Scaling with Green Capital

Prior to Stern, I worked as a crisis management consultant for government and utility companies. Our clients needed to formulate new internal systems to handle additional business operations caused by natural disasters such as gas leak, hurricanes and wild fires. Seeing how efficiently goals are cleared through capital financing and funding, I wanted to explore further in the nonprofit field that deals particularly with environmental protection by ways of financial strategies.

In partnership with Bloomberg Philanthropies, Natural Resources Defense Council (NRDC) is a main facilitator of the American Cities Climate Challenge. This 2-year challenge is a proactive undertaking to continue US’s contribution to the Paris Agreement after US’s exit in 2017. The various program partners work with 25 cities across the US to deepen carbon reduction goals and accelerate effort to tackle climate change for a sustainable future. Philanthropy-funded teams and resources are provided to these cities to ensure success in the development and passage of high impact policies, training for senior leadership, implementation of proposed climate plans and engagement for maximum community buy-in.

The team I am working with this summer is the finance strategy team at NRDC. Our goal is to provide support in financing options and mechanisms that are city and project specific. We help each partnering city understand the amount of capital needed and how to secure funding for its various carbon reduction initiatives. Among the 25 cities, the three deep dive cities I have been working closely with this summer are Boston, Charlotte and Washington D.C.

Working alongside other leading organizations on topics such as fleet transformation and institutional building retrofit, our team has created analysis tools to help various municipal offices visualize long-term energy and dollar savings from different system procurements. I found this portion of the project to be interesting as much of the financial modeling I employed had been derived directly from Professor Damodaran’s classes, knowledge obtained from Stern just a couple weeks prior.

After the cities establish how much investment is needed to achieve certain amount of energy savings to meet their carbon reduction goals, our team is engaged to provide options to close financing gap for these governmental projects. For me, this portion of the project represents valuable technical learning this summer. Each city has different funding and financing limitations for reasons such as legal obstacles, debt limitations or municipal preferences. Extensive research and discussions involving key players ensue to guide cities toward a fitting solution.

To participate in these initiatives and conversations, even as a listener has been a highly rewarding experience. Each interaction provides opportunities to closely observe advocates from key organizations. With passion and dedication, policy makers, activists, and experts share their knowledges and beliefs on various global and local issues involving important environmental policies and ideals. These sessions are often served as foundations for actionable agendas, sometimes immediate, for relevant issues and involving communities.

One of the most captivating topics during these discussions include the highly anticipated Green Bank movement that is continuously evolving in the US. Our team not only participated in the first ever Green Bank Summit in the US at Washington D.C. earlier this month, but also hosted the very first D.C. Green Bank meeting at its office. Locally, our team attended the newly approved PACE financing presentation, part of a NYC effort to accelerate private and public investment in green initiatives throughout the city. Overall, being in such close proximity to important discussions and policy implementations alongside NRDC has been a special summer experience.

_ Jessica Liang, MBA ’20

An intro to IFC

Prior to Stern, I have been working in clean energy financing and investment field in many different regions across continents. Because of my personal passion and professional background, I have always been considered impact investing to be my long-term career goal. I’m very thrilled to spend my summer at the International Finance Corporation (“IFC”) and involved in many aspects relating to impact investing within the organization.

IFC is a member of the World Bank Group, and the largest global development institution focused on the private sector in emerging markets. The Bank Group has set two goals for the world to achieve by 2030: end extreme poverty and promote shared prosperity in every country. IFC applies financial resources, technical expertise, global experience, and innovative thinking to help clients and partners overcome financial, operational, and other challenges. Across the world, IFC investments and advice help the private sector create jobs, improve basic services, foster small enterprises, and more.

Since 1956, IFC has leveraged $2.6 billion in capital to deliver more than $285 billion in financing for businesses in developing countries. Six decades after its inception, IFC now has entered a stage to embrace “IFC 3.0” to answer the evolving landscape of world development. The strategy recognizes the need for the organization to go to the most difficult geographies and to achieve impact at scale. The strategy encourages IFC to leverage the strengths of the entire World Bank Group and other development partners, to create markets, and mobilize private sector resources at a greater scale.

IFC Organizational Structure

IFC conducts its investment, advisory and asset management business with many other operation divisions supporting the business. The main investment and advisory taskforce are pulled into four different industry groups: Financial Institution Group (“FIG”), Manufacture, Agriculture and Service (“MAS”), Infrastructure (“Infra”), and Disruptive Technology (“PE/VC”). This summer I sit within the Climate Business Department to work with industry specialists on identifying potential investment opportunities in solar energy through collaboration with different industry investment teams.

The main solar assets investment can be divided into three major categories depends on the size of the solar project/system.

Utility-scale Solar:

Utility-scale solar is defined as a solar project that is large enough in MW size to be procured by a utility company on the electricity the solar project generates. The generated electricity from the solar project is transmitted from the solar project site through the transmission and distribution system to the end-users. Given the size of utility-scale solar projects, they often require a large land space for the number of solar panels needed to be installed.

Investing and financing utility-scale solar is a mature business in developed countries. Banks are comfortable with the business model of the utility-scale solar project to provide competitive project financing terms. However, in some developing countries, we see the market still as nascent. Activities from both equity and debt investors are often impeded by lack of scalable project, limited governmental support on clean energy investment, and a wide range of risks including credit, regulatory and foreign exchange. Scaling solar program initiated by IFC is a great case in point on how international development financial institution can help to tackle these issues. IFC provides both debt financing to projects and advisory to build up the framework of the tendering process, bankable project documents, and risk management.

Commercial & Industrial Solar:

Commercial & Industrial (“C&I”) solar is categorized as solar projects for businesses. C&I solar encompasses a variety of different types of customers and projects. In addition to businesses of various sizes, from large corporations to local small businesses, C&I solar customers can also include governments, schools and universities, and even nonprofits. In terms of MW size, C&I solar is often ranging from as small as 100kW to as large as 5-7MW. C&I solar project usually generate electricity behind the meter at the businesses site for electricity to be directly used by the business operation.

In general speaking, financing is more complex and less accessible in the C&I solar space comparing to utility-scale solar. It is more difficult for banks to assess the credibility of the electricity users comparing utilities. In addition, the loan size can be too small for traditional project finance lenders to consider if lend to the individual project. Transaction cost can also be one of the roadblocks for the projects to be profitable as solar project financing is less standard than corporate lending. One of the potential solutions is to develop and finance C&I solar projects by grouping them into the portfolio.

Residential Solar:

Residential rooftop solar PV project types are the smallest in size, ranging from 5 to 20 kilowatts (0.005-0.2MW). Residential solar is considered to be an alternative energy solution to provide cleaner and backup power to the individual household. Comparing to utility-scale and C&I Solar, residential solar is the most relevant to our daily life.

Residential solar could be financed by many different approaches, including equipment lease agreement with solar system provider, pay-as-you-go payment mechanism, or solar loan through fin-tech companies. Among all three different solar assets investment, Residential Solar is the most challenging asset to invest for a large financial institution like IFC.

My summer projects focus on creating markets in global C&I and the residential solar market for IFC through research. The ultimate goal is to establish a strategic framework to facilitate investment teams to identify potential investment opportunities in the space. I’m wrapping up my summer projects in the coming weeks and excited to share more of my experience this summer in the next post.

Junyi Wang, NYU Stern MBA Candidate 2020, SIIF Fellow 2019

Where Business Meets Impact

When I began the recruitment process for a summer internship last spring, I had clear expectations for what I hoped to get out of my summer.  As a dual degree MBA / MPA, I always envisioned the first of my two summers focusing on the business-side of my degrees and the second summer focusing on the policy and social impact side.  After interning in investment banking last summer, it was important to me to apply my MPA degree by working at an organization focused on impact this summer.  However, what I did not anticipate was that I would find an opportunity that would so clearly allow me to apply both – my business and impact experiences— to the role.  My role as a Strategy Intern at Arabella Advisors has allowed me to do just that.

Arabella Advisors helps foundations, philanthropists, and investors who are serious about impact achieve the greatest good with their resources. At Arabella, I am working with the Chief Operating Officer on firm strategy.  This includes working with the executive team to plan for the firm’s future: where they envision the firm in 3-5 years, whether they would like to pursue growth opportunities and how they think about their products and services.  This role allows me to apply skills from various prior experiences in ways I did not envision possible. Specifically, I leverage my prior role on the Strategic Projects team at GLG in developing frameworks, creating presentations and thinking about firm strategy. I apply skills from NYU coursework such as Stern’s Strategy courses and Wagner’s Managing the Financial and Social Returns of the Social Enterprises.  I apply financial and analytical skills from last summer’s banking internship as I think through the quantitative and financial considerations related to Arabella’s strategy.  When I initially envisioned an internship in which I would apply my MPA skills, I envisioned working purely in policy or in social impact.  However, in this role I have the chance to merge skills from various past experiences.

While I have been able to apply past skills to my current role, there are also clear differences.  Given that I spent last summer in finance, this summer is starkly different culturally.  For one, Arabella is a B-Corp and prides itself on its Diversity, Equity and Inclusion (DEI) as well as on its flexible work environment.

Specifically, I’ve been struck by the firm’s commitment to DEI.  I’ve learned through experience that many firms that may say they are committed to DEI, but don’t apply a DEI lens to day to day operations.  However, in my time at Arabella, I have heard directly from the founding members on how they actively think about DEI.  As we discuss firm strategy, various members of management have, in different circumstances, brought up questions related to DEI to ensure that our plans reflect Arabella’s DEI commitment.  Arabella has a working taskforce of employees in various cities, seniority levels and roles that meet regularly to think about DEI initiatives.  Further, Arabella is upfront about where there is room to grow.  When DEI targets are not met, the firm relays this to employees and develops plans to work to improve their efforts.

I also had strong expectations about workplace flexibility having spent last summer working 15-hour days on Wall Street. Arabella prides itself on its flexible work environment.  Several employees, including senior leadership, work remotely.  Employees with special situations have relocated to permanently work remotely and others can work from home when needed. The concept of “face time,” something I was well aware of last summer, is not prevalent here.  However, from my experiences, the flexible work culture is a bonus for the firm. For senior leaders located in cities that Arabella does not have a formal office in, they can expand Arabella’s network and develop industry relationships in new markets.  For employees that can work from home on a regular basis to meet their lifestyle needs, their productivity in the office is boosted.  Lastly, this policy helps the company source talent and allows employees to work more efficiently.

While my two summers have been starkly different from one another, what I did not envision was how I’d be able to apply skills from one role to the other.  I’ve enjoyed the opportunity to apply my strategy, financial and analytical skills to help Arabella think about firm strategy and future growth, and I’m excited to see what these last few weeks bring.

-Sophia Valner, MBA / MPA ’20

Where Nonprofit Organizations Meet the Corporate World

Having spent most of my career prior to Stern working for education nonprofit organizations, I wanted to have an opportunity to work not strictly in the nonprofit space, but still in the social good world. So I was very excited about the Social Impact Internship Fellowship opportunity.

This summer, in addition to the SIIF Fellowship, I have the Charles R. Middleton Leadership fellowship at Cause Strategy Partners which has allowed me to work for social good but not at a nonprofit organization. Cause Strategy Partners is a benefit corporation (B-Corp) that through its signature program, BoardLead, matches Fortune 500 employees to nonprofit organizations to serve on their boards and trains them in how to be an impactful board member. CSP is a small company with fewer than 10 full time employees but they deliver a lot of high-quality work. Since their founding in 2015, they have placed over 400+ professionals on nonprofit boards in New York, Chicago, San Francisco, Houston, Seattle, Washington D.C. and Philadelphia. And they have big plans – they are ramping up their signature program to 20+ cities in the next two years. 

This summer there is another graduate intern on the team from NYU Wagner. On our first day, which happened to be my birthday, Savannah and I rode up in the elevator together to get checked into the WeWork office. We and one other full time employee starting that day completed a two and a half day orientation and then we started working on our assigned projects. My three main projects for the summer are administering a program evaluation for a round of BoardLead in collaboration with Savannah, designing and implementing an employee engagement and culture assessment for Cause Strategy Partners (CSP), and consulting with two nonprofit clients around their board practices. I have been particularly proud of and challenged by my work on the employee engagement and culture assessment project. 

One reason is that culture and employee engagement and satisfaction is something I really care about. Another is that I used a lot of takeaways, and even specific curriculum material, from my Leadership in Organizations course with Dolly Chugh. After much research, I have sent out two surveys to the team to begin CSP’s employee engagement feedback practice and gain insight into how community members (current employees, former employees, and board members) understand the company culture. I was working as an “external” consultant for the company on this, which I found both exciting and challenging. At Stern and in my other projects at CSP this summer, I’ve been able to ask for feedback and collaborate with other team members. With this project, since everyone I am working with was going to take this survey, I didn’t feel like I was able to collaborate as much. To maintain data integrity, I wanted to ensure everyone was seeing the questions for the first time when they took the survey. As I look to my future career opportunities, I definitely want to work in a collaborative environment and on a team where feedback is encouraged – as it is at CSP with my other projects!

Cause Strategy Partners has a history of including summer interns right into the heart of the family this summer is no exception! We eat lunch together in the park regularly, we have participated in bake-offs, and we attended a panel on Diversity, Equity and Inclusion in the Boardroom at the Ford Foundation (picture below) with most of the team at the time. The first half of my internship at CSP has been a really great and I’m looking forward to the next four weeks!

Connie Meltzer, NYU Stern MBA Candidate 2020, SIIF Fellow 2019