Should clean energy companies be held to a higher standard?
A couple years ago, when the ALS Ice Bucket Challenge went viral, I, like most people, was challenged. Multiple times. Mainly, the challenges came from personal friends, but I also received an incoming challenge from Lyndon Rive of Solar City and immediately became engaged in a friendly three-way contest of ice bucket one-upsmanship with him and Ed Fenster of Sunrun.
At NRG, I was very used to having one foot in the conventional power camp and one foot in the clean-energy camp. Rarely did the two meet — different confabs, different institutional investors, different trade associations — but having already been a CEO of an independent power producer for more than a decade, I obviously knew many more conventional CEOs, much better and for much longer than I had known Lyndon and Ed, yet I faced no ice-bucket challenge from any of them, only from these two solar disrupters from the Bay Area.
It caused me to reflect on the following question: If you lead a company, such as Solar City or Sunrun, that you have imbued with a broader sense of purpose than just making money — saving the Earth, for example — are you genetically hardwired to be the kind of CEO that embraces and drives the company's corporate philanthropy efforts?
Indeed, taking it a step further, it might be asked: If you are to wrap your for-profit company in the halo of a higher calling, are you morally obligated to do more in your community and for your chosen causes than, say, a conventional power company CEO who unapologetically pours carbon into the atmosphere?
This is not just a philosophical question. It has important consequences. Corporate philanthropy is a huge source of funding for NGOs, amounting to more than $17 billion in cash donations in 2014, and undoubtedly more in-kind and in employer-endorsed volunteerism. But I have seen little written about corporate philanthropy emanating out of the clean-energy sector, perhaps because the incumbents are still in an early stage of evolution.
Follow the leader
In my experience, a company's commitment to corporate philanthropy is very much driven by the personal commitment of the CEO. This is because the directors and institutional investors to whom the CEO answers are usually indifferent to the company's charitable endeavors (except the Audit Committee, which commonly reviews the company's annual charitable giving to check up on the CEO and make sure that company funds aren't being channeled principally to the benefit of the private schools attended by the CEO's children — which, depressingly, is actually necessary because that is too often the sum total of the CEO's involvement in philanthropy).
With respect to the idea that charitable giving can be driven from below the C-suite, all companies have employees absolutely dedicated to doing good deeds but rarely, if ever, are those employees empowered to allocate corporate funds to giving. Only the CEO can override the inevitable opposition of the CFO and his budgeteers to funds being "squandered" in this way.
Corporate giving in the solar end of the energy world has particular resonance because of the unique attributes of distributed solar energy. Most corporations, including NRG during my time there, vastly preferred funding favored NGOs' capital projects rather than their operating costs. Underwriting NGO operating budgets was just too open-ended. But a distributed solar installation spans the divide because it is a capital project that translates through reduced or eliminated electricity bills into an operating cost benefit.
My thoughts on corporate philanthropy were refined in, of all places, Haiti. Over the five years since the devastating earthquake of 2010, I was engaged through NRG, and together with a legion of other volunteers from across the company, in installing solar panels on hospitals, schools, orphanages and social enterprises in and around Port-au-Prince, enabling worthy institutions to redirect their scarce funding away from diesel fuel purchases — for their power generators — to pursuit of their primary mission. In other words, at the hospitals we "solarized," solar panels directly enabled the employment of more nurses.
The way I look at it, solar panels saved lives. And I tell you, my career has had a lot of high points but nothing I ever did was more rewarding, or more educational, or more enhancing from a professional development point of view, than the work I did shoulder-to-shoulder with my NRG colleagues in Haiti. I think the same would be said by the other NRG people who donated their time, their labor and their technical expertise.Yet, despite my best efforts to institutionalize the company's commitment to helping Haiti , its Haiti program was cancelled within a few weeks after my departure from NRG. As I said, CEOs have the power to giveth — and equally the power to taketh away.
This idea of a capital project reducing operating costs also translates into the personal realm and closer to home. The average American spends 2 to 3 percent of disposable income on electricity, which make many more wealthy Americans relatively indifferent to potential savings on their electricity bill.
But for the economically disadvantaged, low or no electricity bills may help them pay the rent or purchase healthier food for their children. Plus, if you are looking for a business purpose tie-in to your charitable endeavors, good work done bringing solar to our lower-income communities may help combat the urban myth, propagated by some utilities and their P.R. hacks, that says the distributed solar industry is being subsidized off the back of electricity bills paid by poor people.
Three worthy organizations
In this regard, three worthy organizations — GRID Alternatives, Vote Solar and the Center for Social Inclusion — have developed a Low-Income Solar Policy Guide to advance the process of removing the impediments to the penetration of rooftop solar into our economically disadvantaged neighborhoods. The entire solar business community should, in my opinion, get involved directly with them and with other NGOs focused on bringing the environmental benefits of solar power to those who can most appreciate the economic savings.
For my part, when my noncompete ends and I wheedle my way into some sort of respectable position in the solar industry, I am going to come calling on you — Lyndon and Tanguy, Ed and Lynn, Danny and Birchie and, for that matter, Rhone and Adam — the leaders of the solar industry — to join me in Haiti. There is much to be done there. There is much we can do there.
Indeed, I have the roof of a worthy hospital picked out for us to "solarize." We will put on the PPE and see who can install a solar panel better and quicker — you or me, mano a mano. No more ice bucket excuses allowed!