Decoding Carbon Markets with Mike Smith, CEO of Aclymate
This transcript has been edited for clarity.
Dan Carreno: Thank you for tuning in to Rewilding Wall Street, where we provide insights and analysis into the ever-evolving world of sustainable investing. And I'm Dan Carreno.
Brittany Damico: And I'm Brittany D'Amico.
Dan Carreno: I'm going to put you on the spot to start off. I'm going to hit you with some trivia right out of the gates. So, Morgan Stanley recently released its latest survey on sustainable investing. It is called Sustainable Signals, Understanding Individual Investors Interests and Priorities. They surveyed about 3,000 investors worldwide, and they got some notable responses. The first question for you, Brittany, is what percentage of the survey respondents said they are interested in sustainable investing?
Brittany Damico: I'm going to say 90%.
Dan Carreno: It's actually 77% globally. We looked specifically at the US and Americans. And so, relative to the global average, were Americans more or less interested in sustainable investing?
Brittany Damico: I'm going to keep running with the internal optimist in me, and I'm going to say it's higher than the global average.
Dan Carreno: You would be correct. It's 84% of Americans. I thought it was interesting. And if we go by generation, 96% of millennials said they are interested in sustainable investing. And then finally, 71% said they would be more likely to choose a financial advisor based on an advisory firm's sustainable investing offerings. But there was one particular element in the report that was new to me I had not seen before, and that was that 60% of investors said that they would be very or somewhat likely to purchase carbon offsets for their investment portfolio if they were readily available. That struck me because I've been in the industry for over 20 years, and our industry is not set up to make carbon offsets and net zero alignments readily available. So, we invited a guest onto the podcast today to think through this issue. We're excited to welcome Mike Smith, the founder and CEO of Aclymate, and we're going to have a little round table chat about carbon offsets and achieving net zero goals. So Mike, thanks so much for being here. How's it going today?
Mike Smith, Aclymate: Good. Thanks for having me, Brittany, Dan.
Brittany Damico: Mike, can you start by giving some background about yourself and how you founded Aclymate?
Mike Smith, Aclymate: My background was I grew up as a Westerner, born in Wyoming, and grew up a little bit in Alaska. All my earliest memories are out in the wild. My dad used to work a week on and a week off up in the north slope of Alaska. And so, on those week offs, we would just disappear into the woods. So, my first memories are from the woods. Then, we moved to Idaho when I was six. My dad became a teacher. My mom was a nurse. In that process, we built a cabin in Idaho that adjoined my grandparents' property. In the mornings, I would walk out into the woods with my grandfather. He was a forester. And so I had this experience with a wildfire when I was nine years old, called the Lowman Fire, which put up this mushroom cloud. My grandfather was very early in understanding the nature of fire. And he said, don't worry about it. It'll grow back. This is part of the natural cycle. So I said, great, what do I know? I'm nine, grew up a little bit, graduated high school, and joined the Navy. I went to the US Naval Academy, and after the Naval Academy, I became a pilot. I was an F-18 pilot for 12 and a half years. But I got married in 2010, and I brought my wife back to Idaho in 2011. This is 22 years after the fire, and the forest wasn't coming back. What my grandfather didn't know was that something had changed and that something was land management, but part of it was climate change. So I just got something stuck in my craw, and I decided to work on this. We moved to Denver to start a company called Renew West. Renew West was about post-fire reforestation for carbon offset production. And along the way, we planted a couple million trees in California. So it's the largest project of its type in history, something I'm really proud of. Along the way, I was also an advisor to the US Climate Alliance, which was the 26 states that stayed on the Paris Accords when the Trump administration pulled us out and before Biden brought us back in. I was advising about climate policy and carbon markets, and I was frustrated that people who were smart and educated were having a hard time accessing the material. It felt like we had created a system that was too difficult for even experts to engage with, let alone the layperson. And that also stuck in my craw. Fast forward a couple of years. Another friend of mine who had been working at a different company was looking for his next gig. My partner here at Acclimate called his name's William Loopesko, and we invited William into Renew West and started working on this thing that ultimately became Aclymate, which was how do we help small to medium-sized businesses measure, reduce report, and offset their footprint without having to become an expert and at a price that's affordable to them? It was an internal side project for Renew West. Ultimately, it grew its own legs. We had to spin it out. So, in some regards, I guess I'm a multi-founder within the climate space. There's not a lot of people that can say that. It's had a lot of ups and downs, but I'm happy to be here and happy to have some great people I've been working with along the way.
Dan Carreno: I wanted to get your take on that survey response from the Morgan Stanley report. Does that square with your experience in the world in terms of the number of businesses, professionals, and individuals who areing interest in carbon markets?
Mike Smith, Aclymate: You have to believe in the future to be a good investor. And so, if you want to believe in the future, you have to believe in solving the problems of the present that are going to sabotage your future. I think there's a component of that. Also, typically, people with a few more resources become more grateful for those resources and think about ways to contribute back. It's less of a zero-sum mindset for them.
Dan Carreno: Could you back up and tell us exactly how Aclymate helps businesses and how that might translate to an investment management company?
Mike Smith, Aclymate: You can think of Aclymate as the QuickBooks of climate accounting. Our software works through your browser and connects to existing data systems, your utility bill, et cetera. And we pull in as much of that information as possible automatically. We reduce data entry and all the friction associated with that. We're known as a SaaS marketplace hybrid, meaning we have software as a service that's primarily the accounting solution, and then we have a marketplace of offset solutions. We lead our customers through a three-step process, which is to measure, reduce, and offset because those are the goals that most align with the goal of getting to 90% emissions reductions by 2050. and that we need to offset the remaining footprint. We always say start with measurement. We don't make any assumptions. Once you know the numbers and have that data, you can start to reduce them. And then we go into offsets. Aclymate has the leading selection of offsets available on the internet. You'll find more selections available on our marketplace than anywhere else. Reasonable prices, and you can buy fractions of offsets.
Dan Carreno: From a portfolio perspective, if an investor or advisor knows the carbon footprint of an investment portfolio, your marketplace is a relatively easy way to comb through different options for buying the equivalent amount of offsets. Is that accurate?
Mike Smith, Aclymate: Yeah, absolutely. If you already know what your footprint is, you can purchase some offsets from us. Think about your operational emissions as well. Think about your business travel. Think about your office electricity. Think about if you're having client meetings and having them come to the office or if you're flying to them. Think about ways that you can decarbonize around that as well.
Brittany Damico: Yeah, this is really fascinating. It applies to every level. So the investment firm itself, if you had a larger RIA, they could come to you and say, okay, we want as a firm to reduce our emissions. If they had their investment portfolios for their clients and the clients cared deeply, they could reduce the footprint of the actual portfolios themselves. Then, the clients, if they have their own business, can use it as another resource or referral point to reduce the footprint of the actual business for the individual clients. So, really, it translates to every aspect from firm, portfolio to client. I'm sure you're aware carbon offsets have received a little bit of negative press recently. There are some who say it's just a con, and it really doesn't actually result in carbon sequestration. Others say it just provides a social license for polluters to just continue business as usual. What's your response to those criticisms or those challenges?
Mike Smith, Aclymate: I think they're both correct and incorrect. As a former carbon offset developer, I care deeply about the carbon markets. I think it's important. There's good research out there which says there's just no path forward without them. The market was in such little demand for so long that some decisions were made that were too biased towards project developers in certain areas. That puts into question the validity of a lot of the market. The majority of carbon offset projects do have positive effects, both from a climate and carbon perspective. The market went through a rethinking last year. The demand is way up this year as well.
Brittany Damico: Last question of the day. For our listeners, if they wanted to learn more information about your firm, where should they go?
Mike Smith, Aclymate: Yeah, absolutely. Happy to help everybody there. It's part of our vision is to educate and empower everybody for our best climate future. So you can obviously go to our website, which is www.aclymate.com. If you'd like to hit us up with an email, it's info@aclymate.com.
Dan Carreno: So, with that being said, Mike, Brittany, I want to thank you guys so much for being on today and for sharing your perspectives. And for anybody who is listening and would like more information about O-Six Impact Partners, you can go to our website. Please feel free to contact us through the website if there's anything we can do to support your sustainable investing ambitions and initiatives. Thank you for tuning in today, and we will be back soon with another episode of Rewilding Wall Street.
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