Sustainable Investment & Plastic Pallets

25 Aug

imagesEvidently, word has spread about the book, because I recently got an email out of the blue from a guy at an investment firm, Sustainable Development Capital LLP (SDCL), that specializes in raising money to fund “sustainable investment vehicles.  The guy, Jason Segal, who runs the firm’s New York branch, had gotten wind of my project and very helpfully suggested that I think about the financial aspect of the renewable energy picture.

So I called Jason and he very generously spent an hour on the phone, giving me the lowdown on renewable energy from a financial perspective.

Here’s what I learned, in a nutshell: to be successful on a large scale, renewable energy technologies need a lot of private funding, and the only way they’ll get funding is by being profitable now.

Now, this may seem obvious, but it’s easy to focus on cool new technologies and innovations and to minimize or even forget about the economic realities.  

So I asked Jason which alternative energy technologies seem viable from an investment standpoint.  His answer?  Very few.  Because right now, most renewables are simply too risky, too dependent on government policies and funding (which can and often do change from administration to administration).  Put another way, given the current state of solar energy technology, to pick one example, do you have a clear sense of which company, which technology, is the clear winner?  Would you feel comfortable investing $5000, $10,000, $50,000 in a company competing in a field that’s still pretty much wide open in terms of which companies will emerge as the safest bet to succeed and grow?

Instead, Jason told me, SDCL invests in mainstream businesses that create sustainable solutions to common, widespread problems.  For example, SDCL is working with a Tampa, Florida-based company called iGPS (Intelligent Global Pooling Systems) that rents plastic pallets, like the kind used to transport produce.  I was astonished to learn that 40% of all hardwood trees lumbered in the US go into making the 17 or so million pallets in use at any given time in the US.  These pallets are full of nails, absorb tons of bacteria from food, and last on average about a year.  Because the pallets are so heavy and otherwise problematic, it costs more to recycle them than to dump them in landfills.

We tend to think of plastic as environmentally unsound because they consume fossil fuels are aren’t biodegradable.  But according to Jason, iGPS’s plastic pallets are environmentally friendly.  Because they’re about 30% lighter than wooden pallets, it takes less fuel to transport them across the country.  They’re also recyclable.  

My point isn’t to plug iGPS or any other company.  But it’s interesting to think about how energy efficiency is about more than just solar energy, wind power and other alt energy technologies.

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One Response to “Sustainable Investment & Plastic Pallets”

  1. David Davis August 25, 2009 at 4:45 pm #

    So the idea is to focus on smaller projects which generate immediate return, and invest in companies which could grow into the leaders in their particular sector. A thousand mile journey begins with the first step. Interesting. Thanks.

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