Joe Biden
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What the growing federal focus on ESG means for private markets
The increasing regulation of ESG (environmental, social, governance) disclosure reporting may have started in the public markets, but will almost certainly have downstream effects for private market actors — for founders, companies and investors.
Since his confirmation as the chair of the U.S. Securities and Exchange Commission in April, Gary Gensler has made reforming ESG disclosures concerning climate change risk and human capital a top priority. The SEC’s regulatory agenda confirms as much. And Gensler is not alone in his focus on ESG at the federal level.
President Joe Biden issued an executive order encouraging regulators to assess climate-related financial risk. At the end of March, Treasury Secretary Janet Yellen wrote on Twitter that “our future livelihoods … depend on the financial sector to build a more sustainable and resilient economy.” Congress is considering measures that would require increased ESG disclosures, including the Improving Corporate Governance Through Diversity Act, the Diversity and Inclusion Data Accountability and Transparency Act and the Climate Risk Disclosure Act.
This renewed federal focus on ESG issues will bolster the SEC’s effort to create disclosure practices for public companies and mutual funds. Regardless of whether these federal policies around ESG come to pass, they reflect a momentum that will almost certainly impact private markets:
- Firms that want to go public — whether via SPAC, direct listing or traditional IPO — may have to seriously consider board diversity or environmental reporting in conjunction with — or well in advance of — their debuts.
- Private companies seeking to align with public companies as vendors or partners may be expected to meet specific ESG requirements before the engagement.
- Startup founders and venture funds raising capital may work to maintain the largest target market by proactively scoping ESG engagements to ensure they meet criteria for investors who may have their own ESG-focused investment requirements.
In his confirmation hearing before the Senate in early March, Gensler said, “Markets — and technology — are always changing. Our rules have to change along with them.”
The federal government is moving to increase regulation around ESG disclosure requirements with the goals of establishing greater transparency and metrics for public companies.
The federal government is moving to increase regulation around ESG disclosure requirements with the goals of establishing greater transparency and metrics for public companies. These requirements are a response to the changing markets — demands from consumers, scrutiny from investors and a general insistence for higher corporate standards from society at large.
Private markets aren’t immune to these forces. Already, three-quarters of investors in a 2020 survey said it was very important to measure the success of sustainability initiatives, but they also said there’s been a lack of clarity on how to define and measure outcomes.
To be sure, private markets are not headed toward full-scale adoption of ESG regulations. They will not be subject to the same reporting or disclosures framework as their public counterparts. Not today, and possibly not for some time.
But we may begin to see private investors, funds and companies adapting to get ahead of ESG regulation and position themselves to effectively operate in a new — albeit adjacent — regulatory environment. In their case, the rules may not change — but the game could.
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Biden’s infrastructure plans could boost startups
As President-elect Joe Biden readies his transition team and sets the agenda for his first 100 days in office, startups can expect to see some movement on long-stalled infrastructure initiatives that could mean big boosts to their business.
Infrastructure is high on the list of priorities of the incoming Biden Administration as the former vice president hopes to make good on his campaign promise to “build back better.”
American infrastructure has been crumbling for decades without significant investment from the federal government, and much of what will be replaced will also be upgraded with new technology, according to people familiar with the Biden plan.
That means tech companies focused on next-generation telecommunications and utility infrastructure, transportation, housing and construction tech around energy efficiency could see new dollars pour in over the next four years.
“Infrastructure and build out of the clean energy economy … doesn’t necessarily mean large wind or large solar projects. It could mean advanced metering … it can be new engine technologies,” said Dan Goldman, a managing partner at Clean Energy Ventures. “We think that that can be a huge opportunity for job creation … not only putting people back to work but putting people back to work in high quality jobs.”
And there’s a willingness to encourage these infrastructure projects in less partisan ways in states like Massachusetts, Virginia and Florida, which are actively building out electric vehicle infrastructure and renewable energy projects, Goldman said.
While the federal government will ultimately be distributing the cash, startups can expect to see the spending actually come from municipalities and state governments, which often have a better understanding of local needs and where the money should go.
Next-generation energy infrastructure
The electrification of everything — a component of any zero-carbon movement — requires significant upgrades to existing power infrastructure. That means everything from systems management technologies to distribution facilities to ways to store power that can be moved on to the grid.
“Without that infrastructure investment it gets quite challenging,” said Abe Yokell, a co-founder and managing partner of Congruent Ventures.
He pointed to large-scale energy storage technologies as one solution, but management systems for utilities will be another area of interest.
Those infrastructure initiatives will likely mean good things for battery companies like Form Energy, which signed its first major contract with Great River Energy earlier this year; or Antora and Malta, which store energy as heat; or Quidnet, which has a pumped hydroelectric play for large-scale energy storage by pumping water into the gaps between rocks underground that creates pressure and can force water back up through a generator.
Other large-scale energy storage companies working on developing and installing batteries could benefit as well. That means good things for Tesla, which has a few major battery installs under its belt, and Fluence, which manages and operates big install projects.
Natel Energy, another startup working on energy storage (and generation) using hydropower, could also find its technology in the mix, according to company founder, Gia Schneider.
Schneider sees three potential pitches for her company’s technologies. “Climate change is water change,” she said. “We have a bucket in energy, a bucket of stuff in environmental and a bucket of stuff in working lands.”
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President-elect Joseph Biden reportedly plucks Revolution’s Ron Klain as new chief of staff
President-elect Joseph Biden has plucked Ron Klain, a longtime colleague and confidant and the current executive vice president of the venture capital firm Revolution, as his White House chief of staff, reports The New York Times.
Klain was Biden’s chief of staff for two years during the Obama administration and left his post as chief of staff in 2011 to join Revolution, the firm founded by former AOL chief executive and founder Steve Case. Revolution did not immediately respond to a request for comment.
If Klain makes his second entrance into the White House, Biden will be bringing on a chief of staff he’s known for more than 35 years. The duo first worked together in 1989, when the president-elect was a senator and Klain was a newly graduated law student from Harvard Law School. He most recently worked as the White House Ebola Response coordinator from October 2014 to February 2015, and helped as a debate advisor to President Obama and President Clinton, as well as nominees Al Gore, John Kerry and Hillary Clinton.
Klain’s appointment could pacify some of the presumed tension that could occur between startups and the government under the Biden-Harris administration. Biden has been vocal about pursuing aggressive regulation on the tech industry, which could negatively impact behemoths like Google, Apple and Facebook. Klain has spoken up (in TechCrunch!) about how regulatory hurdles could hinder key innovation in startup-land. Klain also helped lead efforts for Higher Ground Labs, an incubator and accelerator focused on politically-focused (and Democrat-loved) startups. While that likely wouldn’t impact Big Tech, it doesn’t hurt that, reportedly, one of Biden’s closest confidants will have a soft spot for startups.
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Equity Monday: Vaccine news scrambles the stock market, shakes up startups
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest big news, chats about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out last Friday’s episode that we wound up titling “Fortnite is actually a SaaS company.”
It makes sense in context, I promise.
Anyway, here’s what’s on today’s show:
- Joe Biden was elected president and the stock market is not mad about divided government.
- Positive vaccine news sent many stocks sharply higher this morning, but not all. Some pandemic-favored tech companies instantly dropped double-digit percentage points of value.
- Esign raised $151 million, showing strength in the Chinese startup market, and the e-signature space.
- And this neat Series B for Cellwize caught our attention this morning.
- Finally, a warning. The stuff that is changing lately may begin to change a bit less. We’ve lived in the pandemic economy long enough now that it’s hard to recall what life was like before. But, we’d best start remembering, as there’s a lot that is going to change in the next few quarters.
This has been a wild day to start the week, but with good news.
I suppose a vaccine was always going to eventually make it to this step, but, that said, the United States is seeing record COVID-19 cases today. So mask up and let’s get as many of us across the line as we can.
Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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The climate is our biggest threat. Carl Pope is fighting to change our fate
Michael Bloomberg is an unrepentant capitalist who, as he says in his 2017 book A Climate of Hope, is “not exactly your stereotypical environmentalist.” Yet over the past decade, Bloomberg has become arguably the biggest environmental philanthropist in the world — especially given the $500 million investment Bloomberg announced last month that he would soon make in rapidly moving the U.S. “Beyond Carbon,” off both coal and natural gas and to a “100% clean energy economy.” How did this happen?
It turns out one of the biggest factors in Bloomberg’s green transformation has been his friendship with Carl Pope, the longtime former head of the Sierra Club, whom Bloomberg first met about a decade ago, as Mayor of New York.
Pope is not exactly a household name, but nonetheless at this point can probably be called one of the most influential environmental activists in history. He wears a leather jacket and a weathered-looking sweater on the cover of Climate of Hope alongside Bloomberg’s suit, tie, and flag pin.
The two co-authored the book — and not just in the sense that Pope ghost-wrote Bloomberg’s opinions, as happens regularly when busy political and cultural celebrities take on a lesser-known co-author for some glamour project they may barely even read. A Climate of Hope is an extended dialogue between Bloomberg and Pope, with the two alternating chapters throughout and at times even disagreeing on potentially important issues.
What there’s no disagreement on, however, is that Pope “convinced” his co-author to dive into massive environmental spending (a feat accomplished in part by showing the health-conscious Bloomberg the numbers on how lethal coal can be).
Pope is no stranger to controversy — perhaps unsurprising for a nonprofit leader who has raised money well into the nine figures. He’s a “pragmatist,” as he says many times in the interview below, which depending on who you ask either means compromise to the point of being compromised, or simply that he has a knack for actually getting things done where others merely talk.
His legacy has previously been associated with taking money from natural gas executives in a fundraising bid some saw as necessary and others called ethically tainted; with overlooking people’s polluting individual choices to buy large cars and even bigger homes; and with “looking forward to an active partnership” with Republican leaders when it was obvious they weren’t completely on board with key tenets of the environmental movement.
But Pope has also been equally or better known for pushing the Clinton/Gore administration to be better on emissions; preventing neoliberal environmentalists from adopting a nativist stance on immigration; championing a more diverse and inclusive environmental movement; and now, of course, with potentially ending the use of carbon fuel in America.
Despite 30+ years in the public eye, Carl Pope is a relatively private person who doesn’t seem to like to talk much about himself. So for starters below, I wanted to see if I could figure out what makes him tick.
Because if we could get into the heads of people who persuade billionaires to act against their short-term economic interests, with the bigger human picture in mind, maybe we could do it more often.
Then our conversation moved on to NASA, Ro Khanna, Tesla, AOC and the Green New Deal, and more. And in a soon to come follow up piece, I’ll talk with Pope about the details of the Beyond Carbon plan, including how he was able to persuade Bloomberg to take it on, and some areas of controversy that could arise as the $500 million is distributed.
All of this, after all, is part of what it means to think about the ethics of technology — Pope and Bloomberg’s work, love it or not, is certainly an attempt to reform or transform some of the most influential technologies human hands have ever touched.
How do we motivate people of all backgrounds and means to help make changes for the greener? How do we know what the right changes are to make? How do we grapple with the ethical dilemmas involved and the compromises that can seem to be required?
(Oh and by the way: in the weeks since I spoke with Pope, I have mostly been skipping big evening meals and eating more healthily in the afternoon. So at least there’s that!)
Greg Epstein: I have enjoyed discovering you as — I would even say as a historical figure, though important parts of your story are yet to be told.
I’d like to hear a bit about the key developments in your life that gave you the ethical perspective that you have.
Carl Pope: I can tell you some things about my childhood and my formation. Which particular ingredients formed my ethical perspective, I’m not sure I’ll be able to tell you, but I’ll tell you some things [that might] help.
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