Betting on Green Investments

Keith Zakheim 0:02

Welcome to the Age of Adoption podcast. I am your host, Keith Zakheim. Today, as we do with every podcast, we're going to ask our guests one question and one question only. What is your age of climate adoption? Stories A little bit about the Age of Adoption. We live in an era where all corporations and enterprises must rapidly adopt climate and sustainability solutions, regardless of industry. Companies must transform their businesses to be become more climate

Keith Zakheim 0:32

sensitive and sustainable. My day job is CEO of the marketing and public relations firm Antenna Group. And from that vantage point, I've experienced this transition from an age of innovation, an era in which technologists, entrepreneurs and investors focus on innovating climate and sustainable solutions, to this age of adoption which characterizes the world today. So if you accept the age of Adoption hypothesis, then there's really only

Keith Zakheim 1:02

one salient question to be asked. What is your Age of Adoption story?

Keith Zakheim 1:13

My guest on today's episode of the Age of Adoption podcast is an evangelist for an investment philosophy that is also a great slogan. Divest, reinvest and pressure the rest. As a president of the Carbon Collective, an investment advisory firm that promotes sustainable investing for individuals and employer retirement programs, Breen Murphy is doing what he loves and doing it well. Back with Breen, in the time it takes me to realize that with the recent Washington

Keith Zakheim 1:42

Commanders playoff run, my kids have finally experienced a joyous football moment and I don't have to regale them with the stories from the 1980s. Breen, welcome to the Age of Adoption podcast.

Breene Murphy 1:56

Thank you so much for having me, Keith.

Keith Zakheim 1:58

My pleasure. And, well, it's good to know. First of all, Breen, you mentioned that you had listened to the Scott Kitcher episode, so that already brings you credibility with me and that you listened with the rest of our audience. So you'll send my best to Scott if you speak to him before I do, Please.

Breene Murphy 2:12

Yes. I mean, Scott and I definitely bond over a lot of things, but he was in a conference on the speaker panel and one of the questions was, who would survive the zombie apocalypse? And people did not vote for Scott, but I did. And I was like, Scott, I know. I know how scrappy you are. And so I was like, that was a place. So should the zombie apocalypse come, I'm a believer that Scott Kitcher would be a good person to hitch your wagon to.

Keith Zakheim 2:41

Yeah, the only way I'll survive a zombie apocalypse is if they need people who are liberal arts people. Anything really productive using my hands, I would never be able to survive.

Breene Murphy 2:51

This is where I think, plan.

Keith Zakheim 2:53

Yeah, I can't.

Breene Murphy 2:53

But you know, Scott Build.

Keith Zakheim 2:55

Exactly. Scott. Scott could. So I got to make sure I'm near Scott when I have to help you out.

Breene Murphy 2:59

I think Scott would help you out.

Keith Zakheim 3:00

All right, good. Well, Breen, I don't know about zombie apocalypse and sci fi and that kind of stuff, but your background is super, super interesting. Writer, basketball reporter and editor. I know you worked at Sony, and here you are today as president of the Carbon Collective. How did you get here?

Breene Murphy 3:18

Yeah, so so many people. I've had a very circuitous path to where I've gotten especially into climate. But for me, the climate, it didn't happen to me. You know, I hear so many people that are like, oh, 2020, when the San Francisco fires hit, I knew I needed to get into climate. I always knew it was a problem. You know, I like to surf, so I've been in the oceans. I've seen a lot of change. Been science literate. And so it was very clear for a long time that we had a problem.

Breene Murphy 3:48

What was not clear to me was that I could do something about it. And so I was. Someone wanted to work in creative writing, so I went and got a major in fiction and storytelling. That was during the time when I covered the NBA, which is really fun because that was when Blake Griffin was a rookie. And so for basketball fans, there's the Danilo Gallinari and Mozgov dunks. I saw those in person from the floor while covering those games. And that was an

Breene Murphy 4:18

incredible Saturday night.

Keith Zakheim 4:19

Not to interrupt, but I guess I host it so I can. I was in Boston visiting my son who's at Brandeis University, and we went to the Celtics game. And I've seen a lot of basketball games, but I saw the greatest dunk I've ever seen before John Morant on Saturday night. If you haven't seen it, you gotta look at it.

Breene Murphy 4:36

I'll definitely go look it up.

Keith Zakheim 4:37

Incredible. So Blake Griffin, great dunker. There's been a lot of them, but that was number one for me.

Breene Murphy 4:42

Yeah. Okay. One of the characteristics is, does it take your breath away? I remember, like, standing up and going, oh, my gosh, I can't believe that happened. But covering basketball, I was having a hard time making money. And so I came back to. My parents had an ad agency, and I started just copywriting. I was just in this place of not enjoying what I was doing, and I didn't recognize what I was doing. This is very early in my career, and there was this awakening that came when my grandmother

Breene Murphy 5:12

died. And so my grandmother, we called her the world's smallest nuclear reactor. And she, she was a hoot, you know, a lot of energy as the name implies. You know, five feet tall, blonde, bouffant. She would wear the most outrageous stuff. You know, we're talking bright pink jumpsuits with like leopard like neckerchiefs with matching pocket squares and salmon colored lipstick. The woman was a scene and she was the mayor of her small town. She was on the LA City Planning Commission. She ended up spending a lot of

Breene Murphy 5:42

her life at the end at the USC's Wrigley Institute for Environmental Studies, which if you've never been there, it's incredible. It has a campus on LA and a blue Water Ocean preserve in Catalina which is the island just off of la. And so it's a really amazing place. And when she passed away she, she asked me to speak at her, at her memorial. She's always a planner, you know, so she, she told me early that I was going to speak because there's too many grandsons. And so we had, we could only do one. It was going to be me

Breene Murphy 6:12

because I, I was a good storyteller. So I was like, I'm like all right grandma, I'm really sad right now. Can you give me space to grieve? She's no, no, you need a plan for the memorial. So I did. But when I was up there, it was a moment in which I, I really felt her contributions to the people around her. Viscerally I saw people grieving for her and that was based on the, the impact that she had made on their lives. I had so many people afterwards come and tell me stories about

Breene Murphy 6:42

what it meant to be around my grandmother. I was like, and I was like, all right universe, I got it, I got it. Okay, Give back to people. This is how you live a meaningful life. It was just very visceral. And so I was in this place where I studied storytelling. I was trying to make my way as a storyteller. It's very hard as it turns out to make money just being a storyteller. Went into advertising to do it and, but it just was like super early in my career I was like, all right, if I'm going to do something, make it a big issue.

Breene Murphy 7:12

And so I came to climate change and I was like, okay. Started researching around and I got involved in Citizens Climate Lobby. It's a volunteer based organization that helps get people in their community to start to lobby Congress for an effective solution to solve climate change. In this case a revenue neutral carbon fee and dividend pricing carbon. I'm sure a lot of people on the podcast have heard of that. But I went. I'd fly to D.C. to go lobby my member of Congress, who then was like a Republican, very staunch Republican,

Breene Murphy 7:41

name was Dana Rohrabacher, or I guess his name still is Dana Rohrabacher. But, you know, so it developed a relationship there very quickly realized that volunteering an hour or two a week, which is a lot for a volunteer, right? That. That is. There's a lot for a volunteer. But it was woefully insignificant when it came to the scale of the problem. So I started trying to get clients. And then at the same time, I was trying to like my job more. And one of the things that you were talking about is behavioral economics. And that storytelling for me

Breene Murphy 8:11

was a place where I could help make sense of the world, like on a qualitative level. I know people. I don't know about you, but people surprise me all the time, right. You know, like, I don't understand why they would do something like they just did. And so.

Keith Zakheim 8:25

For the good and the bad. Yeah.

Breene Murphy 8:27

Yeah, totally. I mean, I understand. Why would you make that decision? That is like a really strange decision to make. And stories are a great way for me to understand that people's circumstances, how they grew up, how they lived. But behavioral economics was with the quantification of why people are weird, right? And I was like, oh, I like this. Right? It's a really nice. You know, it's very compatible with that. And so I got really into that. It very quickly leads right into money and finance. And so, and I just,

Breene Murphy 8:57

just discovered I was super good at money and finance. I was not into, not just copywriting, although I was really good at the copywriting for that. But understanding how it worked, how to invest, how to talk to people about investments, you know, my, like, ended up taking a job at a financial advisory firm where I was helping advisors grow their business, communicate how they would grow their business. But there are still this, you know, two sides of my life that were, you know, climate advocate by night and

Breene Murphy 9:27

weekend and, you know, financial services person by day. And that track kept following. But I continue to volunteer. The big thing in terms of where I got to, where I got to is I try to do things at work like pester my chief investment officer to have a more sustainable investment option for our clients. I'm sure he was very annoyed by me, but I continue to do it. That's never really stopped me before. So I don't know why I would now and then I do free Work for

Breene Murphy 9:56

people. Part of this was because I would help so many people. I didn't want my. In a financial advisory world, if you get paid, you have to register with your company. And so I would do stuff on nights and weekends, all the time for friends. And if I got paid for it, then I have to. And then my boss would know how much free work I was doing. And I was like, I don't think he really wants to know that much. So I don't want to get paid. So. But I helped a lot of people, you know, doing freelance, you know, free strategic communications plans. I was doing, you know,

Breene Murphy 10:26

like rewriting sales decks. I was doing like business strategy, I was doing growth strategy. I was doing like understanding your finances. Like everything. Like any skill that I had, I would help people. And just for free, what do you need? I'm here. I found that to be incredibly helpful for myself because it allowed me to develop a skill set in the area I wanted to go into without having the, you know, the performance anxiety around it. So I just had practice, I had a free space. It was really helpful for me.

Breene Murphy 10:56

And between doing the free stuff, doing stuff at work and my own job and trying to get really good at my own job, I found that that created a really good foundation. And then finally someone was like, hey Breen, I'm a vc. I just invested in Carbon Collective investing. They're a climate investor. They need help with people that know finance, marketing, climate. Can you talk to them? And I was like, yes. So I ended up coming and talk to them. I'm

Breene Murphy 11:26

employee number one. So you know, my joke is always, I'm not a co founder, but I'm not, not a co founder. Just be due to the nature of understanding the financial services world. Help on fundraising, you know, strategic partnerships, knowledge of the world. I wouldn't be a typical employee. I'd be someone that like I'm very, very invested in the company I'm doing. But what was most interesting for me was in trying to help my, my then current job develop a more sustainable portfolio, I kept running into

Breene Murphy 11:56

problems of my, my chief investment officers. Like one of his complaints was this is, you know, ESG is bullshit, right? He's, none of it makes sense. You know, you're getting Exxon and blackrock's esg. You he's. I'm just doing an ESG mandate. That's all I'm doing. And what I sound it found is it was so fragmented. Like none of it made sense to my cio nor did it make sense to Individuals and a lot of people will come up with their own ETF or own partial. But there was no galvanizing investment

Breene Murphy 12:25

philosophy. And that's what I love about carbon collective investing is it came up with.

Keith Zakheim 12:30

An investment philosophy of divest, reinvest, pressure. The rest. Any good revolution needs a slogan.

Breene Murphy 12:38

Yeah. Yeah. So it gave us a good foundation for how to build based on the best practices of today. But also recognize these, like, really dynamic trends that we're seeing. Like we're in the world's largest energy transition we've seen in 100 years.

Keith Zakheim 12:53

So, Breen, before I feel like you're starting to answer the question before the question is asked, and the format of this podcast necessarily entails me to ask the question. So we're going to get to that right now. Breen, what is your age of Adoption story?

Breene Murphy 13:09

I want people to invest in a world that they actually want to retire into. That's the age of adoption story I'm working on. Because so far what we've done is we've created a current investment paradigm that is. That is saying that is defined by Vanguard. I don't know who you use it in tenant group, but whoever you all have, it's been deeply influenced by Vanguard. Took them 40, 50 years to get here of saying passive investing is the smartest way to go.

Breene Murphy 13:40

Right. That's going to be your option. It's going to hold fossil fuels in them and all that stuff. But that's basically betting on status quo. It's saying status quo is the best and all those iterations will become the status quo and we don't need to figure it out. And so what I need people to see is that that is not the best or may not be the best. And if we are in this really large energy transition, we maybe want to invest like we want to do that. And we're already seeing this in the lived world, but I haven't seen it come

Breene Murphy 14:10

into public market investing. The lived world is starting to show us that it's becoming cheaper to have renewable energy to put solar and batteries. You can save money. It saved me money. For example, it can be more convenient to have an ev. I don't go to the gas station. I think gas stations suck. They're creepy. I don't want to go there. No, they are. And they're inconvenient. They're the poor use of energy. You may not have to spend energy to go to this other place to get the energy to spend it back to

Breene Murphy 14:39

be at a neutral place that doesn't make sense. So you're seeing this lived world starting to accumulate and that hasn't fed its way all the way up into the public markets. You're seeing this large energy transition.

Keith Zakheim 14:52

It kind of started to into 2020. And then there's a correction.

Breene Murphy 14:56

Yeah, but that correction is not in adoption.

Keith Zakheim 15:02

No, definitely not.

Breene Murphy 15:03

No, it's not in adoption. So the age of adoption is happening in those markets, but people are not investing like it.

Keith Zakheim 15:11

The market is not pricing it in the way it should be right now. That's a great point. Outside of Tesla.

Breene Murphy 15:17

Yeah. Right. But a lot of it is like when you look at, I've had a bunch of time to look at my portfolios, it looks at the cost of capital a lot, which is how much it takes to finance and grow your business. And one of the things that's been really hard recently in recent years has not been the lack of government support. It's been high interest rates. When you have high interest rates, it means your loans go up. And for renewables, which are not all, but in large

Breene Murphy 15:47

part high capital expenditure, but low operating expenditure businesses, you know, it's like buying a car or buying a house. Right. When you have to get a loan to do those things and the loan is significantly more expensive in this new interest rate environment, it slow, it slows the businesses. Right. And so the interest rates have been really challenging. And as a result, this is something that people don't always think about, but is true. Like you, you would think logically

Breene Murphy 16:17

that a Donald Trump presidency would mean that renewables from its stock price would perform worse than under Joe Biden. That has not historically been the case. They perform much better under Trump than they did under Biden. And so there's weird things that come up with the portfolios. But all this adoption has been happening. We just haven't invested like it. We've been investing like the status quo is fine and we're not seeing an exponential

Breene Murphy 16:46

expansion and adoption of all these technologies. And we're investing in the rear view, not in the forward looking mirror. Right. Or forward looking through the windshield. We're looking at the rear view mirror. And so when we start to look at the forward looking, you know, there was a report, Resources for the Future. They had this report that came out that looked at all these projections of future energy. There's this guy that presented it, his name is Daniel Rainey. And I found this one slide

Breene Murphy 17:16

very telling because it had a high variance of the future and it looked at the future oil demand and it was not much more than what today's oil demand is on the rosiest scenarios. This is like the ExxonMobils. I think if I remember correctly, it's 108 million barrels a day that we use now. And it was projecting 2024, 2050 to get to 120 million barrels a day. So increase, but not significant.

Breene Murphy 17:46

But it was showing people that were thinking that there would be a significant decrease in usage of oil demand. And so it's just there. The upper bound for oil demand is not very good from an investment standpoint. And this has already impacted portfolios so far. So if you look at coal, we still use coal today, unfortunately. But you would think the investments would be like. So the investment performance would not be great. But it's been worse than not great. It's been

Breene Murphy 18:16

catastrophic. If you held coal in your portfolio, most people did in passive portfolios from 2010 to 2021, they suffered a 99% drop in the value. So if you had $100,000, that's worse than a crypto drop right now the crypto's rebounded. But it's like that crypto drop was the hard one people remember recently. But those things are already happening now. I don't think oil is going to face that type of demand drop. But I do think that

Breene Murphy 18:46

it's unlikely that if people think it's only going to grow by 10ish percent in 25 years, that's not a good place to put your public market investments. Now what that does is it opens up the opportunity to reimagine what fiduciary you're responsible investing in. Because now what is defined as a fiduciary responsible Investing inside your 401 or 403B has been defined by Vanguard. And that's taken 40 or 50 years to

Breene Murphy 19:16

get to where we are, where they've defined the box. They've defined the box so well we don't even know we're in the box. But fiduciary investing changes, it evolves, it's best practices. And so if we're looking at this forward momentum of where are we going, I think there is going to be more and more people who start to see that we are in this energy transition. We do need to invest accordingly. If you're not going to retire until 2050, do you want to have the liabilities in your

Breene Murphy 19:45

portfolio even as something like Exxon that might not have the same growth in it as a result, unless they transition their business models? But that's a hard sticky thing to go through. And so we're trying to help people see where we're going. So our age of adoption comes through. Yes, this adoption is happening now. We need to invest like it.

Keith Zakheim 20:08

I love it. And we only have a couple minutes left. But I do have a follow up question for you. And this is something that, you know, our agency, as a marketing public relations agency, we focus on, you know, working with climate sensitive companies and we get asked a question all the time. How do you differentiate between companies that are meaningfully, incredibly transforming businesses to become more sustainable and those that are greenwashing. And I know your investment philosophy or actually more like the model is divest

Keith Zakheim 20:38

from companies that are, that can't make the transition negative, can't make the transition reinvest in companies that are solving. That's easy. I mean I think everybody would agree on that one. But then hold the rest to pressure them to decarbonize and in two minutes, how do you know the, you know, how do you separate the wheat from the chaff when it comes to that?

Breene Murphy 20:57

Okay, so first thing I should say is what, what are we doing now and what do we envision? Right? Because once, once we get into what we envision is possible, I think there will be more answers where you're talking. Right now we're voting on our shares and that is largely on the individual side. We have some limitations on what we're able to do on the, on the, the 401k and 403b side side. But we're voting our shares in a way that is aligned with shareholder votes that would make that business more resilient over the next 25 or 30 years, which means

Breene Murphy 21:27

addressing sustainability issues. So that's how we look at it right now. But we do believe that there's a real opportunity to do shareholder engagement. I think Tom Steyer is someone that has spoken to this probably the best of being a real friendly on like kind of the way a great VC plays for a startup where it's, you're looking at how do you navigate these times and bring the resources like to these people that will both help them decarbonize but

Breene Murphy 21:56

make them better businesses. So for example, one of the things that we could be looking at is someone like Costco. Right? Costco is one of my favorite companies out there. I have a 4 and a 7 year old. I don't know if you care but like my, my four year old is just yelling in the background for his mom. But I'm in a place where samples are so key to the life of like my children. Now we go in, they know the people there. We have a great experience. We love Costco, but Costco is way behind

Breene Murphy 22:26

Target and Walmart in its renewables adoption and it's probably costing them millions of dollars a year. So if you had the resources, let's say you had like one. As we get bigger, we'll be able to build out like consulting and engagement resources that come to say, hey, we can help save you millions of dollars a year. We've done all this free analysis based on what you've already publicly reported and it will help you decarbonize.

Keith Zakheim 22:54

Yep, that makes sense.

Breene Murphy 22:55

That's going to make that business better and more money and more sustainable. Yeah.

Keith Zakheim 23:02

And we can only. We can only as a world, you can only meaningfully decarbonize when the companies who are doing this at scale decarbonize. So yeah, I mean, big believer in the model. Breen. We gotta jump just at the end of time. But really appreciate you hopping onto the Age of Adoption Podcast and look forward to being in touch real soon.

Breene Murphy 23:21

All right, thank you so much.

Keith Zakheim 23:24

The Age of Adoption podcasts is where CEOs, investors, entrepreneurs and policymakers share their climate and sustainability business transformation stories. You can find Age of Adoption Podcast episodes on your favorite podcast apps, including itunes and Spotify. The Age of Adoption Podcast is brought to you by Antenna Group. If you have a great Age of Adoption story and want to share it with the world, then Antenna Group is the integrated marketing and public relations

Keith Zakheim 23:53

agency for you. We partner with companies big and small, from Growth Stage to Fortune 100, to tell their climate and sustainability stories to key audiences and stakeholders, helping companies build brands and sales funnels. Antenna group is the OG of climate and sustainability PR, having worked in the space since 2005. If you're interested in learning more about Antenna Group, please visit our website at www.antennagroup.com. shoot us an email at antennagroup.com or ping us on LinkedIn.