The Institute for Innovation Development recently talked with Robert Uek and Bill Page, co-managers of the Essex Environmental Opportunities Fund (EEOFX/GEOSX)—a global, all-cap mutual fund investing across nine environmental technology themes. While the term nexus has been bandied about a lot, it seems most appropriate here as this fund’s investment strategy truly seems to position itself squarely at unique crossroads: between a socially responsible mindset and corporate profitability, technical innovation and bottom line efficiency. All the while, finding solutions to critical, real world environmental and social issues in the process. It really does beg the question: How impactful is your investment portfolio?
Bill Hortz: Where are we on the issue of sustainability today and what is the investment case for areas like clean energy and resource optimization?
Robert Uek: Sustainability is rapidly mainstreaming. What was once a social aspiration is now an economic reality where companies are investing in technologies that enable sustainability. Clean technologies, such as LED lighting, solar arrays and energy efficiency projects are proving to be strong investments. In late January, Nike announced it was going to be powered by 100 percent renewable energy by 2025, seven years earlier than initially planned. Nike just signed an 86 megawatt wind power purchase agreement from two Texas wind farms to meet this goal.
Companies are aligning sustainability and economic goals by moving into clean technology investment because it makes economic sense. As clean technology cost curves have come down over the last 10 years, end market demand has increased. For example, according to PV Insights, solar module prices are down from close to $2.00 per watt in 2010 to under $0.40 today, leading to solar energy taking share from traditional fossil fuel sources, as it is cheaper, and lessens commodity price risk for the companies running their operations on solar and wind power.
Bill Page: The case for resource optimization is a global one today given the greater economic growth outside of the developed markets. Economic centers of the emerging markets are scaling, with consumer-driven growth a greater percentage of aggregate economic growth—there is simply not enough food and fuel to provide an easy economic transition. While over 100 million people per year have gained access to electricity since 2012 according to the International Energy Agency, 90 percent of sub-Saharan Africa still lacks access to electricity. This access gap cannot be filled with coal as the source given global climate change.
We believe strongly that renewable energy and clean technologies such as micro-grids for storage and electricity generation allow more efficient and feasible installations and scaling. Just as cell phone adoption was led by the emerging markets given lack of competing infrastructure, so too will the frontier markets scale electricity access with new energy technologies.
Hortz: How does the current administration’s actions support or hinder investment in this area?
Uek: Disruptive technology does not care who is in Washington. With successful and scaling clean technologies, more can be achieved with less. These technologies are adopted because they enhance the quality of life and save money, whether on a factory floor with robotics, on the farm with precision agriculture applications or in a city with traffic and energy management systems. Each of these solutions is represented by the Essex Environmental Opportunities Fund, striving to achieve economic growth with enhanced productivity and lower environmental impact. We manage the Fund with a focus on technologies that are commercially viable in the absence of government incentives.
We are struck by the continued progression of clean technology, despite the negative sentiment of a year ago. While concerns were not baseless, much was made of the negative prospects for clean tech and new energy given an incoming Administration that denounced clean technology solutions in favor of fossil fuels, with a focus on coal power promotion. As the Trump Administration attempted to limit EPA oversight and walked away from a global solution to combatting climate change with the Paris Climate Accord, disruptive clean tech solutions continued to take share from old-line, traditional energy sources. Since the Trump Administration denounced the Paris Climate Accord, 250 U.S. cities, 12 states and 300 companies representing over $6.5 trillion in market value have set climate targets, with more than 100 companies having committed to run their operations solely on renewable energy. As we begin 2018, the global direction for clean tech is evident, continuing to stride in forward fashion.
Hortz: Tell us about your research and thought leadership efforts in this space. What else have you been uncovering?