Episode 198: Accelerating Innovative Climate Solutions with Galvanize's Chief Impact Officer, Nicole Systrom
Episode 198: Accelerating Innovative Climate Solutions with Galvanize's Chief Impact Officer, Nicole Systrom
Today's guest is Nicole Systrom, Chief Impact Officer at Galvanize Climate Solutions. Galvanize Climate Solutions, launched in September 2021 by Tom Steyer and Katie Hall, is a mission-driven investment platform that will provide capital, expertise, and partnerships necessary to produce and scale vital and urgent climate solutions.
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Nicole, could you just frame the discussion, talk a bit about where you are currently with Galvanize, and what you're up to.
I recently joined the team at Galvanized Climate Solutions as Chief Impact Officer. I'm having so much fun. It’s such a great team of people doing great stuff. So, Galvanize, we are a very recently launched for-profit investment firm but climate-driven. Our mission is trying to accelerate this climate transition that we need to make. Galvanize is being organized as an investment platform and then my job as Chief Impact Officer is to at the platform level help build an integrated set of capabilities, perspectives, and skills that we can use to support the platform. So, to be specific, you won't be surprised to learn, one of my major responsibilities is setting our impact outlook or impact strategy, figuring out how we're going to measure and manage that both for each investment strategy, but then as a firm. I also had our science and technology team, which is just awesome and incredible, we're so lucky to have them on staff. I'm responsible for thinking through how we interact with policymakers, and the sort of intersection of investment and like regulatory affairs, policy work.
And then another topic that I'm thinking a lot about is community impact, equity, justice, what Galvanize means when we use those words, and how we're going to be integrating it into what we do moving forward. So, really fun, really big. I get to think about lots of really interesting hard things and work with smart people to try and move it forward.
Correct me if I'm wrong, but it seems like a lot of your work has been focused around deep tech, technology innovation, the intersection of that and policy. It sounds like your initial draw came more from almost a conservationist perspective. So, one natural question that comes up is around conservationism and techno-optimism, are they at odds? Can they coexist? Do they go together?
I think they're absolutely complimentary. I started out my career in climate being like, "Okay, we have to save the mountains, save the Earth, save the animals, right? How are we going to do that? You know, let's try this tool”. And then, “oh, that's what's not quite working. Okay, let's try this tool". I kept trying to find the one tool, the one thing that was really going to like get us there on climate.
I know, and I deeply believe at this point in my career is that there's no one solution to climate. Look at all the wonderful people you've talked to. There are so many takes on what we need to do here to move the ball forward and get back to a stable and safe climate. We need them all. We absolutely have to conserve, and in many places, I think, restore our natural ecosystems, which have all sorts of climate benefits. But then, we also need a bunch of new technologies as well. And so, there's room for both, and we absolutely must have both.
It'd be great to now have a rundown about what your worldview was coming into climate about the best ways to address the problem, how that has evolved, and the twists and turns that that's taken as you've had these different professional experiences?
I started out my career, gosh, this was I'm trying to think how old I am now. This was 15 years ago or 16 years ago now. I essentially started out, from a climate perspective, I started out in the carbon offsets world. I spent the first part of my career working on carbon offsets and thinking about that as a really important tool for us to incentivize good behavior. Eventually, I've just realized that offsets, it's a tiny tool. It doesn't actually address the real problem which is reducing the emissions itself.
So, it was at that point that I went back to grad school, I went to business school. But while I was there, I also got a master's in environment and resources and focused thematically that work on the energy sector. I felt like offsets were only considered only expected to be a small percentage of the solution set that we needed to address climate. And at the time, when I went back to grad school, I decided to focus on the energy sector, because depending on what you're looking at, it’s somewhere around 30% of the response. We can trace 30% of the emissions, of our global emissions to the power sector.
So, that felt like a really high leverage place to be and I feel even smarter now because that was even before the electrification of transportation was really a conversation we were having. As that conversation has accelerated and the deep connection between those two sectors has only become more apparent. I feel like I really picked it right. And what I got interested then at Sutro, and I think this is expressed in my work with Activate and Prime Coalition was even going a step further and thinking about all of the technologies we still would need.
This is not at all to denigrate deployments efforts or deployment of wind and solar, deployment of those technologies that we already have because I think we absolutely must do that. But it seemed to me, at the time, that the new technologies that we are going to need to get us that critical last 15 to 20% of the way there on climate they just didn't exist or they were going to take a really long time to develop. So, we had to start being really creative about how we were going to see those things and get them off the ground.
So, that led me to the focus on really early-stage technology development work. I still hold a very deep commitment to that in my heart. But I think where I'm at today, given that we have about eight years or so left on our carbon budget, is we have to pull back outwards again and have taken a more bird's eye view in terms of how we can mobilize the financial sector or the corporate sector. How do we get everybody involved? We'll need those early-stage technologies. We'll need some deep technology development. And those are underway, and we'll need more of that. But in the meantime, we have to be doing everything we can to move solutions forward on all fronts.
One of the debates that it seems like occurs is how on the one hand, we just need more. There are so many different types of solutions, sectors, and geographies. But then on the other hand people say, "But yeah, there's only a few things that matter and all the airtime by all this other stuff is a distraction from the things that actually move the needle." So, even your 15% talk, right? The 85% would say, "But it's only 15%. And yet, it gets 80% of the airtime." Like “just get it out of the way so that we can make the 85% happen faster.” How do you think about that tension?
We're at a kind of an interesting moment for climate writ broad because I think part of the reason that we've been having these debates about like, "Oh, that's all the deployment” or “oh conservation is the thing that we must do”, right? These scarcity arguments come about because, for a very long time, climate has been starved of resources of any axis, right? Whether it's philanthropy or investment, or media coverage. We haven't been in a good situation. If this problem affects everyone on this planet is so big and huge, and really gets so little air time. That's why we're in those scarcity arguments.
I think this is a moment when that's starting to flip. It feels to me like an acceleration of interest in climate from the general public. There are so many people out there who get networked to me through friends who are like, "I did this, but like climate is the thing, and what should I be doing?" There's an influx of people, money, and interest into climate. My hope is that we will soon reach the point where there's enough happening here that we can stop the scarcity arguments because at the end of the day we really have to do everything. We have to do it all. So, we all, we as a community of people who care about this, have to figure out how to do it all together and stop wasting time trying to compete for attention or support or airtime.
Another debate that takes place frequently is around our capitalist system. If you look at the capitalist engine, it can be a very powerful engine. And in some ways, it can be a great source for good and it has everything, it has some unintended consequences and some negative externalities, as well. There are people that say, “in order to fix the problem in a sustained way, we need to change the system. Otherwise, it'll just be more of the same in terms of inequality, in terms of colonialism.” And there are other people that say, "Well, do you want to try to bake it all in and try to achieve some idealistic future and end up with a goose egg?" So, how do you think about those trade-offs?
I really appreciate this question. There are lots of areas where doing the right thing is generally good and the negative externalities are low. Then there are areas where we're going to have some trade-offs to make. Right now thinking of, if you believe that we're going to electrify everything, then maybe you think that that means we're going to need a lot more rare earth minerals. So, that probably implies that we're going to have to mine something somewhere. And as we know, mining is not an environmentally benevolent activity.
So, there are lots of places where we're going to have to have hard discussions and we're going to have to make some hard choices about how we're going to get there. Where I personally come down is I buy the idea that we don't have a lot of time to start making progress here. So what I take as a given is that we have the capitalist economic system that we have. We have the governmental systems that we have. And unfortunately, or fortunately, depending on how you look at it, that's what we got to work with. And so, we need to be moving forward within those systems as they are today while having an eye to making the changes that we hope can change would make everything better.
The last thought I would share there is if at the end of this work the climate issue is "addressed" but we have an incredibly unstable social order, the world is still a place where there is a divide between people who have safety, security, and resources and people who don't, I don't want to live in that world. So, what I very much appreciate is finding folks and working with folks who are willing to face that reality and grapple with hard choices because I don't think there's any way around it.
Now, I'd love to turn our attention to Galvanize for a few minutes. When it comes to Galvanize, the people that you're assembling around the table are very experienced, accomplished people. I already know from your offset comment earlier that you think while there's a long tail and there are lots of different things we'll need for climate action, they're not all created equal. So, my question is, what are the key levers that you and the team looked at before Galvanize was formed that led you to believe that it warranted Galvanize getting formed? And then what is the positioning in the market that you think will both lead to differentiation in terms of financial success, but also differentiation in terms of impact and additionality? Is additionality even something that you, that you care about? How much should you or how much should anyone weigh that in when trying to figure out what they should do to help?
I'll just start riffing and then you jump in and ask questions when you want me to go a certain place. To me, one of the ideas that really sparked the founding of Galvanize and, you can talk to our founders but if you ask Tom. Tom Steyer is a person who has spent many decades now trying different ways to affect the climate crisis. And I think we have made a lot of progress since that time, but this feels like the moment when the role that the private sector can play in helping to push forward on climate progress is really ascendance.
I'm sure you've seen the analysis of COP26, which has sort of characterized COP26 as the handoff to the private sector. But in the absence of global action, you have seen a ton of big corporate players making commitments and financial institutions making commitments. So, I think Galvanize, as a finance firm, as an investment firm, is really born in that we are of this moment, right? We see the power and the role of the necessity of the private sector being involved in this transition.
Now, as an investment firm directing capital to places that matter for the climate is the central tool that we are using. But the thing that makes me really excited about being at Galvanize and my particular role is the recognition that investment happens within a much broader context. And even if investment is your main tool, if you can wrap investment and the investment tool with policy expertise, with science and technology expertise, with some understanding of community impacts, with communications and branding expertise, you can drive the climate impact of your underlying investments further, faster.
And to me, that understanding is the really special thing about Galvanize that's reflected in what we're trying to build at the platform level, which is bringing expertise and ability in those related areas that I mentioned to our outlook as financial investors. This is the theory that means that we're able to make better investments from a climate perspective but also enables us to be kind of good corporate citizens. We can both think about our impact at the individual investment level but we can also think about our impact as a firm and how we show up in policy conversations, how we work with our peer investor institutions on broader initiatives to move things forward, how we contribute to the net-zero conversation, which is another discussion to have. But we have a lot of ambition to try and be as helpful and impactful as we can in so many ways. That’s what I'm signed up to do and on a team that really wants to do that as well.
In terms of the lifecycle of these companies and time horizons that it takes for them to reach their full form. From a fund standpoint, you have the Silicon Valley firms, a lot of which have, let's say, 10 year life cycles to their funds. You have the BEVs of the world that have maybe a little longer funds (15 or 18). And then you have the Generates of the world that don't even have a fund. Everything's off balance sheet where they're not beholden to any time horizons, and they won't take any time box capital. When Scott Jacobs came on the show, he made a point to say that if any investor wanted to come in, and they're investing out of a pool of capital that's timebox, they won't take it. How do you think about that? And what is it that gives you confidence that time box capital won't be inhibiting from an impact standpoint?
First of all, I think there's room for sort of all of those approaches for sure. We need all of those approaches. And we probably need more of those. We don't need one Generate, we need six or seven more Generates alongside.
Well, back to the scarcity mindset from early on in our discussion, right? Scarcity versus more for everything.
Yeah, exactly. We need all of those things. And we need more of those things. I would underline the point that Galvanize, even if we get to be a huge financial firm, will still be very tiny compared to the $3 or $4 trillion investment gap, which is needed to address climate. So, the more the merrier. The more approaches the merrier. The different takes on what kind of financing is needed at what point in time is all good, and let's get more of that if we can.
In terms of Galvanize, what makes me confident that timebox capital won't inhibit us is the market has changed a lot. There are just technologies we already have well developed. I think the kind of corporate attention on this issue and appetite for making change and innovation and sort of changing the way we do business is different. I think policy too, although I wish policy was coming faster than it was. I think the winds are changing there. There's a lot more opportunity and creativity and an understanding that this is where we need to go as a global society. So, there are plenty of investments for any of these strategies or sort of financial structures to engage with and we need all of it. I don't think there's a lack of things to invest in.
Is it fair to say that since you are so impact motivated that the additionality with Galvanize comes from the fact that you're providing post-investment versus from the decision to make the investment itself?
Yeah, I think that's fair. We're a for-profit investment firm, so we're not dealing with catalytic capital. As someone who I feel very, personally very strongly about the role of catalytic capital should play. Maybe there's some way far off in the future where we could partner more closely with those kinds of sources of capital, but Galvanize itself at this point is for profit. So, again, I don't think from a very strict additionality perspective, the places where we can claim additionality are in the way that we plan to work with our underlying investments and hope to accelerate their progress.
And we've talked a lot about the things that are within the scope of your control, either personally or with Galvanize. If you could change one thing outside of the scope of your control that would most accelerate our progress on tackling the climate problem. What would you change? And how would you change it?
I would point to one thing that I said earlier, which is just around voting. I wish every voter in every country was voting from a climate mindset at all levels of government and that we were all communicating that strongly to our elected leaders.
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