott: [00:07:26] Absolutely. The complacency for Hurricane Katrina was staggering. In fact, on a personal basis, my sister, and my niece, and nephew were very complacent. And as much as I had a bad feeling about this one and begged them to leave with me, they decided to stay. And for about two weeks after the storm landed, they were lost, lost in the system. And I thought they were dead because the ranch home that they were living in, in a suburb of New Orleans, had about three feet of water over its roofline. And fortunately, they were able to swim to the only two story home on their street and were rescued by helicopters. You probably remember those images from television.

Troy von Otnott: [00:08:08] So, it was, personally, a devastating experience and literally made me just want to completely change gears, switched direction, and try to see if I can add value to figuring out solutions, and become a part of the solution, instead a part of the problem.

Mike Blake: [00:08:26] So, I’ll interject. They said that humor is tragedy plus timing. We’re talking about this before. And I thought I was in Connecticut when this happened. I was not. We, actually, just moved to Atlanta. And when Katrina happened, it occurred at the same time as Dragon Con happened. And I remember being at Dragon Con. For those of you not in Atlanta, that’s basically our Comic Con. So, if you’re into dressing up as a Wookie, Dragon Con is for you, right, Labor Day weekend. And I was actually in a bar. I was not in costume. I don’t do that. But there are actually a couple of folks that had fled the city. And I was sitting next to this guy and he was—we’re watching on TV as they’re doing—just as you said, they’re pulling people out.

Mike Blake: [00:09:10] And here’s a guy whose life is completely uprooted. He’s watching it being uprooted in real time. And in the background behind him, there are storm troopers. There are people in Star Trek uniforms, Battlestar Galactica, Japanese Anime, everything you can possibly imagine. I’m thinking, “Boy, this poor guy next to me must think he cannot catch a break in any—” Either that or he thinks he actually fell asleep somewhere on the road, and he’s still dreaming. It’s a very odd juxtaposition. So, you-

Troy von Otnott: [00:09:44] By the way, not quite as odd as you being an esteemed accountant by day, father of dragons by night, so.

Mike Blake: [00:09:48] There you go, there you go. So, you had the shift, It made a huge impact on you. And was your family okay by the way? I didn’t ask you about that.

Troy von Otnott: [00:10:01] Yeah. Everyone survived. And lost property, but property can be replaced. In fact, that’s exactly what the first thing I did is I started working with the local city planning commission to work on building code improvements because we needed to build structures that we’re going to be able to sustain a Category IV or Category V storm. We don’t have a lot of those structures in New Orleans. We’ve got 150-year-old structures that, actually, did survive the wind loads from the storm but didn’t survive being submerged in 12 feet of water for two to three weeks.

Troy von Otnott: [00:10:34] So, I started building sustainable housing. We created a modular home company and was very successful. And ironically, I wanted to try to build a highly efficient and energy-efficient home. And we accomplished that after a couple of iterations working with our manufacturer. But I got to a point where I couldn’t make the home any more energy-efficient without adding some form of renewable energy. And so, I started doing some research and looking for a solar energy company. And lo and behold, there was not one in the entire state.

Troy von Otnott: [00:11:12] So, I started researching why that was the case. Why is California, why is New York and Northeast leading in the early stages of solar energy development, but we weren’t? I mean, we’re an energy production state, but we’re producing fossil fuels, not clean energy, and that didn’t make any sense to me. So, I worked with a group of of caring and passionate environmentalists, and we actually drafted a bill, which was a Louisiana renewable energy tax credit bill. And when I say we had no idea what we were doing, we really didn’t know what we were doing. But we were bull in China cabinets, and we were just committed to getting it done. And at the end of the day, at the next legislative session, we wound up passing a clean energy bill that in recent memory, none of the politicians could remember when a bill actually passed unanimously in the state legislature. They thought it was like a unicorn, it didn’t exist.

Troy von Otnott: [00:12:10] And so, I remember getting a call from the governor’s office after the bill passed, and they said, “Well, look, you’re the lead guy working on this bill. You need to come to the State Treasurer and meet with him.” And I said, “What did I do?” And he’s like, “Well, you need to tell the government how much money this tax bill is going to cost our state treasury.” And I literally said, “I have no idea.” And they’re like, “Well, you better figure it out because you did this bill.”

Troy von Otnott: [00:12:34] So, I go to the State Treasurer’s office two days later and they said, “Okay, how many individuals, or homeowners are likely to put solar panels on their house?” And I just kind of came up with a number and literally out of the air. And the guy was writing on a notepad, and he’s like, “Okay, so, that is equivalent to about $500,000. Does that sound right?” I said, “It sounds great to me.” And so, he’s like boom, stamp, “It’s good. Governor will sign it tomorrow.” I’m like, “Does this really happen?” And he’s like, “Yeah, it’s happening.”

Troy von Otnott: [00:13:06] And so, two days later, after the governor signed it, I get a phone call. It was from a 303 area code, and it was a guy named Shane. And he’s like, “Hey, are you the guy that did the renewable energy tax credit bill?” And I was like, “Yeah.” And I was like, “Did I do something wrong?” He’s like, “No, you did something extraordinary.” I was like, “What do you mean?” He goes, “Do you know you passed the most aggressive state tax credit in the United States for renewable energy?” I said, “I did?” He’s like, “Yeah. California has about a 10% tax credit. You have a 50% tax credit. How did you do that?” I was like, “I don’t know.” He said, “What business are you in?” I’m like, “I build energy-efficient houses.” He’s like, “You’re not in that business anymore.” I said, “I’m not?” He said, “No.” I’m like, “What business am I in.” He says, “You’re in the solar business now. I’m coming to see you tomorrow.” And I was like, “Okay.”

Troy von Otnott: [00:14:00] Guy gets on a plane, comes and meet me at the local hotel on Canal Street. And after about six hours, he said, “Hey, I’m with a company called SunPower. We’re one of the biggest brands of solar panels in the world. And you’re now our partner in Louisiana.” And literally, within a week, we formed a company called South Coast Solar. And within about six months, it went from me, my old friend, Tucker Crawford, and a solar expert named Scott Oman, and a part time accountant operating in my friend’s second bedroom to a downtown office with about 10 employees and about $3 to $4 million in sales.

Troy von Otnott: [00:14:36] And within two years, we became the largest clean energy company in the southeast. And it was a really interesting and wild ride. And we got indoctrinated into the national scene because people were just so excited to see someone outside of California or the Northeast actually develop a sustainable clean energy business industry. And so, we’re really proud of what we did with South Coast Solar.

Mike Blake: [00:15:00] So, that segues perfectly to the next question, and that is that especially here in the southeast, red state haven, there’s a perception and, really, I think, kind of a knee jerk reaction about when you say sustainability, you’re kind of bracing yourself for pushback, argument, lots of questions. I mean, as it turns out, I drive electric. And I still I remember one of the first times I drove outside of Atlanta, I went to a hotel. That’s where there’s a place to to plug in my car. They said no, but they said no in a way that their eyes said comrade at the end, right. Go back to Russia basically.

Troy von Otnott: [00:15:45] Right.

Mike Blake: [00:15:45] And I think we still—I still think we face a lot of that in certain sectors. And I got to imagine you face some of that in Louisiana, right? Especially a fossil fuel state. Talk about entrenched interests.

Troy von Otnott: [00:15:56] You know, it’s funny. I had a very close friend who was actually the CEO of of Entergy, which is the dominant energy company in New Orleans. And this is a friend that used to sit on my sofa and play Madden football with me. And so, now he’s running the biggest utility company in the south at that time. And he said, “Hey, I’m supportive of what you’re doing. I want you to know that.” He goes, “But you guys have got to get your cost in line because solar is way too expensive, and we can’t buy any of it.”

Troy von Otnott: [00:16:27] Well, flash forward 13 years later, and they’re still singing that same tune, right? So, it’s—and ironically, what’s happened in Georgia, regarding Georgia Power and Southern Company, is when I first moved here in 2010, they were not very supportive of the solar energy industry. In fact, it almost felt like they were running disinformation campaigns to suggest that clean energy doesn’t even work in Georgia. But at the end of the day, what all these utilities come to the realization is they have an obligation to their ratepayers to buy the cheapest form of energy that offers the most stability and that their ratepayers desire, right? Those are the three things. But number one is cost, right?

Troy von Otnott: [00:17:16] So, in 2018, solar is, by far, the cheapest energy outside of coal, natural gas, nuclear. It blows them all away. The only thing that’s cheaper than that is wind, but we don’t have a lot of onshore wind in this part of the country. So, now, even though Georgia is not a renewable portfolio state, there’s no mandate by the government to do this, Georgia Power, with the help of the Public Utility Commission, winds up buying a substantial amount of solar. We have a problem, it’s a problem, but it’s also a blessing that Atlanta is called a city in the forest because there’s so much tree cover that it’s almost impossible to find a home that’s not surrounded by 40 or 50-foot pine trees, right?

Mike Blake: [00:17:59] Right.

Troy von Otnott: [00:18:00] And so, you can’t get a direct line to the sun. So, you have massive shading issues everywhere. So, while there is very little residential solar in the market, in fact, I think in the entire state, only 40 homes last year put solar on their houses-

Mike Blake: [00:18:14] Okay.

Troy von Otnott: [00:18:14] … but utility scale solar has taken off. In fact, I helped Georgia Power put together a construction team to build 17 solar farms just last year. So, the fact is that they are now moving towards greening their own grid. And they’re doing it, not because it’s green, not because it’s sustainable, because it’s the lowest form of stable energy that they can offer the ratepayers.

Mike Blake: [00:18:43] And I’m curious, have they crossed the 1 gigawatt of capacity yet, solar?

Troy von Otnott: [00:18:48] They have.

Mike Blake: [00:18:48] Okay.

Troy von Otnott: [00:18:49] Yeah. In fact, the PUC just put out a new directive for them to buy, I think, another 1.6 gigawatts-

Mike Blake: [00:18:56] Okay.

Troy von Otnott: [00:18:56] … over the next few years. So, while that’s a decent amount of clean energy, I mean, it pales in comparison to what’s happening in California, pales what’s happening up in the Northeast. But it’s so much better than what it was five, six, seven years ago, right? So, at the end of the day, if you pull the ratepayers and ask them, “What form of energy do you want coming into your home or your business?” 80% of them will say, “Give me the clean stuff, right. I don’t want the coal because I don’t want my kid suffering from asthma.”.

Mike Blake: [00:19:31] Right.

Troy von Otnott: [00:19:32] Natural gas, that’s better. It’s a transition. It’s a bridge fuel. Let’s do that because we don’t want to have coal. The nuclear is just so expensive. It’s almost impossible to get a plant up and operating. And then, talk about annual maintenance and then decommissioning, which never gets into the economic model, which is kind of crazy to me.

Troy von Otnott: [00:19:50] But at the end of the day, cities and states are taking lead in the clean energy transformation. And there’s over 125 cities in the United States now that have mandated 100% clean energy sometime between 2035 and 2050. So, it’s coming, and it’s coming a lot faster than most people ever thought it would. ***

Mike Blake: [00:20:12] So, you bring up an interesting point. And I think, if I had asked this question five years ago, the answer would have been very different. What percentage of the sustainability program question now is being driven purely by economics, where it’s a more manifestly positive business case as opposed to, for whatever reason, we feel it’s the right thing to do case?

Troy von Otnott: [00:20:37] I would say 100% of it is, because at the end of the day, the definition of sustainability is having a business that will be around, right?

Mike Blake: [00:20:47] Yeah.

Troy von Otnott: [00:20:47] And so, what sustainability, ultimately, means is driving down cost of your operation, right? And so, when you talk about greening your supply chain, or you’re talking about more efficient lighting, or you’re talking about clean energy, all of those things have a return on investment, right?

Troy von Otnott: [00:21:05] So, at the end of the day, in order to be sustainable it means, you have to be able to turn a profit. And the only way you can turn a profit is to manage your operational cost. And everything that happens, whether you’re recycling, reusing, using smarter forms of energy, more efficient forms of energy, dealing with your waste issues in a more sustainable way, it’s all about saving money. And almost every single sustainability officer at any smaller, or midsize, or even large corporations here in Atlanta will tell you, this is not about politics. This is not about green versus red. This is about being green to make green. And so, if you think about it from that standpoint, everyone should be doing it because if you don’t manage to be profitable, you’re not going to be around to even have this discussion later on down the road.

Mike Blake: [00:22:01] So, I want to go to the flip side now. As I mentioned, we’re in a red state, there are a lot of red states around us. And you and I are roughly the same age. I was not a voting age when Jimmy Carter was president, but I do remember the whole sweater thing, turn the thermostat down, the 55-mile-an-hour speed limits and so forth. But that is because we just couldn’t buy the oil we wanted, right?

Troy von Otnott: [00:22:26] Sure.

Mike Blake: [00:22:26] It was scarcely there. And everybody mocked the solar panels on top of the White House. The first thing Ronald Reagan did was take it down-

Troy von Otnott: [00:22:32] Take it down.

Mike Blake: [00:22:33] … supposedly.

Troy von Otnott: [00:22:36] Yeah.

Mike Blake: [00:22:36] In a conservative environment, has the risk of stigmatizing yourself by being seen as too green, and hippie, and whatnot, is that no longer a concern? Is that sort of an old stereotype that’s gone by the wayside, or is that something that somebody needs to really kind of think about depending on what business they’re in and where they do it?

Troy von Otnott: [00:22:55] So, that question is interesting. And I think you get different answers from different people, right. If you talk to people in our age range, they probably are not as educated about these issues. But if you think in terms of the current generation of workers coming into the workforce, the millennials, the millennials care about this more than anything. They care about the environment more than anything because they are the ones that are going to be living in a completely different environment as they age, right.

Troy von Otnott: [00:23:29] I mean, you can have a political discussion, I guess, to some extent, about whether climate changes are anthropogenic or manmade, right? You can have that conversation if you want to. But at the end of the day, you cannot refute that the climate is changing and that it’s affecting agriculture, it’s affecting refugees, right. It’s affecting access to clean water. It’s affecting transportation systems. It’s affecting our entire global ecosystem, right. So-

Mike Blake: [00:24:01] And public health.

Troy von Otnott: [00:24:01] And public health. Public health is a really big issue that really people should be focusing on, but they don’t. I was just reading an article yesterday that I don’t know how many people died in Japan last week because of the heat wave, but it’s almost unsustainable. And so, if you think about—if you’re developing a workforce, and let’s just say you’re Coca-Cola, and you’re hiring millennials, they care about your environmental and social governance more than any other generation because they’re the ones that are going to have to deal with the ramifications of a changing climate.

Troy von Otnott: [00:24:38] So, if you don’t speak that language, and you don’t address their issues, the next company will. And so, it’s a recruiting issue more than anything. You’re not going to get the best of the best unless you are being environmentally and socially responsible, not just from a greenwashing standpoint, but this is a core tenet of who we are and what we are as a company.

Mike Blake: [00:24:59] And greenwashing is what?

Troy von Otnott: [00:25:00] I mean, greenwashing is a company saying that we’re doing all these amazing, wonderful, green things. But at the end of the day, it’s more of a PR campaign than it is an actual programmatic impact that the corporation is having to the bottom line, right. So, you can—Coca-Cola, actually, got pinged on this in the last few years, where they were making assertions in the global media that they were addressing water shortage issues or water quality issues all over the world. And when it came down to a lot of third-party independent organizations that are charged with understanding water scarcity issues, they realized that those issues haven’t been affected at all, and they haven’t changed their policies and their procedures to really ensure that there’s not an overuse of water in their respective markets where they’re operating their bottling facility.

Troy von Otnott: [00:26:00] So, they took that very seriously and said, “We cannot be looked upon in the world as a company that says what they’re doing and not do what they’re doing,” right? So, that’s what really greenwashing is. It’s just sort of a PR campaign to say we’re green just because it makes everybody feel good, but you can’t sit down and put your your corporate sustainability report out and have confirmed metrics by a reputable third-party organization.

Mike Blake: [00:26:28] Now, you touched on something that harkens back to a conversation we had before we hit the record button that I want to come back to, which is it’s not just about millennials anymore either. The capital markets are now paying a lot of attention to this. I read an article recently where I think something like 78% of Wall Street analysts now are factoring in the impact of climate change-

Troy von Otnott: [00:26:49] Absolutely.

Mike Blake: [00:26:51] … in their valuation models.

Troy von Otnott: [00:26:52] But you know why?

Mike Blake: [00:26:55] I may or may not. Tell me.

Troy von Otnott: [00:26:56] Because of the global insurance market, right? I mean, insurance drives everything, right? And if you can’t insure a business, there is no business. And so, the insurance markets are basically saying, “Hey, this climate change thing is real. It’s now. It’s not something that’s coming 10, 20, 30 years from now. We’re experiencing impacts of it right now. And if we don’t start addressing this issue, we’re not going to be able to insure businesses. And if we can’t insure a business, they cannot operate.”

Troy von Otnott: [00:27:26] But you mentioned financial aspects of this whole industry. And we talked briefly about this part of this—part at the start of the podcast. But, you take an organization like BlackRock, right? I think they’re the largest financial management company in the world. They have several trillion dollars under management. Their CEO last year, Larry Fink, put out a directive to all of their associates globally and said, “You guys better start taking environmental social governance seriously. And if you don’t, and you don’t have verifiable third-party validation of what you’re doing regarding ESG, you’re highly likely not going to get capital from us again.”

Troy von Otnott: [00:28:05] And it’s weird because BlackRock still funds coal plants, and they still fund natural gas, and they still fund oil and gas. And so, you can’t just turn on a dime, right? This is a battleship. It takes a very slow curve to change direction. But when it comes top down from the CEO saying, “You guys better take this seriously, or you’re not going to get capital,” I don’t care how big of a company you are. Apple has probably more cash than anybody in the world and are constantly borrowing money because debt is cheap. They don’t want to use their own capital when they can get 2% money from the bond market.

Mike Blake: [00:28:38] Sure.

Troy von Otnott: [00:28:38] Well, you’re not going to get that bond market money if you don’t have a serious commitment, a verifiable commitment to environmental and social governance all throughout your organization.

Mike Blake: [00:28:49] And part of that goes back to the insurability. You’re not going to get 2% money-

Troy von Otnott: [00:28:55] No way.

Mike Blake: [00:28:55] … if you’re not insured.

Troy von Otnott: [00:28:56] No way.

Mike Blake: [00:28:56] Right? You suddenly go from a-

Troy von Otnott: [00:28:59] Well, you can’t even operate.

Mike Blake: [00:28:59] Right.

Troy von Otnott: [00:28:59] You cannot operate. I mean, I was working on a new business model just last year trying to help Native American tribes do some interesting things that their laws, their sovereignty allows them to do. And unfortunately, we could not get the tribe insured. And we dealt with the top 17 global insurance. I mean, all the big names in the world. And every single one of them, over the course of a year, said, “No, we cannot give you a policy.” And therefore, there was no business. So, I have firsthand experience knowing that if you cannot get insurance, you cannot operate a business.

Mike Blake: [00:29:39] So, let’s say we want to think about setting up a sustainability program for our company for the first time. We often hear that some companies—that companies have a chief sustainability officer or one individual that, at least, ostensibly answers for all these sustainability initiatives. Is that a requisite? Is it such a distinct skill set that even if I’m a small company I, kind of, just going to bite the bullet and hire that? Or are there companies that have successfully rolled that portfolio into other responsibilities that already exist?

Troy von Otnott: [00:30:08] I mean, I think it depends on the size of the company, right. So, if you’re planning on putting out a corporate sustainability report, you’re going to need a CSO. But if you’re just a small to mid-sized business, there are really simple things that every business can do. I mean, really simple things like, reduce your energy load, right. I mean, the cheapest and easiest thing to do is to address your lighting in your building, right. And the technologies are so far advanced now and the short payback period is ridiculously low. I mean, any kind of a major LED lighting conversion in a small office like this or a manufacturing facility, two-year ROI max. A lot of them are coming in at one year. And so, if you can’t fund something on a one-year ROI basis, you’re in the wrong business.

Mike Blake: [00:30:56] Right, right.

Troy von Otnott: [00:30:57] So, there are things you can do to address your supply chain. There’s things you can do to address your waste material resources. There are things you can do to to address more sustainable transportation. I mean, there are many simple things that can be done. You don’t have to have a very complex program. But what I’ve learned in talking to companies and students all over the south over the last couple of years about this issue is, they want to be involved, and they want to be engaged, right.

Troy von Otnott: [00:31:26] So, it’s kind of a—I relate this, not on a really appropriate couple basis, but if you think about XPRIZE, right. XPRIZE does these really interesting challenges, whether they’re medical, whether they’re lunar landings, whether they’re clean energy or clean water, but they create competitions, right? And people like to compete. It’s the very nature of who we are. We always compete with each other.

Troy von Otnott: [00:31:52] And so, smart companies create these little, sort of, sustainability competitions, and they create real incentives and real rewards. So, whoever wins, I’m the most sustainable employee in my group for the first quarter, guess what? I get a trip, and I get to go to Cancun, and lay on the beach for three days with pay time off. So, I mean, I think the more you can engage a, sort of, employee plan that allows them to feel like they’re taking some responsibility and doing something that has impact, and it’s not just truly a top-down directive, it’s literally a bottom up, it becomes fun. You can even gamify it and really create teams. And people care about the stuff, and they want to feel like they’re having impact. That’s the biggest struggle.

Troy von Otnott: [00:32:39] Climate change, the biggest problem with climate change is the enormity of the scope. Every time I talk to someone who’s ill-informed about climate change, I might as well be watching a slow motion train wreck, right, because at the end of the day, their brain just melts down. They just like, “What can I do about carbon emissions in the atmosphere? I can’t go up there and grab those molecules.” And it’s just like if the problem’s too big, people don’t know how to deal with it.

Mike Blake: [00:33:08] Right. So, The good news, I think, is that sustainability is a trend that is accelerating now for various reasons, and some of it we’ve spoken about today. Is there a company or organization out there you think is in a particularly good job that has some lessons to teach other companies to follow?

Troy von Otnott: [00:33:26] Yeah. So, I didn’t even know about this until a few years ago when I heard a chief sustainability officer for Cox Enterprises give a presentation at Georgia Tech. I was speaking on clean energy, and they came in and talked about corporate sustainability. And I was literally blown away at how much impact one of Cox Communications divisions has on sustainability. So, they’ve got a good internal group called Cox Conserves. And this is a really dynamic division of that communications company. Well, they’re more than a communications company now. They’re pretty diversified.

Troy von Otnott: [00:34:03] But this organization does some extraordinary things, not the least of which they actually have their own budgets. So, they’ve created their own entrepreneurial co-working ecosystem within that organization. And they, basically, instead of just saying, “Hey, guys, we’re going to have a competition to see who drives the fewest amount of miles or who recycles the most cans,” I mean, they literally say, “Hey, Bob, do you have a really cool idea about how to save the planet? If so, why don’t you write a little executive summary and submit it to us? And if we like it, we will fund you. We will use our own internal capital resources to turn our employee into a sustainability entrepreneur.”

Troy von Otnott: [00:34:49] Like, that kind of forward thinking is really what’s going to be needed in order to make this transition. Because this problem is so big, it needs a lot of people working on it. And people don’t understand that little things actually add up to big things, right. I mean, to change one bulb, recycle one can, drive one mile less than you did yesterday. I mean, a lot of little things can add up to a big thing. And so, when people say, “I can’t do anything, this problem is too big,” that’s not accurate.

Mike Blake: [00:35:20] You mentioned about gamification, and I think you’re really onto something. So, I drive a Volt, and which is a serial hybrid. First, it’s rated for the first 38 miles on electric. After that, it’a nine gallon gas tank. And there’s a very active Volt community on Facebook, Volt owners basically. And there’s a competition to see how much mileage you actually can get out of that car on battery, right. And so, people are doing all kinds of things. Probably, it may or may not be the safest things in the world, but they’re over inflating their tires, right, like, 48 PSIs. So, you go over a bean bag, and you are jolted, right?

Mike Blake: [00:36:04] Right, right, right.

Troy von Otnott: [00:36:04] Or, how much can you coast, and maybe you don’t turn the air conditioner on. And the most I’ve ever gotten out of was 46 miles an hour, and I was miserable. I’ll never try that again. But it does work, right?

Troy von Otnott: [00:36:17] Absolutely.

Mike Blake: [00:36:18] And I think the Volt’s dashboard is set up for that feedback because it shows in real time how much distance you have left, right? And I’ll tell from my own perspective, because I grew up in a fossil fuel internal combustion engine world-

Troy von Otnott: [00:36:33] Sure, we all do.

Mike Blake: [00:36:33] … because I could put gas into my car but don’t really want to, every day that I—especially, every day that was, sort of, at the outside of my range, I don’t put gas on my car. I don’t feel like I’ve saved a polar bear. I just feel like I stole something for free.

Troy von Otnott: [00:36:49] Sure.

Mike Blake: [00:36:49] Right. And the gamification really works.

Troy von Otnott: [00:36:52] It really does. In fact, the old adage, everything old is new again. You’re probably old enough to have driven the original Model T, right?

Mike Blake: [00:37:01] Almost.

Troy von Otnott: [00:37:01] Exactly. So, the original Model T was electric.

Mike Blake: [00:37:05] I did not know that.

Troy von Otnott: [00:37:06] There you go, boom. Dropping knowledge, baby.

Mike Blake: [00:37:08] No, I did know that. I mean, there-

Troy von Otnott: [00:37:09] There were two versions of the Model T, by the way. One was electric. One was-

Mike Blake: [00:37:13] I do know that, at the time, that internal combustion started to catch on. There was a competing industry than battery. And we know the history—the rest of the history.

Troy von Otnott: [00:37:24] Right.

Mike Blake: [00:37:26] And we flirted for battery for such a long time. Now, it looks like we’re rapidly approaching battery ICE parody.

Troy von Otnott: [00:37:33] We are. I mean, two or three years ago, I think people were saying that internal combustion engine parody level was going to be sometime around 2030.

Mike Blake: [00:37:46] Right.

Troy von Otnott: [00:37:48] Now, it’s 2025. And then, I read a report the other day where it’s like 2023. Like it keeps getting shorter. And it’s because R&D in battery technology is one of the bright shining spots of clean tech. A lot of money is flowing into battery storage. And the amazing work that Tesla is doing, and Panasonic is doing, and others is really the north star. It’s where all the major successes are going to happen.

Troy von Otnott: [00:38:17] And so, the utility companies actually didn’t see this coming, right. And so, now, they’ve got to kind of change their whole mindset and say, “Hey, you know how we were going to build this natural gas combustion system, and we’re going to generate 500 megawatts power?” well, they’re not really economical now that we’ve got battery storage. So, instead of building picker plants, these coal firing plants are now in demand, right? And so, at the end of the day, battery storage gets dramatically cheaper every year. And in a couple of years, none of these plants outside of solar, wind, and storage are going to be able to compete.

Mike Blake: [00:39:00] And oddly enough, I think the⁠—this is off topic, but I’ll throw it out there anyway. The VW diesel scandal, I think actually moved that.

Troy von Otnott: [00:39:10] Dieselgate.

Mike Blake: [00:39:11] Yeah, exactly. I think that moved the needle significantly.

Troy von Otnott: [00:39:16] Absolutely.

Mike Blake: [00:39:17] They went from ICE to electric, really, in a period of two and a half years.

Troy von Otnott: [00:39:23] And by 2025, every model that they make will have an electric version.

Mike Blake: [00:39:27] Yeah, right. And Volvo is following through.

Troy von Otnott: [00:39:29] But that fine they got was painful. It wasn’t a light fine. I mean, they got punched in the mouth.

Mike Blake: [00:39:37] And I think⁠—I mean, I don’t think it hurt him as much in America, but I think in terms of-

Troy von Otnott: [00:39:40] Publishing.

Mike Blake: [00:39:41] … public relation and branding-

Troy von Otnott: [00:39:42] Yeah.

Mike Blake: [00:39:42] … killed them in Europe, right?

Troy von Otnott: [00:39:42] Right. It hurt them bad in Europe.

Mike Blake: [00:39:45] I think they thought⁠—and it costs the CEO’s job.

Troy von Otnott: [00:39:47] People⁠—but not only that, but people felt betrayed.

Mike Blake: [00:39:50] Right.

Troy von Otnott: [00:39:50] I mean, I’ve got a good friend of mine who lives here in Atlanta who is a lifelong Volvo and VW enthusiast. And he literally felt btrayed. He felt like he was completely lied to. And he, not only sold his car, he never bought another car.

Mike Blake: [00:40:08] Wow!

Troy von Otnott: [00:40:09] Like he literally got an electric bike, and does public transportation, he does Uber, and was just so incensed by being lied to by that corporation that it changed his whole relationship with the brand. It ended it.

Mike Blake: [00:40:22] That’s basically breaking up with your boyfriend and keying his car on the way out.

Troy von Otnott: [00:40:24] Absolutely, absolutely. See you.

Mike Blake: [00:40:31] So, I’ve read a literature. You probably have too. There are studies now coming out that companies that have a strong sustainability posture tend to outperform others, kind of, in areas that aren’t directly involved with sustainability also. Have you seen that? Is there credibility or are we getting ahead of ourselves?

Troy von Otnott: [00:40:50] No. So, there’s a study done last year, well, in 2018 that said companies that have embedded ESG programs have a valuation basis somewhere between 175 and 250 basis points better than those that don’t. And I mean, I know that’s financial speak.

Mike Blake: [00:41:11] Right.

Troy von Otnott: [00:41:11] But that’s real money when you talk about-

Mike Blake: [00:41:13] Loss 2% profit margin,.

Troy von Otnott: [00:41:14] … 2% profit margin. It’s really⁠—it’s a big number when you talk about a lot of companies are in single digit profit margin.

Mike Blake: [00:41:23] Yeah. If you improve Coca-Cola’s profit margin by-

Troy von Otnott: [00:41:25] 1%.

Mike Blake: [00:41:25] … 2.5%.

Troy von Otnott: [00:41:26] It’s a Big deal.

Mike Blake: [00:41:27] That’s a lot more electric-powered private jets are getting.

Troy von Otnott: [00:41:31] When I first came to Atlanta in 2010, Coca-Cola was the first company that I met with. And we were working with them on some different recycling technology. And they literally said, “If you move our profit margin by 0.5%, we will do it. That’s all you had to do.” I mean, that’s how big of a scale global operation they had that that’s a tremendous amount of revenue to their bottom line. And so, now, Coca-Cola is, obviously, one of the global leaders in sustainability. I mean, they are almost single-handedly focused on water efficiency because, look, we’ve got problems with the changing climate. It’s not just that it’s getting hotter, it’s not just that seas are rising, but it’s affecting global agriculture. It’s affecting our ability to get potable water. It’s affecting health services. It’s affecting disease. We’re destroying species at a rate that’s never happened in the history of mankind.

Troy von Otnott: [00:42:35] And so, you got to kind of steer the conversation away. “Oh, well, I could just turn my air conditioner up a little bit more. Who cares if it gets a little warmer?” Look, we’ve got a problem with our oceans, right? We’ve got a major problem with plastic in our oceans. But if you think about the biggest global carbon sink that we have is our oceans. And the more acidified those oceans become, the more it destroys aquatic ecosystems. And I promise you, if you haven’t thought about this, a dead ocean equals a dead planet.

Mike Blake: [00:43:05] Yeah.

Troy von Otnott: [00:43:06] Right? And so, at the end of the day, it doesn’t matter how much money you think you’re going to make, or how much money you need to make, you will make no money on a dead planet. And so, we’re all not going to Mars. I mean, God bless Elon, but that atmosphere is not very inviting. I’m not going to Mars.

Mike Blake: [00:43:21] No.

Troy von Otnott: [00:43:21] So, we’ve got to fix this planet. And we owe it to the future generations. I mean, look, at the end of the day, we’re all going to be here. God bless if we were healthy call it 80 to 100 years, right? But that’s just a⁠—it’s a blink of an eye on a geologic timescale scale, right? And it means nothing, but we’ve done more damage in the last hundred years to our global ecosystem that’s ever been done in the history of the world. And so, there’s this old Indian proverb. It’s like, “We don’t inherit the earth from our ancestors. We borrow it from our children.” That’s the⁠—like people, like the minds of men altogether.

Mike Blake: [00:43:58] Yeah, right.

Troy von Otnott: [00:43:58] Think about that for a second. So, even though I don’t have children – you do – I care about your children just as much as I care about a child in Ethiopia, or a child in India, or a child in Europe. It’s like we owe it to them to leave this planet better off than when we found it, or if not, just the same as, not worse. We have a responsibility for people that come after us. If we don’t, when it’s our time to leave this planet, we’re not going to do it in great graces. I promise you that.

Mike Blake: [00:44:31] So, a couple more questions before we wrap up here. Let’s say that I’m a listener, and, now, I’m convinced, we really got to put in some kind of sustainability program. What are the first steps to think about?

Troy von Otnott: [00:44:44] Well, there’s this amazing new invention called the interwebs, and you can-

Mike Blake: [00:44:49] I’ve heard of it.

Troy von Otnott: [00:44:49] Yeah. You can get on the internet. I mean, there’s so much public available information. The good news is that if you Google or search corporate sustainability reports, a lot of the reports are in the public domain. And so, you can get a report from Apple, which has a phenomenal program. You can get a report from Cox. You can get a report from Coca-Cola, from Alliance, from, major insurance companies, anyone. I mean, there’s tons of public available data out there. You don’t have to reinvent the wheel. There’s a lot of great case studies about things that work, being proven, easy to verify, not hard to implement.

Troy von Otnott: [00:45:30] And, the one thing at the end of the day, beyond, sort of, “trying to save the planet” is the the morale impact that you will have on your employees is palpable. I mean, when they feel like they are actually contributing to something good, and social impact is really kind of a broad umbrella, but when they feel like they’re actually adding value, and they can go back and look at their parents, and go back and look at their kids and say, “I did something. Even though it’s small, I did something,” right.

Mike Blake: [00:46:03] Everybody, especially millennials, we  Gen-Xers are okay with slogging for the paycheck, millennials aren’t quite so much into that, right?

Troy von Otnott: [00:46:12] Not at all.

Mike Blake: [00:46:14] And maybe they’re smarter than are we, but-

Troy von Otnott: [00:46:16] They’re not smarter, they’re just more woke, right? I mean, at the end of the day, they know they’re going to be the ones living in a different environment. It’s not us. I mean, yeah, to an extent, if you’re 50 years old, in the next 30 years, by 2050, you’re going to see some pretty bad stuff. But 2060, 2070, 2080, I mean, you’re going to see a real huge problem.

Troy von Otnott: [00:46:41] And, to your point earlier, when we’re talking, it doesn’t matter how many solar panels, or how many wind turbines we put up, or how many efficient lights, we put it on, or how many electric cars we drive, there’s so much legacy carbon in our atmosphere that, a few years ago, geoengineering was a hot topic in the scientific community about should we? It’s no longer about should we? It’s we’re going to have to. We have to remove legacy CO2, or else. And so, when you’re given an “or else,” you better do something because it’s not going anywhere. I mean, like you said, it’s in the atmosphere for a hundred years.

Mike Blake: [00:47:20] Whenever⁠—even as a kid, whenever my parents said, “or else,” I never thought, “You know what, or else is probably the way I want to go.”

Troy von Otnott: [00:47:27] Exactly.

Mike Blake: [00:47:27] Never works out that way.

Troy von Otnott: [00:47:29] Give us some of that or else.

Mike Blake: [00:47:30] Give me a thing. I’ll have a second helping with the or else.

Troy von Otnott: [00:47:33] Exactly.

Mike Blake: [00:47:34] Troy, this has been great. Thank you so much for doing this. If somebody wants to contact you to learn more about this, maybe get some advice about maybe launching a program or tweaking the one they already have, can they do that?

Troy von Otnott: [00:47:44] Sure, yeah. You can contact me in my email. It’s troy@massive-tech.com.

Mike Blake: [00:47:51] All right. Well, that’s going to wrap it up for today’s program. And I would like to thank Troy von Otnott so much for joining us and sharing his expertise with us today. We explore a new topic each week. So, please turn in, so that when you are faced with your next business decision, you have clear vision when making it. If you enjoy this podcast, please consider leaving a review with your favorite podcast aggregator. It helps people find us, so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision Podcast.