Q&A: Diana Propper de Callejon
Diana Propper de Callejon [1984 BA Political Science] is managing director at the global investment company Cranemere Inc., where she is responsible for building the firm's sustainability platform. Previously, she spent 10 years as general partner at Expansion Capital, investing in clean tech and sustainable businesses. She serves on the board of Echoing Green, an organization that supports social entrepreneurs, and has served on the Nicholas Institute Board of Advisors since 2011.
Your career is built on a belief in the power of investment capital to solve environmental problems. What led you to want to work at the intersection of finance and the environment?
I would define my career as a commitment to finding market-based solutions to the environmental and social challenges of our times. Over the past 20 years, I have been working in the area of finance and deploying capital toward solutions—businesses that are creating environmental and social value at the same time as generating strong financial returns.
I’ve always been passionate about the environment even as a little kid. I started out as a biology major at Duke University under Norm Christensen, but I gravitated away from the lab and started doing more work in political science, public policy, and, specifically, international development. When I left Duke I worked four and a half years with Save the Children doing sustainable development work in emerging markets. One project was providing risk insurance in Bolivia to get farmers to transition from slash and burn agriculture to more environmentally sustainable practices. Through the insurance, any shortfall in yield would be covered in the form of cash and food.
I realized through that experience that neither the nonprofit sector nor government owned, managed, or controlled most of the world’s natural resources—the control lay in the private sector. And I realized that the world’s environmental and social problems were so large that neither the NGO sector nor government had the resources to properly address them. That led me to Harvard Business School and then to transitioning my career into the private sector and finance.
When I was at Harvard, I started studying how to turn environmental and social problems into business opportunities. Although I knew that businesses were often part of the problem, I became convinced that business and finance could find opportunities in the solutions. It became clear to me that factors such as globalization of the world economy and the beginning of deregulation of industries such as energy meant many industries were becoming more competitive. As competition increased, becoming more resource efficient and productive would increasingly become sources of competitive advantage. Businesses that used resources more efficiently and productively could lower their costs. There were also opportunities for companies to develop more resource efficient products and technologies for their customers, driving increased revenues and entry into new markets.
When I left Harvard, I co-founded EA Capital, a business focused on working with companies and investors to identify opportunities in resource efficiency and resource productivity such as energy and water efficiency. We worked with firms like Texas Pacific Group, and it was in those days that I got to know [Nicholas Institute Board of Advisors Chairman] Bill Reilly. We did sustainable and renewable energy investing work with Bechtel and the Turner Foundation, eventually developing a biodiversity investment fund for the International Finance Corporation.
Over 10 years, we saw more and more opportunities at the intersection of profitable businesses and the environment, fueled by the continuing pressures of globalization, deregulation, and the emergence of natural resource constraints. In the late 1990s and early 2000s, several industries began looking at the cost of extracting resources. As the world’s population increased and more people in China and India would join the middle class, more pressure on resources would be felt in the market, further driving opportunities for sustainable investments.
In 2003, I started a 10-year run with the venture capital firm Expansion Capital Partners to invest in clean tech and sustainable businesses. I recently left Expansion Capital to pursue sustainability investing at Cranemere, where we focus on making long-term investments in middle market, privately held companies.
The consistent theme for me is the power of business to both solve environmental challenges and make money for investors. I have really enjoyed working at the forefront of moving capital to these opportunities, and I think this is a trend that is likely to grow over the next 20 years.
Your day-to-day life focuses on advancing clean energy and building sustainable businesses. Outside the office, what environmental issues are most important to you and why?
With respect to some of the biggest challenges we face in the environment, devoting resources to education is critical.
How smart we will be in the finance world and the business world regarding sustainable use of precious resources will depend on the next generation of leaders—and the generation of leaders behind it.
The biggest shifts in thinking and behavior around what are considered intractable problems today will come from young people. I like focusing on today’s youth to help them be forces of good. One of the organizations I work with is Echoing Green. We help college kids think through how to have a career as a change maker. Even if you’re not going to pursue social entrepreneurship as a career, how can you be a positive force in your world?
It’s important to take an optimistic approach—you can harness the idealism and enthusiasm from young people and work with them to help them realize their dreams. That’s a major reason why I spend time with the Nicholas Institute and Echoing Green, because they work with young people who want to make a difference in the world.
You have surrounded yourself with innovators and are active in supporting them. What do you think it takes to craft and implement innovative solutions to environmental problems?
Partnerships among NGOs, business, government, and academia are so necessary. It’s an “all hands on deck” situation right now. If we are going to responsibly and sustainably manage Earth’s resources—and deal with enormous problems of social inequality—we have to work across all the sectors.
One thing the innovative companies I’ve worked with have in common is that they have all turned a problem into an opportunity—this is in the heart of every successful entrepreneur. They saw a problem, they were frustrated, and they identified a remedy and created a business around it.
Another thing I see innovative companies do is not just develop a new product or technology but an entirely new way of doing business. One business I invested in—CPower [acquired by Constellation Energy in 2010]—created a completely new business model. The question it asked was, “What if we just developed a new way of meeting our energy demand that wasn’t about producing power but about paying people to reduce power consumption?” The company built a thriving business around this approach. I would advise people to think about business model innovation, not just product innovation.
Finally, never forget that for a business the most important thing is customer service. Companies in the “green” space can get enamored with the solution they provide and forget about the customer experience. The companies I know that have done the best financially are those that put the customer front and center—it sounds trite and obvious, but few companies can do it well. These companies are always innovating, because they are always thinking about how to improve the customer experience.
What advice do you have for aspiring environmental and sustainability leaders?
I see a new generation of CEOs in their 20s and 30s starting businesses in the fields that intersect with my work, and for them there is no disconnect between creation of social and environmental value and creation of financial value. They don’t “disaggregate” these values. It’s the DNA of their businesses, the fuel of their companies’ growth.
You can’t live in a bubble. If you work in an NGO, you can’t be isolated in your knowledge base. You have to know what’s going on in business, finance, and government. You need networks and knowledge that transcend the specific sector you work in.
Today, everything is global, and everything is technology-driven in one way or another, so you have to be fluent in a lot of different “languages.” You need to understand how technology can be a source of innovation in what you do. Some of the biggest environmental game-changing companies are simply applying new technologies to old industries. For example, DIRTT Environmental Solutions is applying software to the interior construction space. The company looked at interior construction—namely drywall—and said, “There’s no value in that other than as a partition,” and millions of tons of drywall gets dumped annually into U.S. landfills. DIRTT came up with a tech-enabled way to build interiors in a modular, agile fashion. Using specialized software, a customer gets their interiors done in a matter of weeks, not months, and if the office, hospital, or school layout needs to change over time, the materials and components of the originally installed interiors can be re-purposed to the new needs. With its software, DIRTT can do all of its manufacturing in the United States—keeping all jobs in North America that might otherwise have been offshored.
Finally, don’t get stuck on one way to solve a problem. You may be right, but you may be wrong—and if you’re wrong, you don’t want to get stuck on that path. Be passionate about the path you’re choosing, but be open to learning that there are better ways and that you can change directions.
What attracted you to the Nicholas Institute Board of Advisors?
What first attracted me to the Nicholas Institute was the opportunity to come back to Duke and become re-engaged with the university where I had such a positive experience [as an undergraduate], and where I believe that the Nicholas Institute is engaging the next generation of leadership, whether students or policy makers or business leaders. We need to educate future leaders in terms of practical solutions—that is critical to me.
What I like about the approach of Nicholas Institute is that it takes the best work of the brightest minds and turns it into practical solutions, ideas that can be readily implemented, stripped of ideology or bias. The Nicholas Institute’s commitment to finding practical solutions that are based on data, knowledge, and expertise that reside at Duke and taking them outside the boundaries of the university is appealing.
I believe that the business and financial communities have to work with policy makers—we have to create partnerships to come up with the most robust solutions—and I think the Nicholas Institute is really at the forefront of building bridges between different constituents and stakeholders.
To this end, it’s the people. The Nicholas Institute has great leadership and has dedicated, passionate, and fun people on its staff and Board of Advisors. I learn a tremendous amount and enjoy spending time with this group. None of us has enough hours in the day, so we want to spend time with people who are kind, passionate, smart, and, above all, who are getting things done. I think these people epitomize the Nicholas Institute.