John Chaplin [00:01:00] This is Energy Impact Podcast. I'm John Chaplin, your host today, and I'm here with Paul Ellis, ESG Consultant and the host of Sustainable Finance Podcast. How are you doing, Paul?

Paul Ellis [00:01:11] I'm doing well, John. How are you today?

John Chaplin [00:01:13] Doing really well, doing really well. So yeah, I'd love to really dive down into your background. Usually how we like to get started is to just tell us about your early life and how you got started.

Paul Ellis [00:01:24] My early life... Well, that's... I don't want to go too far back because that's a lot of years, but I'll go back to when I was in a career as a financial advisor to individual small companies, some family offices, etc. And this was in the early aughts, 2002, to be more exact.

Paul Ellis [00:01:48] But there was a lot of chicanery going on on Wall Street in those days, and I was getting really fed up with how the industry was starting to look. So, I asked some friends for some guidance, and they referred me to the folks at the Calvert Funds, at that time. It's now Calvert Research and Development, part of Morgan Stanley. But at that time, they were an independent portfolio manager and one of the oldest portfolio management companies for sustainable investing.

Paul Ellis [00:02:20] And I met with Julie Gordy, who at that time was the head of their research department, and did a 180 degree pivot in my practice. Over the next five years, I doubled the size of my practice because I found, John, that IBM engineers and school teachers and administrators have a lot in common when it comes to sustainable investing, which I really didn't have a sense of prior to that. They're all focused on very specific issues that they want to have control of as investors and that they want to see do well related to investment strategies around environmental impact.

Paul Ellis [00:03:05] I live in New Paltz, which is in the mid-Hudson Valley, and it's a beautiful area and it attracts people like that. So, that's how I got started in sustainable investing.

John Chaplin [00:03:17] Interesting. So, I mean, sustainable investing back in the early 2000s... That would be way early before it was en vogue in the larger, broader market. What really pulled you in and attracted you to just sustainable investing?

Paul Ellis [00:03:32] Well, what I discovered was that there was a way that investors, whether they were institutional or individual, could benefit from taking a look at the kinds of things that today we categorize as ESG metrics and criteria. It's very controversial today; there's a lot of pushback from the conservative elements, politically, around these kinds of issues. But frankly, really, what it is, it's a data collection process, as you probably know well. And it's really about how companies can manage their business model and their ROI over a long period of time while taking environmental, social, and governance issues into consideration in their business model.

Paul Ellis [00:04:22] Ultimately, there's no big mystery about it, but a lot of people today are confused and think that it's something other than good portfolio management over the long term.

John Chaplin [00:04:36] And you touched on ESG being those three core: environmental, social, and governance. How have you seen the changes of what's most important or where the weights of those are over the course of your career?

Paul Ellis [00:04:51] I would say that when I first started doing sustainable investing with my clients, it was much more a focus on environmental issues. At that point in time, they were really starting to come to the fore. There was more and more recognition that there was a lot of negative environmental impact going on around the world. Prior to that, it had really been sort of a social movement, because it really got launched strongly in response to apartheid in South Africa, maybe 20 years before I got into this part of the industry.

Paul Ellis [00:05:30] What ultimately has developed over time is the fact that at the C-suite level, these types of issues, this type of data... All of these things are important for companies to evaluate, to scrutinize, to measure, etc. And the reality is that it works most effectively from the C-suite down throughout an organization.

John Chaplin [00:05:59] Okay. Well, maybe this would be a good time to pivot to your work you've done at Ellis & Associates. So, how have you approached the market in what you're offering there?

Paul Ellis [00:06:10] Well, I'm a consultant to financial advisory firms. And what I really love to do most today is run the podcast platform, the Sustainable Finance podcast platform. I have a lot of fun sourcing and having conversations with people in the public or the private markets who are really pushing the envelope in terms of developing sustainable investment strategies, integrating them into portfolios, and being founders of companies that are out there on the cutting edge. Companies that are very entrepreneurial in their approach to investing, and are really looking just over the horizon, if you will, beyond the timeline or... There's not really a specific timeline related to a lot of what these entrepreneurs are doing around technologies, nature-based solutions, etc.

Paul Ellis [00:07:08] So, that kind of work really excites me. I love telling those stories before they get into the hands of the larger media companies, because then they become part of an article that somebody writes that includes several of those stories. I like to find those firms when they're still out there really cutting their teeth in this process.

John Chaplin [00:07:31] Interesting. Maybe you could give a few examples of some of those that are out there on the forefront, that are really cutting their teeth maybe earlier than what most people would have heard about from the large media sources.

Paul Ellis [00:07:43] Well, I'll give you one really good example. It's someone that I did a program with, a podcast with, last October. His name is Karthik Balakrishnan. He's the co-founder of Actual, which is a platform in, I would say, AI and reporting systems within the industry. And he and his partner have built a platform where any company, whether it's public or private, can go to review their entire business model as it is integrated into sustainability reporting and metrics, etc.

Paul Ellis [00:08:21] So, they do, from start to finish, all in one place, so that companies don't have to go to several different vendors. They don't have to have relationships and build relationships over time with 15 different organizations, some of them providing data, some of them providing portfolio management, etc. This is a one-stop shop, if you will. Actual is the name of the company.

John Chaplin [00:08:49] Awesome. Okay, interesting. And I guess you're seeing a lot more from the investor side really wanting to get more insight into that data, maybe more uniform data so that they can judge across the investments that they're making, apples to apples, on what they're reporting.

Paul Ellis [00:09:07] Yeah, that's become a rapidly-growing part of this part of financial services. And one of the companies that I have a very good relationship with is Novata. They are a consortium developed onramp for private market companies. And the consortium that founded them is made up of the Ford Foundation, Microsoft, Hamilton Lane, who you're probably familiar with, one of the very large venture capital firms in the industry, and a number of other venture capital and private equity firms.

Paul Ellis [00:09:45] And what they do, since they were founded a few years ago, is they provide, essentially what I would call an onramp for private market companies to begin their ESG reporting process and follow through on it on an annual basis having the support of the people at Novata who are going to help them either continue as a private company in their reporting needs and that kind of transformation over time, or make the transition to a public company and be ready to start reporting to regulatory organizations that today are focused more on the public markets. But eventually, that type of process is going to filter down to the private markets as well.

John Chaplin [00:10:34] Interesting, interesting. What are some of the other pain points... Data being one, but what are some other pain points that investors are really looking to solve when it comes to sustainable investing?

Paul Ellis [00:10:47] Well, I think the big one that everybody focuses on, especially when the weather starts getting warmer and we start having wildfires out west and those kinds of environmental impacts... Those are the things that I think are growing in awareness for investors all over the world. They understand that we're in a period of time where we're negatively impacting nature to the extent that we're having higher temperatures all over the planet every single year for the last dozen years or so, maybe going back much further than that. And these are issues that we're really not focusing on in terms of resolution on a planetary basis at the moment.

Paul Ellis [00:11:39] There's a lot of concern about water shortage. There's a lot of concern about violent storms and impact. There's a lot of concern about warming oceans. There's a lot of concern about the food chain throughout the entire... Especially in the Global South. And so, these are all issues that are on people's minds every day.

Paul Ellis [00:12:03] I was reading in The New York Times, an article this past weekend that was offering some examples of how people could deal with the stress that comes from thinking about all of these issues that we have on the planet now and offering advice around how to cope with those kinds of concerns on a day-to-day basis. So, it's not just about investors. It's not just about the capital markets. The entire public and private infrastructure is now being influenced in its decision making processes and the way companies think about the long-term course of their business models.

John Chaplin [00:12:47] And have you seen that change more recently compared to when you first started? That it seems like there's more action being taken to solve those problems?

Paul Ellis [00:12:57] That's a good question, John. There is a lot more action being taken by many more companies all over the world. And there's also a significant amount of reaction on the political side that is negative and that is pushing back against this kind of action going forward.

Paul Ellis [00:13:16] This is part of the process of going through these periods of transition. As we know, human beings have been doing this ever since we became the dominant species on the planet. We go through transition times where new technologies come to the fore. New issues that we have to deal with economically as well as from the natural world are all part of our ongoing process. And today, the pace of acceleration around focusing on those issues from both the positive and the negative side has significantly increased since I started doing this work.

John Chaplin [00:13:57] Well, that's good to hear. I think we're seeing a lot of the same thing. That's why we started this podcast, to talk to people who are working in this space and making those impacts on the day to day.

John Chaplin [00:14:05] I'd love to dive more down into... I've got here in my notes that you've written 80 plus articles on sustainable finance, with a specific focus on women leaders in the renewable energy technologies. So, maybe you could dive down into what you found there.

Paul Ellis [00:14:22] Well, in working with women in sustainable finance, what I'm finding is that they are really emerging as the leaders, not only today, but going forward in the next generation. Many women are choosing, educationally and professionally, to engage in the whole world of sustainable... Not just sustainable finance, but sustainable business development. They are really taking the bull by the horns, so to speak, in establishing their own companies and becoming entrepreneurs. Even though, very interestingly, they still get just a very small percentage of the allocation of capital that's going to these issues or going to women-owned and run portfolio companies or private market companies, or women who are even in public companies in senior executive positions.

Paul Ellis [00:15:23] It's really what I think is sort of a paradoxical dynamic that's taking place right now. Women get about 6% of private equity capital from general partners to take their best shot at being entrepreneurs and growing a private company, to whatever point they want to. Men still get about 94% of the capital allocation. But guess what? The women significantly outperform the men when they are in charge, when they are a founder, when it's a women-run company.

Paul Ellis [00:16:03] So, it's almost like we've reversed the expectation in the capital markets. We provide men with a lot more resources to do their best and to make the right decisions for the investors they represent. And at the same time, the women who are competing with them are outperforming them, but getting a much smaller percentage of the capital allocation.

John Chaplin [00:16:31] Yeah, that definitely sounds like a misallocation of capital there that I'm sure is going to slowly correct itself over time, and hopefully, much quicker.

John Chaplin [00:16:39] We talked a little bit about your Sustainable Finance podcast. How did you get that started? What really encouraged you to get going there? Maybe you could talk a little bit more about where people can listen to that podcast, and maybe some of the first episodes that you would recommend.

Paul Ellis [00:16:57] Sure. Well, this is a story that goes back to 2018. Because at that time, I was working with my good friend Jeff Gitterman, who owns an asset management firm and is a very good advisor and was, like me, looking for ways to expand the opportunity for sustainable investment. And we had decided that since we were both working and living... I don't live in New York City. Jeff does, but our whole business infrastructure for both of us is in the New York area.

Paul Ellis [00:17:35] So, we decided that we were going to convene some events for financial advisors on the East Coast. And all of the people who were doing sustainable investing out on the West Coast and in Colorado at that time told us, "No, it's not going to work, because investors and financial advisors on the East Coast are not interested in this." And we said, "Well, we beg to differ. So, what we're going to do is we're going to work with the partnership office at the United Nations and we're going to put on some events there."

Paul Ellis [00:18:12] This was about 20 weeks before the date that we had scheduled for the event at the UN, and we were sitting in Jeff's office trying to decide how we were going to promote it. And I said to Jeff, "Well, there's 17 SDGs, Sustainable Development Goals, issued through the United Nations. Why don't we do a podcast on each of those programs, on each of the SDGs? And we'll put you doing a podcast, as a leader in the field, at the beginning and the end, so we can do 19 programs? You know Jeff, I've wanted to start a podcast now for a couple of years, so why don't we launch the podcast to promote the event?"

Paul Ellis [00:19:03] So, that's what we did. And I didn't have any trouble getting experts, subject matter experts for all 17 of the SDGs. And we ended up with 750 financial advisors attending that first event at the UN. So, that was the launch of the podcast, and that was almost six years ago now, and it's got legs of its own. We're growing very nicely. We're distributing through a number of different platforms. People can go to the Paul Ellis Consulting website and there's a link to the podcast page. And you can link to all of the platforms where the podcast programs are available from that page at Paul Ellis Consulting.

John Chaplin [00:19:46] Awesome. And so, it sounded like you started off with those Sustainable Development Goals. Out of those 17, what were some of your favorite episodes that you'd recommend?

Paul Ellis [00:19:56] Well, I've done 252 episodes now, so...

John Chaplin [00:20:03] Those were the early days. That's right, yeah.

Paul Ellis [00:20:04] Yeah, it's hard to take my memory back that far. But what I can do is I can tell you about a couple of the recent episodes that we've done that I'm very excited about. One I've already mentioned, the one with Actual. I've done some programs with a company named Novata, which again, I've already mentioned is a private market onramp for getting into ESG integration and in business models. I have an ongoing relationship with them where we're doing a number of programs on an annual basis.

Paul Ellis [00:20:45] And what they do is they source all these fantastic guests to come on to the programs, and I get to meet all of these really cool people who are doing great ESG things and nature-based programs on their own company platforms. And then, we have conversations with them and members of the Novata staff who are talking with our audience about how private companies can introduce those types of metrics, that type of measurement, that type of reporting into their business models.

Paul Ellis [00:21:27] For example, last fall I had a program that I did with Mark Kroese, who was at that time the Head of Sustainability for Microsoft, and Mark Fischel, who is a member of the Novata team that has been responsible for conducting or putting together our carbon tracking program. So, those are the kinds of people that I'm now getting to work with on a weekly basis.

Paul Ellis [00:21:56] Another program that we did just recently was with a young woman who is a co-founder of a platform that is working with young people, Gen Y and Gen Z people, in France and in Africa to get them into the policymaking process. Her name is Amina Zakhnouf. It was a really fun episode. I found that what's really happening at the core level of, I guess, psychological development for Gen Y and Gen Z right now is that people are very committed to sustainability across every part of their lives.

Paul Ellis [00:22:44] One of the things, John, that I've found is really interesting is that we've had information about the very large wealth transfer that's taking place in our economy over the next 25 years or so. It started maybe a decade ago, and it's a transition of wealth across generations. And what's happening now is that a lot of young men like you, a lot of young women, are starting to be the stewards of family capital in a much larger way than they ever have been before. And what they're doing is they're focusing on sustainability as one of the very clear goals that they want to accomplish in that process over the rest of their lifetimes. And their founding organizations like I'm Committed to Africa, like Amina Zakhnouf; that's what they do on a day-to-day basis.

John Chaplin [00:23:47] That's great. Yeah, it's very interesting to see the generational shifts from the older generation and what the younger generation is really trying to champion and take for it. I think we see very similar things. The younger generation is much more gung ho about getting these things done quickly and willing to put effort and capital behind it.

Paul Ellis [00:24:06] And you kind of touched on this a little bit... I'm curious to dive down into this a little bit more. You started the podcast at the UN doing the UN Sustainable Development Goals. How do you feel the difference is in the conversation around sustainability from, let's say, the Western markets like the United States versus more of the growing economies and the rest of the world?

Paul Ellis [00:24:31] This is one of the dynamics that is causing a lot of focus from around the world. And it's also causing a fair amount of friction because you've got developed economies that want to continue to control the majority of the wealth that's out there. And let's just say, financial wealth and natural wealth. And then, you've got the countries in the Global South, for example, that are less well-off financially for the most part. And they are also absorbing more of the environmental and health-related and social impacts of climate change because these are the places where temperatures are rising the fastest. These are the places where the infrastructure is not built out yet to deal with these kinds of issues on a day-to-day basis. So, where we need a lot more capital infusion is in the developing markets.

Paul Ellis [00:25:35] Now, a lot of investors in the developed markets will say to you, "You know, I'm comfortable using my portfolio allocation to invest in companies that I feel are large enough and well-structured enough and in an economy that is not experiencing a lot of political tension or other kinds of social or military issues or anything like that, but I'm not really keen on investing in smaller economies because they're just too volatile. You never know what's going to happen from one year to the next."

Paul Ellis [00:26:15] I'm here to tell those people that that transition is well underway now in the Global South. And there are many, many, many entrepreneurial organizations and companies that are just taking the bit in their teeth and they are going forward around sustainability and capital allocation from the capital allocators in the developed economies that are willing to take a little more short-term risk in order to develop a long-term portfolio return.

Paul Ellis [00:26:47] In fact, what a lot of these types of companies are doing in the developing economies is they're leapfrogging the OECD economies in terms of technology. They don't have to worry about an oil and gas infrastructure. They don't have to worry about a utility infrastructure. Those things don't exist in their economies. And they are going to use the current technologies to go right over what we're trying to do, which is adapt and adjust from a 100 plus year old system and infrastructure to the future.

John Chaplin [00:27:23] Well, it's good to hear because I think it is an area that's needed, and I do believe in that leapfrog approach. There's definitely an opportunity to start from a base point and build out with the technology that we have today, the best infrastructure that we can to deliver abundant energy, but also deliver it in the cleanest way possible. And it's good to hear that there are a lot of people focused on that in the Global South, because it's very much needed.

Paul Ellis [00:27:47] Yes.

John Chaplin [00:27:50] I'd love to talk to you about... And this might be a good way to lead into this... What are you most optimistic about in the future as far as ESG? Globally, whether on the investing side or just the results of some of the companies that maybe you've talked to on your podcast that are out there doing some of this good work.

Paul Ellis [00:28:07] The thing that I love to do most is have these interactive conversations with entrepreneurs, with people who are, as I said before, sort of pushing the envelope. They're really looking out beyond the horizon. Now, they have a vision that they're pursuing, that they're raising capital for to invest in. And what they're doing is they're making choices that are going to be determining the way our global economy develops through all of these new technologies that we have over the next couple of generations.

Paul Ellis [00:28:43] I'm very excited about working with those kinds of people because I really think that they are looking just over the horizon in their planning. They're really getting involved in the capital markets in significant ways. And once again, a much larger percentage of women are participating in this process because they have the ability to do so now. We're encouraging them through diversity and equity programs in the workplace. And even when there's pushback against those things, at least the discussion is out in the open today. Those kinds of issues are no longer hidden behind doors, and senior executives at most corporations are very sensitive. And in the boardroom, they are sensitive to these types of issues because, guess what? There are more and more women on corporate boards of directors than ever before.

Paul Ellis [00:29:36] So, we're seeing a lot of dynamic change around gender, around social issues, good and bad things going on. But at least it's out in the open now where we're viewing these things because we've got this global information process now that can go anywhere in the world, any time of day, and get the stories that are going to be interesting to people, whether they are conservative or liberal or somewhere in between.

John Chaplin [00:30:10] Okay. And then, with the clean energy transition, if you had to put your interests, what you would like to see in the next 5 to 10 years... What are you most looking forward to when it comes to clean energy?

Paul Ellis [00:30:23] What I'd really like to see is a continuing, rapid buildout of clean energy resources. So, I'm talking about solar. I'm talking about wind. I'm talking about the ways that we're delivering energy to the end user, whether it's a company or a home. I think we're really at a critical point in development of those processes, because we're growing our human population dramatically over the next 50 years. And a lot of that population in places like Africa is going to be below the age of 25 for the next 50 years or so. So, these are people that have, potentially, a very long lifespan in dealing with our current energy infrastructure. And we have to provide more and more clean energy resources to those people.

Paul Ellis [00:31:23] And we have a process that's underway, an energy transition that is going to ultimately take the place of carbon energy, because that's the choice that we have. That's really the only choice that we have for our health and well-being over the long term. So, really what I want to see is more and more companies, more and more entrepreneurs who are going to really push the envelope in terms of clean energy resources.

Paul Ellis [00:31:54] And I'm talking about all kinds. I'm thinking that this is going to happen at the nuclear level. This is going to be something that's really important to continue all processes of energy development for the time being and gradually transition everything over to clean energy resources.

John Chaplin [00:32:17] Yeah, it's an interesting time to be in the energy space with this transition. There's a lot of volatility, but a lot of opportunity. And a great opportunity to bring in cleaner energy sources, like we were saying earlier, to the Global South. Some of them are still using fuel oil, are still using...

Paul Ellis [00:32:38] Collecting firewood.

John Chaplin [00:32:38] Really old forms of energy that you could transition straight to wind or solar. I think there's a tremendous opportunity there.

Paul Ellis [00:32:45] Yes. I agree with you.

John Chaplin [00:32:47] Awesome. Well, what's next for you? Any exciting upcoming announcements or episodes or events that you'll be participating in?

Paul Ellis [00:32:56] Well, I'm going to be participating at the end of this month at a very exciting event for me. I'm going to be moderating the main panel at the FountainHead Rhode Island Climate Stocktake for 2024. This is a first-ever event for them. Rhode Island is really out there on the edge of development around clean energy and a lot of different approaches to how to integrate sustainability throughout the global economy. So, that's an exciting event where I'm going to have the opportunity to have a dialog with some of the regulatory and political community there. And it's also an event where there'll be lots of CEOs of local companies and businesses that are participating. So, if anybody is interested in that kind of an event, they can get in touch with me and I'll be glad to pass information on to them.

Paul Ellis [00:33:54] The other thing that I'm doing is an event in New York City in May, which is called Accelerate 2050. Once again, it's an event where there's going to be probably 400 people in attendance. There'll be a lot of speakers across two days. And it's going to be a lot of dialog related to sustainability infrastructure and business and technology development. So, people in New York City or people from out of town who want to go to an event like that and visit the city at the same time, that's another event that they can contact me about.

Paul Ellis [00:34:38] In terms of the podcast program, we're adding YouTube to our distribution network. We're currently distributing the podcast through BrightTALK and Spotify and iTunes, and we're going to be adding other platforms. We're really excited about the potential for our programs because we keep meeting more and more people who are senior executives and key to sustainability development in their companies, whether they're founders or executives at the C-suite level. And we keep attracting more attention that way.

Paul Ellis [00:35:21] We're also recently developing a partnership with Equities News, which is an industry publication that has 37,000 subscribers. Paula DeLaurentis, who's the new CEO of that firm, of that media platform, has taken over the reins. And her plan is to transform it completely to a sustainability-focused news platform over time. So, we want to wish Paula all the best there. We're glad to be participating in that process. And it's an exciting time for us.

John Chaplin [00:35:58] Yeah, that's a lot of exciting upcoming events and news. So yeah, great. I would encourage any listener to reach out to Paul about some of those events. And listen to the podcast; I'm looking forward to listening to a few episodes after this as well. But yeah, thanks, Paul, for joining. It's been a pleasure talking to you.

Paul Ellis [00:36:16] Great. Well, look us up. The Sustainable Finance Podcast on all of those platforms and at Paul Ellis Consulting, the link there. And thank you very much, John, for the opportunity today to say hello to you. Best wishes for your success and for your podcast as well.

John Chaplin [00:36:36] Thank you, thank you. And same to you. Thanks to all the listeners; pleasure.