Featured Guest: Marilyn Waite

Marilyn Waite leads the Climate Finance Fund, a $75M philanthropic platform covering the markets of China, Europe and the United States. She has worked across four continents in renewable and nuclear energy, and climate modeling and investment. Author of Sustainability at Work: careers that make a difference, Marilyn’s writing has been featured in outlets such as the Financial Times, Forbes, and GreenBiz, where she serves as editor at large. Marilyn previously led the energy practice at Village Capital, modeled and forecasted energy solutions to climate change as a senior research fellow at Project Drawdown, and managed innovation projects at Orano/Framatome (formerly AREVA). She holds a Master’s Degree with distinction in Engineering for Sustainable Development from the University of Cambridge and a Bachelor’s of Science Degree in Civil and Environmental Engineering, magna cum laude, from Princeton University.

Episode Transcript

[00:00:00] David Reiling: Welcome to the NextGen Banker podcast, where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I am your host, David Reiling and I am super excited today to welcome Marilyn Waite, Marilyn. Welcome to the NextGen Banker podcast.

[00:00:20] Marilyn Waite: Thanks so much for having me.

[00:00:22] David Reiling: So, I have to start with a, maybe a little interlude today because we’ve gotten some great feedback and positive feedback from the audience. And a reminder to check out our musical feature at the end of the episode. And if you didn’t know it at the end of each NextGen Banker podcast episode, we showcase a new artist from somewhere around the world, representing a wide range of genres. So, in my wide spectrum of tastes, you’re going to get it with our showcase feature artists. So be sure to check it out.

[00:00:55] David Reiling: So, Marilyn, I am absolutely fascinated with your work career and path, and I’ve seen it or understand that it’s ranges from Madagascar to France, to China, to the US. Can you tell us a little bit about your career and in sustainability and, in particular, your focus in sustainability finance?

[00:01:19] Marilyn Waite: Yes. My early training was as a civil and an environmental engineer. So concrete, steel, water, wastewater, using more chemical processes, and so there was already an anchoring of environmental sustainability and those principles and those concepts. I think what drove home more of the social sustainability side was when I spent time in Madagascar.

[00:01:44] Marilyn Waite: So, my first job from my first degree was in Madagascar, working on water resources with the United Nations in the more rural south of the country. And what happened was we went for a couple of months without reliable electricity. And that really shifted my focus towards both the private sector, private finance included, and also to clean energy, reliable energy, affordable energy.

[00:02:18] Marilyn Waite: Because I saw that without the electricity being reliable, the local businesses were shutting down. Right? So, refrigeration companies at that time, cyber cafes, and now we don’t really think about cybercafes anymore, but they were a thing at one point and all of these things had an impact on the local economy.

[00:02:37] Marilyn Waite: So that really caused a big shift. And from there, I started to work on sustainability and engineering in a more profound way. And then eventually entered the nuclear and renewable energy sector in France. And that’s when, ultimately, while I was working in R & D technical economic studies bringing new technologies to market, I found that a lot of our challenges were more on the finance and investment side, then on the engineering or project management side. So that was another shift that I made through experience really, and then shifted to China, shipped myself to China from France and, was working on a lot of things in China. And eventually came back to the states to lead a climate clean, clean tech, clean energy practice, and a seed capital firm, which led me to what I’m doing today, which is I wear multiple hats.

[00:03:32] Marilyn Waite: And my main hat is leading the climate finance fund, which has been on topically supported by the William and Flora Hewlett Foundation and hosted by the European Climate Foundation. And really, it’s a strategy across those different geographies, so China, the European union, and the United States, all about mobilizing capital through three primary pools of capital: venture capital, asset management, and of course, and most importantly bank lending and credit.

[00:04:03] David Reiling: Fantastic. And can I just ask you, from your perspective, when you think about sustainable finance from that global lens, how does the US compared to Europe compared to Asia, how would you kind of think about those things in terms of maybe the geographics of who’s progressing faster or slower?

[00:04:25] Marilyn Waite: Right. So, I think even the term sustainability is quite rooted in a certain cultural norm that doesn’t apply everywhere. So, I think, for example, if when sustainability was being developed as a concept, right, as a phrase from the United Nations and other influencers that say. If China had been at that point, you know, this major economy that it is today, I think maybe we would have used a different word or phrase.

[00:04:56] Marilyn Waite: So, for example, I think in China, there’s a lot more focus on health, on being healthy. Right? And that comes from traditional Chinese medicine. It comes from all these other cultural influences. And I think that kind of health lens is one way in which people understand the concept within China. And you could, you could say that about many parts of the world, but there’s a certain angle and understanding of it that is pronounced in China, more so than other, some other parts of the world.

[00:05:29] Marilyn Waite: I think also there’s a lot of different interpretations of what it means. And I think there’s now in the United States, what I’ve witnessed is a move towards this concept of regeneration, regenerative economy. And that it’s not good enough to sustain ourselves, but we also need to have this kind of circular regenerative improvement on, on things.

[00:06:00] Marilyn Waite: And I think when, if you’re talking about a more emerging or frontier market, a least developing economy, then maybe sustainability in the kind of very narrow way of thinking about it, in terms of just keeping things going as they are, it’s not the best word because how they are is not okay.

[00:06:23] Marilyn Waite: Right? There’s poverty and there’s malnutrition, lack of access to markets and to goods and to services. And so actually sustaining is probably not the goal, right? And so, I think there are definitely these kinds of cultural differences. But overall, when I think about sustainability, I think about these four pillars, which I do think apply across.

[00:06:52] Marilyn Waite: And these four pillars are social cohesion, kind of social sustainability, economic wellbeing, including financial wellbeing, financial health, environmental protection, and wellbeing. So, our ecosystems, everything. That depends on the environment, which is our economy. Right? So, someone once said that the economy is a wholly owned subsidiary by their environment and so very much that is a strong pillar of sustainability.

[00:07:24] Marilyn Waite: And then finally, which I, I always like to incorporate is this idea of future generations and future thinking. Because we could imagine, I mean, we often do actually have a social economic and environmental system that can be quite myopic. And so, sustainability pushes us forward to think about future generations beyond whatever is normal in our industry.

[00:07:47] Marilyn Waite: So, for used to thinking about 30-year terms, then we should think about 50-year terms. If we’re used to thinking about, you know, two to five years, we should push that boundary. And so, beyond that really our earth has been around in our ecosystem have been around for over 3.8 billion years. And so, we’ve been around for a very short time compared to that. And so, if we think of a bit more long-term, I think we can go a long way.

[00:08:12] David Reiling: Yeah. Someone once told me that people really start to understand climate and climate impacts when they have grandchildren, because it really then gives them a window into a next generation or another century. And they begin to start to internalize the impacts of what they’re doing. And so, I always thought that was kind of a fascinating way to get people maybe to think a more longer term.

[00:08:36] David Reiling: I have a question for you because it’s my understanding that you were able to attend the Global Climate Summit COP26 in Glasgow. Were there any takeaways or any thoughts from that event that you could share with our listeners?

[00:08:52] Marilyn Waite: Yes, that was my first COP. And I, it may be my last COP. I am, I, it’s an interesting COP, right? It’s a COP that’s in the middle of a global pandemic. Um, so the many things about the COP, it’s a COP that comes after the US removed itself from the Paris agreement and then put itself back in and so there’s lots of context behind this particular COP or a conference of the parties, the big UN climate conference.

[00:09:30] Marilyn Waite: And so, I think there’s a lot to unpack there about this particular convening. I think if this was your 26th COP, then you likely have a more nuanced perspective and probably can list off the pros and the cons this being this, having been my first COP. I have a more critical perspective and I was pretty disappointed in the outcomes let’s say.

[00:10:00] Marilyn Waite: I thought that based on all of the recent studies and evidence that we have now. So, from the IPC, from, even from the IEA, the very conservative, uh, international energy agency, which pretty much said we cannot expand financing into fossil fuel for us to solve climate change, to keep life on earth going in a livable way.

[00:10:28] Marilyn Waite: And yet we didn’t approach this, or I didn’t see the outcomes that match that level of urgency and all of the evidence we have now that maybe wasn’t at our same disposal before now. And so, I think my recommendations for the next COP would be to definitely think about who’s on the inside actually at the negotiating table and who’s on the outside. And really have a different approach to be more inclusive of those, like the youth likely younger generations who really have a big stake in this. And it really should be, you know, for each delegation there really should be a youth delegate who negotiates officially for their countries, right?

[00:11:15] David Reiling: Yeah. I would agree. Yeah. I would put my daughter right in the middle of that as well. I mean, just her perspective is just so much more passionate and urgent and sincere.

[00:11:27] David Reiling: I don’t know how else to put it then. Um, then others that I talked to it is really very much a generational focus.

[00:11:37] Marilyn Waite: Right. And so, I think that was part of what I witnessed as a challenge. And of course, it was also well documented that there were a lot of fossil fuel badges. So, the fossil fuel industry, if it were a country having more access, more voice than any single country.

[00:11:55] Marilyn Waite: So that’s problematic as well. I think that the reason why I attended this COP was because it was the first time that private finance or commercially oriented finance, however you want to call it, was on the table, was present, was a part of the conversation in a more serious way. And so that’s why I was there.

[00:12:17] Marilyn Waite: So, I followed quite a bit of the finance and investment activity. Which of course is not the core of official climate negotiations. I think that there has been progress and that progress is not nearly close, I mean, even remotely close to what we need. Imagine if most of the banks who were present were B Corp banks, not the case, not the case at all.

[00:12:50] Marilyn Waite: Imagine if most of the banks present committed to phasing out fossil fuels in the next five, 10 years, not the case. Or even, you know, by 2050, also not the case. Imagine if most of the bank’s present and apart of the various commitments we’re truly diverse and inclusive and approached climate lending with a climate justice lens. Right?

[00:13:20] Marilyn Waite: So, in addition to counting the carbon and counting emissions, also taking a look at where, in terms of our footprint, where are we concentrating our emissions? Is it disproportionately in poor communities? And communities of color? In poor countries? Really look at the justice angle in addition to the pure climate impact or carbon impact angle.

[00:13:46] Marilyn Waite: And so, I think there’s a lot of work to do. I have seen progress post COP, however, in this notion of offset. So, I think going in there was a lot of momentum around offsets are going to save us, carbon offsets. I actually heard from a chairperson of a major European bank, with trillion-dollar level that we have to offset our way out of this problem and that we should plant Oak trees.

[00:14:14] Marilyn Waite: I mean, quite literally, I was just flabbergasted. I mean that’s the kind of environment that I was in, right? Global banking community and, and comments like that. And I, and I will say now we even see Mark Carney, former governor of the bank of England, speaking about how actually, no, we cannot offset our way out of this.

[00:14:42] Marilyn Waite: We have to actually reduce our carbon emissions and those activities. We need the action plans to do that and decarbonize. And so, I think perhaps part of the silver lining is that there was so much kind of bad press, criticism, over many parts of the COP that I think hopefully now there there’s a real reckoning happening and shifting in approaches.

[00:15:08] David Reiling: Yeah, that’s fantastic. And if I could take you one way to where banks are engaging and, while it’s not the solution, I would say it’s really the beginning of it all. Let’s talk a little bit about PCAF and what’s going on with the Partnership for Carbon Accounting for Financials. How do you see that, kind of in your own words, how do you kind of describe what PCAF is and what impact it can have?

[00:15:35] Marilyn Waite: Right. So PCAF started in the Netherlands among the Dutch pension funds and banks coming together to harmonize their approach by which they measure and disclose and reduce the carbon emissions of their loans and investments, right? So, its finance emissions, it’s the core business of a bank is to provide these loans and lines of credit.

[00:15:58] Marilyn Waite: We had supported the global expansion and still do support the global expansion of PCAF to be a true partnership. So, we helped to bring it to the United States and to other parts of the world. And what I’m proud of is that when we brought it to the United States, we were not dragged down by the laggards in the industry. Meaning we started with the banks and the credit unions that have ESG in their DNA. So environmental, social, governance metrics in their DNA.

[00:16:29] Marilyn Waite: So, we started with the CDFI banks, credit unions and the B Corp banks, the banks that are part of GABV, the Global Alliance for Banking on Values. For example, I mean, all of this, this ecosystem of values-based ESG oriented financial institutions.

[00:16:48] Marilyn Waite: And we had help align with those institutions and bringing it to the US and then we brought in the laggards to come, come up to this level. Oftentimes, historically what has happened is that I think there’s a tendency to go with the largest bank or the largest financial institution and say, well, if he can get them on board to do this thing, then everyone else would join in, right? Given their size.

[00:17:18] Marilyn Waite: And the truth is what happens or what has happened in the past is a lot is watered down and they bring down the ambition as opposed to coming up to an ambition. And so, I think we were able to maintain the integrity of PCAF in this process. And I’m really proud of that. PCAF for each financial asset class provides a methodology to measure greenhouse gas emissions. It builds on the greenhouse gas protocol, which is also currently being updated, but is the foundation for carbon accounting in general for the non-financial companies and it is comprehensive. So, across auto loans, mortgages, commercial real estate, bonds, corporate loans, so on and so forth.

[00:18:09] David Reiling: Yeah. Perfect. And so, I mean, I can speak maybe from being each one of those, a member of the Global Alliance, as well as a B Corp bank and a CDFI, and we had submitted our data, Sunrise Banks. We submitted our loan portfolio data. I think we just got it back. We were looking at those results now.

[00:18:29] David Reiling: I think we got it yesterday, as a matter of fact, and we’re gearing up to disclose in the first quarter. And then where I think for us really where the rubber meets the road is what’s our strategy to act? How do we get in alignment with the Paris agreement? How do we engage with our clients?

[00:18:45] David Reiling: How do we engage or screen out certain loan portfolio class types and screen in others that we want to incent? And so, it’s really that, how do we get to action as fast as possible and really show a path forward for other banks and credit unions and financial cooperatives around the world that we can do this.

[00:19:05] David Reiling: And, but it’s going to take that commitment for one encouraged for another, in which to make a sizeable and measurable impact in, in lead the way.

[00:19:16] Marilyn Waite: Right. Well, I’m excited for that and I would love to hear how you strategize based on that data, because that is part of the, the effort is to have that visibility first and then decide, okay, how do the best act right to improve and bring down the emissions?

[00:19:35] David Reiling: Exactly. And maybe in true Sunrise form as kind of a social entrepreneurial organization, which happens to be a bank, we’re going to make it up and we’re going to figure it out. And some things are going to work, and some things aren’t going to work, but we’ve got to take the mindset of action as opposed to we’re going to study this for another year.

[00:19:51] David Reiling: So, we just kind of feel that sense of urgency to try things and lead. And if we fail, it’s just a learning in disguise and we’re going to keep going and share what we learn with others, so they don’t have to make that mistake. So very much looking for a community, if you will, in PCAF financials to engage with, and that could be across the banking sector, insurance, obviously real estate finance, bonds.

[00:20:16] David Reiling: However, it may be, there might be gleams of collaboration and knowledge that can be shared to accelerate all of us in the process.

[00:20:26] David Reiling: So, if I could, Marilyn, I want to shift you a little bit into… well, I got to touch on this real quick, cause I’m a FinTech kind of guy. How do you feel FinTech plays a role in the environmental with the sustainable banking world to lack of any better term?

[00:20:45] Marilyn Waite: So, we funded a comprehensive landscape of this next between FinTech and climate FinTech from new energy nexus, which is an accelerator and a clean energy support ecosystem for startups in clean energy and climate solutions globally started in California. It used to be called the California Clean Energy Funds.

[00:21:09] Marilyn Waite: And now it’s gone global, including with a presence in China and Uganda and Indonesia and other parts of the world. And in New York, I guess if we want to count that as another part of the world beyond California. And so, the climate FinTech landscape really, it was a breakthrough report in that it helped elucidate what we meant and what we mean by climate FinTech.

[00:21:35] Marilyn Waite: What are the various verticals, including RegTech and InsureTech and all the ways you can utilize technology and financial technology. For some type of climate ends and there has been a lot of movement there. We also funded the first cards and payments challenge. So, kind of a mini accelerator in climate FinTech where we’ve seen, or we were able to provide non-dilutive funding to startups who were innovating in climate FinTech through it and managing excess of course.

[00:22:11] Marilyn Waite: You know, everything from accountable, which is a US accountable. It’s a US-based app. So, everyone can download it. It brings transparency to find any transaction that you do. So, you safely link your bank card or whatever you use to do most of your purchasing, and you also choose what’s most important to you. So, for example, is it gender equity, racial equity, climate action, supporting local businesses, things of that nature. And you can, like me, choose everything’s very important. You’re five out of five on everything, you know, the strictest, but you can, you have that flexibility.

[00:22:56] Marilyn Waite: And then based on that, they will also bring transparency to not only the scoring of what you are purchasing and the company behind that, but also where they’re driving their data from, because there’s a lot of different databases and ways of approaching this broader ESG landscape. And so, I recently found out when I was making, I went stopped at one of the kinds of bookstand.

[00:22:04] Marilyn Waite: And union station in Washington, DC. So, near the Amtrak state or in the Amtrak station and I, from the app, I, I learned that that was not aligned with my goals, on gender equality in particular. And they also propose alternatives, and it turns out Wawa is like one of the best alternatives, according to what I find to be ESG aligned.

[00:22:29] Marilyn Waite: And so that kind of information I would have never gotten right otherwise.

[00:22:32] David Reiling: Oh, that is fantastic. And it was the one thing that struck me the most about that climate first report was the power of FinTech and data and how it can be used so quickly in which to provide feedback and change behavior. And it is really somewhat of the magic of FinTech is it’s obviously digital.

[00:22:52] David Reiling: And as a result of that, when used, I think responsibly, and appropriate, particularly with AI you can really get some powerful information quick and make decisions accordingly. I’m going to shop here, buy here, eat here as opposed to somewhere else. And, and not to mention really giving you that feedback on those things that you’re most concerned about, whether it’s environmentally or socially. And so, yeah, really fantastic.

[00:23:18] David Reiling: So, I would love to switch you wrote a book, sustainability at work and careers that make a difference. And one of the things about the next gen banker podcast is really the ability to get this conversation out to I’ll say, People interested in finance, but also very much ingrained from a value standpoint of that social environmental aspect. And tell me a little bit about what was your motivation for, for writing the book in the first place. And were there, there any kind of, a little bit of “ahas” as you are going through the development of the book process?

[00:23:55] Marilyn Waite: Right. So, I had studied engineering for sustainable development, and then when I started to work in the field. So, in a nuclear spent fuel recycling plant and in France I remember having a particular conversation. I was working a night shift as a safe kind of safety operations engineer. And I was speaking with a fellow engineer about what I had studied and, you know, civil environmental engineering, easy enough.

[00:24:22] Marilyn Waite: And then when it came to this sustainable development thing, that sustainability thing, it was just mind boggling for this, for my fellow colleague. And I realized, but for me, I was completely doing the work. I was improving operational and they looking to improve on the waste and reducing the chemical use in the, in the plant.

[00:24:42] Marilyn Waite: And for me, it was like a no brainer. Yet I think I was living in a bubble around, you know, everyone else around me was also studying this. And so, what I wanted to do with the, by writing this book is really bring to more people. The fact that you can integrate sustainability and almost any job and career path. And if we’re going to solve some of our major challenges like climate change then we actually have to, we actually don’t even have a choice. We need to get the system going. And that requires not just what we can do, you know, when we’re at home, but what we’re we can do when we’re at work.

[00:25:22] David Reiling: Yeah, definitely. And, and whether I, it was interesting. I haven’t read the book yet. I scanned the contents page and you’re right. No matter whether you’re a teacher or a banker or a lawyer, it, you, can ingrain sustainability into everything and every lens. And as you mentioned that you, we have. It’s just the mindset we need to shift.

[00:25:44] David Reiling: So, if I can press you on the NextGen Banker question. So, when we think about what does the next generation of banker look like? What comes to mind?

[00:25:56] Marilyn Waite: Yeah, that’s a great question. I think it definitely looks colorful, like more heterogeneous. The next gen banker, as you were saying is more innovative. I think leaning into the tech. Doesn’t shy away from tech user-friendliness. I think also when I say innovation also, for example, structuring green loans that don’t have the same track record as fossil fuels and for some projects, no track record at all.

[00:26:21] Marilyn Waite: I think Bankers can apply a framework that I developed called SURF, which is in the book SURF stands for supply chain, user relationships and future orientation. And I think applying this framework, it was also very helpful and for the next gen banker, I think tracking the carbon emissions, reducing those emissions tracking human capital and demographics and reducing the bias.

[00:26:45] Marilyn Waite: All of these things, I think have to be part of the toolkit of the next gen banker. I would encourage more syndications. So, one way of managing, if we’re going to take on more innovation, more tech, you know, some might hear, oh more risk. Well, maybe we can manage that risk by partnering and syndicating. And then I would like to see more banks become B Corp banks or equivalent. And I think that is there’s such potential right in the United States alone. Over 5,000 banks and over 5,000 credit unions, of course there’s been a lot of consolidation. However, there’s, there’s a lot to work with in terms of ingraining, more sustainability into banking and lending. You know, one thing I’ll just say because of your audience one of my pet peeves is just the amount of Inefficiency that I see happening, especially among the ESG oriented banks.

[00:27:34] Marilyn Waite: So, for example, oftentimes there isn’t a foreign currency desk dedicated to ESG aligned bank or a sustainable bank. And then the bank has to rely on some other unsustainable bank for certain services. Well, what if all the good banks got together and source their own backend for international transactions and foreign currency.

[00:27:52] Marilyn Waite: I think there’s a lot of that kind of thing. I think the credit union industry does some of that pretty well. I would love to see it on the banking side and just kind of, you know, use that collective nature and that alignment. And so yes, maybe, sometimes you compete often, not though often times you don’t really use the different markets, different strategies. But even still you’re, even at you, if you look at the largest six banks in the US, they there’s a lot of syndication, a lot of collaboration, and it was seemed to me that we could have more, have even more impact if there would be that kind of efficiency gains and in collaborating.

[00:28:31] David Reiling: Well, Marilyn we are so on the same page, particularly regards to that issue, because I was just talking about it about a couple of weeks ago within the context of the GABV and what correspondent banking could look like for the organization as a whole and its members. So, we’re on it. We’re trying to get it done.

[00:28:48] David Reiling: So, Marilyn thank you so much for joining today, your insights have been super valuable and how we can use banking and finance as a force for good and for sustainability again. Thanks for all you do out there and appreciate you being on the podcast.

[00:29:04] Marilyn Waite: Thank you for having me again. I appreciate it.