Balancing Profit and Planet – How Business Leaders Can Help Decarbonize the Economy
Clean energy and economic development should be intrinsically linked, according to Tanatswa Mapondera (MiM’20).
You could say his life has been a series of events that led to that mindset, as well as his career. Born in Zimbabwe, Mapondera recalls experiencing the stark contrast between living in Johannesburg, South Africa, during a time when it was known as the engine of growth in Africa and then moving to Nigeria when he was 10, where he regularly experienced power outages that could last anywhere from a couple hours to several days. After high school, Mapondera moved to the United States and majored in political economy at the University of California, Berkeley, where he deepened his knowledge of politics, the economy, and climate change.
“I have experienced living in the most advanced economies in Sub-Saharan Africa, what is now the fast-growing economy on the continent, and the United States,” he says. “This has made me passionate about how we can take lessons from countries that have excelled in building out core infrastructure, and specifically how Africa can leapfrog the exploitative and environmentally harmful fossil fuels and look to renewables as the bedrock of how we build up that energy.”
Mapondera started consulting with development finance institutions in D.C. after earning a Master’s in Management from McDonough. That degree, he says, helped him better understand the scale of the problem, the global climate finance landscape, the key stakeholders, and where the money is going. Today, Mapondera is an investment associate with Aligned Climate Capital, which “invests in the people, companies, and real assets that are decarbonizing the global economy and its infrastructure.” His role is focused on ensuring the companies helping the planet are set up for financial success. BoxPower, Nyle Systems, and UtilityAPI are among some of the companies in Aligned’s portfolio focused on helping reach the Paris Agreement by 2050.
“As I got older and more knowledgeable, I realized climate change is the most existential threat we have today,” he says. “That’s when I decided that this would be a worthwhile career for me.”
Here, we talk to Mapondera about the work he and his team are doing, the effort to democratize climate reporting, and the regulations that will impact the future of business.
What’s unique about what you and the team at Aligned Climate Capital are doing to decarbonize the economy?
Our general partners, Peter Davidson and Brendan Bell, were both presidential appointees under Barack Obama to lead the Department of Energy’s Loan Programs Office, which essentially does direct investing on behalf of the government. They provided some of the early loans to SolarCity, which was acquired by Tesla, and backed some of the early utility scale solar developers in the country. They understand policy, and I think policy needs to have a seat at the table. For example, we know that somewhere around 60-70% of the technologies exist to get to net zero, but we also know that many of them are hindered or inhibited by certain policies. So we look at areas where we can add immediate value, whether that’s helping with strategic partnerships, accessing non-dilutive capital, getting credit, or unlocking project finance.
As an associate on the deal team, my role is to understand and make sure we are putting dollars to work that are going to be impactful. My background is in consulting rather than policy analysis and research, so I’m focused on doing the diligence to make sure we’re backing the right teams, that the market makes sense, that their financials are in good shape, and that they’re set up to scale. Because the larger the scale, the larger their footprint and impact.
There’s a lot to think through in terms of which companies to invest in. The U.S. Securities and Exchange Commission, the European Union, the United Kingdom, and the International Sustainability Standards Board are all proposing rules aimed at standardizing climate-related disclosures so investors can make better decisions. Do you think having consistent reporting standards will help?
We obviously fundamentally believe that ESG [environmental, social, and corporate governance] should drive carbon reduction for companies. There’s a difference though between the public markets and the private markets with these disclosures, but they’re going to help investors align with companies that are thoughtful about their approach to ESG and their carbon footprint. Assuming that the market is able to price that at a premium, it’s a win-win for both sides.
Is there currently a consistent way for organizations—from small businesses to Fortune 500 companies—to create a baseline audit? What does that process look like?
There’s a push from the people in this space to democratize climate and broader sustainability knowledge, such that small business owners have access to the same kinds of trainings available to Fortune 500 companies. Maybe that’s a government-funded program that provides those resources, maybe it’s a curated list of vendors to work with that are still competitive.
At the small business level, it’s more the mindset of finding out what’s available to them. But there are startups being created to do exactly this. Watershed is one of them. They do carbon accounting, and they’ve started working with the pioneers in this arena, such as Microsoft and Google.
What should business leaders be thinking about when it comes to decarbonizing the economy? What should they prioritize?
It starts with an internal audit of their baseline carbon emissions. That’s going to require a lot of education and short-term sacrifice no matter what, because no one wants to hear that their business isn’t succeeding across the board.
If I’m creating a business, I’m not thinking about the $2 million I make today. It’s about the $200 million I will make over the next 10 to 20 years. That level of thinking is still relatively new when it comes to ESG, but it starts there: It’s evaluating where you are, disclosing properly, and spelling out what sort of climate actions you’re going to be taking.
A lot of times climate becomes an afterthought, but I wouldn’t bifurcate climate and then everything else. I would see everything through a climate lens, so when you look at your supply chain and you ask yourself questions about why you have such long lead times and where you can optimize. If you’re viewing everything through a climate lens, you’ll spot the opportunities to increase your top line, as well as any potential risks to your bottom line.
At the end of the day, in addition to benefiting our planet, there’s a massive financial opportunity.
Which regulations should business leaders be paying attention to? Which ones will have the biggest impact in the next two to five years?
The Inflation Reduction Act was so catalyzing for the climate sector in general. There was a lot of celebration when it was put into law last year, but tracking that policy and the discourse around where things are going, and actually getting smart on the programs and the eligibility requirements, are going to be an ongoing effort. That capital, presumably, can dry up quickly, so it’s important to track and make sure businesses are well positioned to tap into those funds as soon as they become available. They don’t want to miss out and have to wait for the next cycle, which can put them behind their competitors.
This story was originally featured in the Georgetown Business Fall 2023 Magazine.