- At the Sierra Club, we believe in the power of together.

- Together, we're a powerful collective of millions of changemakers.

- Dedicated to making a better tomorrow for our family, our friends, and our planet.

- Together, we hold the power to advance climate solutions, stand up as allies in the fight for justice, restore the promise of our democracy, and protect our lands, water, air, and wildlife.

- Together, we remain committed to the fight for a healthy climate, built on a foundation of environmental, racial, economic, and gender justice.

- A future where all people benefit from a healthy, thriving climate and a direct connection to nature.

- As the climate crisis, the COVID-19 pandemic, and deeply entrenched systemic racism all fuel inequity.

- We will continue to fight for a bold transformational agenda.

- That recognizes the connections between our planet, our humanity, and our democracy.

- This country belongs to all of us.

- Together, we can help deepen the movement for a livable planet.

- Safe communities.

- And a democracy that works for everyone.

- Welcome to the Aaron Harber Show.

My guest today is Dan Chu, the head of the Sierra Club Foundation.

Dan, thanks for joining me.

- Thanks for having me.

- My pleasure.

So, as the national director of the foundation, how big is the foundation?

Do you have an endowment, or how does it work financially?

- Sure.

The Sierra Club and the Sierra Club Foundation are essentially sister organizations.

The Sierra Club has an annual budget of about $180 million.

About half of that is 501C3 tax deductible dollars, which are provided by the Sierra Club Foundation.

And then, about half of that is C4 membership dollars that they get from small donations from their membership and that kind of thing.

So, right now, financially, the Sierra Club Foundation, we manage about $200 million in assets under management in endowments and operating accounts, and then also we do some impact investing as well, which I'd love to talk about here in a little bit.

- Yeah.

So, that's basically the role.

And we have two separate board of directors.

And I've got 10 staff, and the Sierra Club has 800 staff.

- So, big difference.

So, talk about impact investing.

I don't want to wait till later.

- Sure.

- How do you determine something's going to have an impact?

What kind of investments have you made?

What size?

Where have they gone?

And how do you measure impact?

- I'm really excited that you're asking us about how we do impact investing to further the mission of the Sierra Club and Foundation.

The Sierra Club Foundation has about $200 million in assets in its endowment and operating accounts.

And we invest in public equities, private equities, and specific projects.

So, I'd say about, gosh, it's about 10 years ago, we made a commitment, it was at a White House summit, to go fossil free and divest from fossil fuels across the entire portfolio.

So, we divested 99% from fossil fuels.

And we think of that as kind of mission alignment investing.

We kept a small portion of that that we call our advocacy investments.

So, we still have stocks in oil companies or whatever so we can show up and engage as shareholders.

So, going from that kind of missions aligned investment, we moved into impact investing where we actually made investments in clean energy funds, funds to advance equitable outcomes, that kind of thing.

And we determined that we would measure our impact based on a number of the United Nations sustainable development goals.

So, we identified the climate sustainable development goals as well as one on reducing inequalities and really use that as kind of our map for identifying the kind of impact we'd like to have.

Just in the last couple of years, we've gone even farther and created a catalytic capital fund of about $9 million out of that overall $200 million.

And the purpose of that is to advance climate justice direct investments and to be catalytic with our brand because it's a well-recognized brand, the Sierra Club, to come in early when there's a lot of risk associated with it because we feel like that's our role as a foundation, and to bring other co-investors in early as well so we can really create that, you know, that amount of capital to attract federal funding as well as institutional investors.

- Critical mass.

- Yeah, exactly.

Critical mass.

So, some examples of that is we early on provided a very low interest five-year loan to the Navajo Power, which is a corporation majority led by the Navajo.

And they have a vision of installing utility scale solar on the reservation.

But in addition to the solar, what we were really interested in was the justice element.

So, they actually went to all of the chapter leaders throughout the reservation and asked them for their input on what areas are culturally appropriate to place panels.

So, they went through that whole grassroots process, got buy-in from the tribal leadership.

And then secondarily, as you know, the vast majority of Navajo families don't even have electricity.

So, some of the dollars that they'll be making from the utility scale solar will go into individual remote solar projects where individual families can finally get electricity from solar.

- The numbers you're talking about, and I've been involved in various endowments and resource issues, given the challenge of the climate crisis, these are, to be candid, relatively small numbers.

- Exactly.

- So, a couple questions.

One is, how do you get the people who are concerned about these issues to really scale up?

I mean, what you're talking about, you're literally a couple of orders of magnitude off of where we need to be.

How do we get there, number one?

Number two is, there are certainly people who have great concerns about the climate, who have immense wealth, who could move you those two orders of magnitude, writing a single check.

Why haven't we seen that?

- The first thing I would say is that in the last couple of years, the Sierra Club Foundation, with other partners, have developed this theory of change around shifting trillions.

Because really what you're talking about is we have to shift trillions of dollars from the extractive, exploitative economy of today, it's largely based on fossil fuels, to one that's restorative and just for all.

So, that's a big, kind of hairy, audacious goal, as Jim Collins would say in Good to Great.

And we think of our role in three ways, as an asset owner, shareholder, as an investor, co-investor, and as a thought leader.

And so yeah, the dollars aren't very much, but what we find, particularly with investment funds, bringing in the brand of the Sierra Club is really important to those early funds because it gives them a stamp of credibility.

And then, we help them bring on other add-on investments as well.

The second piece is to make sure that we're always engaged with the advocacy and grassroots network of the Sierra Club.

So, back in 2019, the Sierra Club and others, including the Blue-Green Alliance, the Labor Movement, environmental justice groups, came up with this vision of a Green New Deal.

And through the presidential primaries, at least on the Democratic side, all of the candidates subscribed that they would support a Green New Deal.

After Biden became president, that morphed and eventually became the Jobs and Infrastructure Act, a $1.2 trillion act that was passed in 2021.

And then, most recently, the Inflation Reduction Act, which is about $360 billion for climate progress.

So, now we're getting to scale with those federal dollars.

The next step is a lot of those dollars are actually tax credits to leverage institutional investors and private investments, folks that need those tax credits.

And so, we're working very closely in all 50 states with our chapters and local partners to make sure that those dollars, which eventually will be implemented at the state and local level, are going to the kinds of things that were laid out in the Inflation Reduction Act.

- There are a lot of people you mentioned, certainly some of the Biden administration's leadership, the Inflation Reduction Act.

In certain senses, I mean, you had what really are some of the most significant allocations of resources to address climate issues.

You also had some compromises made to get it through, which is the nature of the beast in Washington.

There are also a lot of people, though, who feel that given the existential nature of the climate crisis, that this administration really hasn't done that much.

Is that a fair criticism?

- Sure, they could do more, but they've done a lot.

Certainly, for instance, put in a lot of new regulations around oil and gas development, worked very hard with us on getting the Inflation Reduction Act and protecting it through the whole debt ceiling negotiations that that would not get dialed back by the Republicans.

So, yeah, they've done a lot, and then also they've made some really important appointments, be it the, you know, Secretary Hallin for Department of Interior.

And we think that they've done a lot as far as leadership.

Now, can they do more?

Yes.

Have they done everything that we need to have done to address the climate crisis?

No.

And so, we continue to push them hard.

We came in hard on them to try and keep them from approving the Willow Project in Alaska.

They have approved, and we continue to fight that both with grassroots and litigation strategies.

So, we're not going to let them off the hook for what we think is absolutely critical to deal with, which is, you know, fundamentally the climate crisis problem is because we continue to burn coal, oil, and gas.

[Music] - This site in Alaska is part of the controversial Willow Project.

It's a plan by ConocoPhillips Willow to drill for oil and gas in Alaska, A plan that President Biden has announced will be approved, triggering angry reactions from climate activists.

So, what exactly is the Willow Project, and why are activists opposing it?

The Willow Project is a roughly seven billion dollar proposal by ConocoPhillips and would be located inside the National Petroleum Reserve, a 23 million acre area of undisturbed public land in the United States.

The area holds an estimated 600 million barrels of oil.

Biden's Interior Department approved a scaled down version of the project that would include three drill sites and less surface infrastructure than originally proposed, which, according to the Interior Department, would help to reduce its impact on habitats for species like polar bears and yellow-billed loons.

The full project has been initially approved by the Trump administration years ago, but a federal judge in Alaska in 2021 reversed that decision, saying the environmental analysis was flawed and needed to be redone.

Despite the scale down, environmental groups remain unhappy, arguing that the project, even in its smaller form, still poses a threat to the wilderness and that it conflicts with the Biden administration's promises to fight climate change.

- Our government has the obligation to do everything it can to address this massive problem that's affecting us all.

Climate change is not an issue that affects only one state or even one nation.

- You mentioned Willow in Alaska, which certainly is a massive project and multi-year, multi-decade endeavor.

One of my questions-- So, I have two questions.

One is, it seems to me that there has needed to be an effort to get people on the right and left, to get environmentalists and those who don't see the issue as seriously, together to make some kind of plan where there can be some agreement.

And I'll give you an example.

When it comes to fossil fuels, when it comes to oil, and you need to disagree with me if anything I say you think is wrong, I think it's pretty obvious that we are going to be using oil products for at least several decades, hopefully on a path where we don't need or we aren't as dependent on fossil fuels, at least for energy.

We may use them for other things.

And so, given that reality, and I think that is an objective reality, we have a situation like today or in the last number of years, certainly through the Biden administration and beyond, where the United States is making efforts, due to pressure from environmentalists, to reduce or eliminate use of fossil fuels, more importantly, to try to stop extracting fossil fuels.

Yet, we go to other countries who don't have the kind of strict environmental regulations we have, begging them to produce more fossil fuels, whether it be Iran or Venezuela or Saudi Arabia, whatever.

To me, there just seems to be a disconnect.

Why not develop our resources, in reference to Willow as an example, and try to at least wean ourselves away from developing resources that we want, or we want to be in the market in countries that in many cases don't have the same environmental concerns we have.

It's almost as if, well, if we keep our nest clean, it's okay, but if the rest of the world is dirty, that's fine.

So, I don't understand that disconnect, so help me.

- I would disagree that if the rest of the world is dirty, it's fine, because at the end of the day, climate is a global issue, and tons of carbon come up from it.

If it's China, or the Middle East, or the US, it's all in that collective pool that's driving the climate crisis.

So, yeah, I think a couple of ways that we've been thinking about it, one is on the demand side, as you were saying earlier.

Now, transportation, at least domestically, is the largest sector that continues to be the purveyor of oil.

So, we've leaned in on clean transportation, not just electric individual vehicles, but also electric buses and that kind of thing as well.

So, for instance, with Europe saying that they plan to outlaw internal combustion engines, and California is thinking about following suit, that's a significant signal to the market, and the oil companies are very concerned about that.

So, I think that that's one very important strategy is on the supply side, I mean on the demand side.

On the supply side, the reality is that, for instance, the International Energy Agency, which is an international think tank that comes out with annual report, they came to the conclusion last year, or two years ago in the report, that no new fossil fuel projects can be financed if we're to stay within the Paris climate 1.5 degree target.

So, we've used that data and other data and actually filed shareholder resolutions with banks.

So, part of our target with oil companies is to say, look, they need financing for these large projects, be it Willow or whatever, and banks or customer-facing entities who care about reputational risk, who have existing policies on human rights violations, and that kind of thing, and really put a lot of pressure on the banks because asking oil companies to stop producing oil, that's their fundamental business plan.

So, that's been a shift in our strategy and in the collective strategy of all of our partners as well.

And one example of that is that back in 2017, when the Trump administration passed the tax reform bill, they put in their provision that was frankly bogus math that said a lot of that revenue would come from drilling in the Arctic Refuge.

And so, we knew that they were intent on permitting and leasing oil and gas development, and we worked closely with the indigenous folks there, the Gwich'in, to actually develop a letter that had $2.5 trillion of assets under management signed on, sent it to all the banks and all the oil and gas companies, and said if you drill in the Arctic Refuge, you will create a number of human rights violations, you'll create enormous financial and reputational risk for your companies.

And long story short, after three years of bringing the Gwich'in in to meet with the CEOs and the boards of the banks, all the major domestic banks passed a policy internally that said they would no longer finance Arctic drilling.

And when the administration, in the latter days of the administration, put out a lease sale, really the only entity that bid on those leases was the state of Alaska.

No oil company did.

So, we think that that is an important strategy as well, is to fundamentally dry up the funding for these companies to do oil and gas drilling.

- So, if you do that, and let's say American exploration companies, American production companies, have trouble developing resources here in the United States or the continental United States, Alaska, or elsewhere, and yet we're still using those products and the world is too, then we become more dependent on the Saudi Arabias, the Russias, the Irans.

That strategy doesn't seem to make much sense to me.

- I think that's true if there aren't binding multinational agreements, and that's what COP's been focused on for a number of years in the Paris agreement, number one.

Number two, one of the things that we have supported very strongly with the Biden administration is bringing manufacturing back home, weaning off that dependence on both human capital and fossil fuel capital from other countries as well.

And third, we are one of the largest consumers of fossil fuels, so we've got to continue to drive that demand down.

We have a goal of getting to 100% electrification, for instance, by 2035 and reduce light trucks and cars from burning oil as well.

So, that's an important part of the solution.

So, in regard to-- I mean, that still to me begs the question of why encourage Saudi Arabia to develop more oil and gas resources or produce more oil so that we can produce less.

That still-- That disconnect still doesn't make sense to me.

In regard to electrification, clearly-- -Can I just-- - Oh, sure.

- Yeah, you know, and I'm not an economic specialist, but my understanding is part of that is around pricing, and that actually, the domestic production of oil and gas has very little to do with the overall pricing at the pump.

And that part of that was Saudi Arabia and OPEC really constraining supply to drive up prices.

So, I don't know exactly if that's the correct assumption that we have a decline in oil and gas production, therefore we need it from other countries.

- So, I can answer that because I do have a background in economics.

- Yeah.

So, certainly, the price of oil is primarily set.

It's an international commodity.

- Right.

- And so, it's really a function of what everybody is doing.

And if you look at oil and gas production in the United States over time, starting just several years ago, we actually reached a point where we were producing more energy products than Saudi Arabia.

- Right, and started exporting.

- So, clearly, our impact on domestic pricing was very significant.

And in our impact, we're only part of international pricing.

- Sure.

- But again, in fact, one of the concerns the Saudis had was because of the operation of shale companies, and because they were having so much success, Saudi Arabia was very concerned that, hey, the US is taking over both market share and is impacting pricing.

And in fact, now, there's actually some new pricing with WTI, West Texas Intermediate.

So, the US is playing a significant role in pricing.

But the commodity as a whole is generally priced as a function of all markets combined, international markets combined.

So, if we produce more, that means that we're potentially keeping the price lower, or if somebody is producing less, we're maintaining an equilibrium.

When it comes to natural gas, historically, the natural gas produced here has been primarily consumed in the United States.

And so, that's why you've often had a huge price differential where natural gas in Europe or Asia at times could be $15 or $20 per million BTUs or per thousand cubic feet.

And here, it could be $3 or $4.

And then, of course, you had this whole transition with liquefied natural gas being shipped.

And so, that actually helped raise the price here because a lot of our resources were being-- - Were being exported.

- Right, because if you can sell it even with the cost of liquefaction, and transportation, and new ports, et cetera, if you can produce it for $4, and sell it for $18, and your costs are $10, you're making a huge profit.

So, yeah, I'm an environmentalist, and I think environmentalists have made a huge mistake by not negotiating a deal here in the United States with producers and saying, "We want you to produce as much as possible under these environmental regulations so that we're not shuttling the environmental problem to other places.” It's kind of like-- you know, I feel like there are people here that are as concerned about the environment as I am, who are concerned about what happens here, and they don't really care what happens in the rest of the world.

And I think their actions and their policies reflect that, and that disturbs me.

And when you talk about, you know, social justice, environmental justice, and all that, it's the exact opposite because when you look at the kind of pollution that's occurring in countries like Nigeria, which we, you know, promote, you know, the development of resources there, or in many other countries, it's like we don't care because it's so far away.

So, it strikes me as a very elitist and very selfish perspective.

That was Dan Chu, the National Director of the Sierra Club Foundation.

I'm Aaron Harber.

Thanks for watching.

We'll see you next time.

[Music] - I'm Aaron, host of the Aaron Harber Show.

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