Let There Be Light (but not too much…)
by Bret Nolan Collazzi, MBA '13 (7/31/12)
Working as an EDF Climate Corps fellow at a North Carolina real estate company deepened my understanding of energy efficiency, sustainable design, and what it takes to make a meaningful difference in business.
Standing 25 feet above Central North Carolina, I finally had my enemies in sight: two hulking, rusting rooftop air conditioner units that, like me, date back to the early Reagan Administration. It was late June, and the relics were doing everything in their (severely diminished) power to cool the office building beneath them during the latest East Coast heat wave. In the process, they were consuming twice as much energy as they should — costing their owner an extra $25,000 a year and wasting as much fuel as it would take to power over 30 homes.
And that’s just the tip of the (rapidly melting) iceberg.
In its landmark 2009 report, McKinsey & Company concluded that U.S. building owners could save $1.2 trillion over a 10-year period by upgrading lighting, cooling, and other building systems. As a fellow with the Environmental Defense Fund’s (EDF) Climate Corps — which places specially trained MBAs and MPAs with companies, colleges, and cities to make a business case for energy efficiency — I spent my summer helping Grubb Properties, a real estate firm based in Charlotte, N.C., claim its slice of that growing pie, while learning how to make a meaningful difference in business.
During my 10 week internship, I helped develop projects that could shave $75,000 off of expenses — and roughly 800 megawatt-hours off of energy consumption — per year at two office parks and three apartment communities in the Carolinas. Recommendations ranged from installing low-wattage office lighting to replacing swimming pool pumps to retrofitting those ancient AC units. Some are free, such as reprogramming thermostat schedules. Some will take an investment, but all will pay for themselves in anywhere from a few months to seven years.
The EDF Climate Corps appealed to me because, as a former journalist and political aide hoping to advance urban revitalization efforts, I saw an opportunity not only to learn about real estate, green building, and clean energy, but also to test my ability to make and justify complex financial decisions in real time.
When I wasn’t scaling rooftops, I was constructing financial models to weigh the benefits of competing technologies, quizzing property managers about how projects would impact operational costs, and projecting how efficiency projects might increase the expected resale value of Grubb’s properties. Thanks to Johnson courses such as Core Finance, Managerial Spreadsheet Modeling, and Valuation Principles, concepts such as net present value, return on investment, and rate of capitalization rolled off my tongue and keyboard with relative ease.
Working on a sustainability themed project for a for-profit company also helped inform many of the concepts we explored during the Sustainable Global Enterprise (SGE) immersion. Among this summer’s lessons:
Not all profits are created equal. At the heart of Johnson’s SGE immersion program is the challenge to approach global challenges as business opportunities. And at the core of identifying business opportunities is learning what truly motivates specific firms. While mature companies might consider quarterly profits the be-all-end-all, and startups are likely to bet it all on revenue growth, at Grubb Properties, the priority was increasing property value. Energy efficiency — which reduces operating expenses and therefore lifts the value of a property — is an important tool in Grubb’s shed, but if you didn’t know how value was created in real estate, it would be much harder to pitch energy efficiency projects to Grubb.
Concern alone won’t guarantee execution. I was fortunate this summer to work for a forward-thinking, environmentally conscious firm, but even at Grubb, many decisions affecting energy use — whether big choices, like which properties to acquire, or small ones, like which light bulb to install — are made by a diffuse group of people with competing incentives and interests. I gained a newfound appreciation for corporate social responsibility (CSR) roles and their importance in translating vision into action. But considering that many firms, including Grubb, aren’t large enough to employ a dedicated CSR officer, I also developed a clearer understanding of why it’s so important for managers of all stripes to understand the opportunities that sustainable practices pose for both profit and competitive advantage.
Summer internships are supposed to solidify what you learned in Year One of the MBA while helping you make smart decisions about Year Two. A few weeks from my return to Ithaca, I feel newly energized to charge ahead with my MBA and soak in another set of lessons as I prepare for one summer from now — when the stakes will be higher, and the future wide open.