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Ep 35 Eco Performance Management Office with Ron Herbst | Otter.ai

Ep 35 Eco Performance Management Office with Ron Herbst

Podcast Feedback44min

Dave Karlsgodt

00:00

Welcome to the campus energy and sustainability podcast. In each episode, we'll talk with leading campus professionals, thought leaders, engineers and innovators addressing the unique challenges and opportunities facing higher ed and corporate campuses. Our discussions will range from energy conservation and efficiency to planning and finance, from building science to social science, from energy systems to food systems. We hope you're ready to learn, share and ultimately accelerate your institution toward solutions. I'm your host, Dave Karlsgodt I'm a director of energy and utility advisory services at Brailsford and Dunlavey, an advisory firm focused on facility planning and operational efficiency within the higher education, K-12, municipal and sports venue sectors.

Ron Herbst

00:41

But my guidance says that just a certification is not enough. I mean that I've seen way too many green build buildings that use an excess amount of energy and water and way more than they were modeled an estimated. It's too late, you can't build your way to carbon neutrality.

Dave Karlsgodt

01:02

In this episode, you'll hear my interview with one of my B and D colleagues, Ron Herbst. Ron has a long and storied career spanning multiple decades. In this conversation, we'll focus on his previous role, where he led energy and sustainability efforts at the International firm Deutsche Bank. We'll discuss how he created and evolved the Eco performance management office or eco PMO. Ronald explained the way he leveraged the financial, real estate and contractual competencies of the bank and staff to achieve a long list of performance targets including carbon neutrality. Throughout this conversation, we work to translate the lessons Ron learned in the corporate world into a campus context. I hope you enjoy this October 2020 interview with Ron Herbst. All right. Well, Ron, it's great to have you on the podcast.

Ron Herbst

01:49

David, it's great to be here.

Dave Karlsgodt

01:50

Well, so we've worked together now for not quite a year, but more or less for a year. And every time I talk to you, I think I learned something new about your past. So just once and for all, and also for the listeners benefit, why don't you give us a little bit of background on just how did you get into this energy space and take a trip down memory lane to give us the the origins of Ron.

Ron Herbst

02:12

Sure. And by the way, it's a great sign when you learn something new every time you talk to someone. So I do the same with you, David, always find something new. So I've been an energy and sustainable professional for 30 years before the day that that was actually recognized as a career path. So my background is in a wide range from physics, to environmental design, to architecture to solar engineering, grew up in the valleys in California where anything was possible, you just have to try and you could build it. So that was my formative years. I worked as a consultant for a while in a consulting firm that did energy planning and design and MEP mechanical plumbing drawings, and then ventured into other areas design build construction, found my way to energy performance contracting, where I helped start a couple firms, both in large power plants and, and just straight up energy efficiency work a lot of federal contract work. And I just keep getting bored. Throughout my my career cycle, I've moved on to corporate real estate, headed up CBE's energy safely practice, and then went to work for a big International Bank, Deutsche Bank, which we'll talk about a little bit further, that gave me a challenge of taking a large global institution to the highest Agrium, you could find and lead them to the path of carbon neutrality. And since then, I've been working in higher ed, which is, has a lot of the same challenges, same solutions, and hopefully the listeners will learn something from my career path and learning.

Dave Karlsgodt

03:50

Alright, well. So I'm going to start with going way back. So, you know, I've got young kids who are kind of starting to think about what they want to be when they grew up, but what did you think you wanted to be when you grew up? And how did you end up going from being you know, baby Ron, to the one that you just described,

Ron Herbst

04:06

Hey, I wanted to live off the grid, I want to build my own house, make it a passive solar house, you know, use solar energy to make my own water. I was in the mindset of being self sufficient. In fact, my my undergraduate degree, I did a double major and omble double envelope housing, which is a super insulated housing solution, and heat transferred low velocity laminar flows, you know, but I was always interested in building so I kind of think of my career as being a building doctor, you know, so I have just focused my entire life on how to how to make the built environment more efficient, and more sustainable. That's been my calling.

Dave Karlsgodt

04:48

Yeah, how did you start that cause when most kids are young, they're not wanting to be they're want to be a doctor, not a building doctor. So where do you attribute that history?

Ron Herbst

04:56

Uh, just curiosity and and Engineering, everyone has different talents. So I had a, you know, interesting way things worked. I was a mechanical engineer, I grew up in a machine shop. So I saw my dad inventing things all the time and building them. That was where my interest led as I was a student of Buckminster Fuller, try to come up with elegant designs that use less than they're durable, and, you know, make our interfaces with the planet work better.

Dave Karlsgodt

05:26

All right, well, I guess that gives me a little better background and where you're coming from. But we set this podcast up, I think, to talk more about your time at Deutsche Bank, I know you lead the creation of what you always call the Eco PMO office or the program management office or project management office. And you can correct me on which which you refer to it as but before we get into that, just explain like what is a PMO office and then with let's let's dive into the Deutsche Bank story.

Ron Herbst

05:55

The great thing about the letter P, and eco PMO, is you can substitute a lot of things in there. It was a performance management office, it was designed to drive continuous performance improvements in all aspects of business related to operations, whether it was the built environment, to the way we purchased things, to our external reporting and validation systems, we were in a constant mode of driving continuous performance and feeding back the results of that performance to all the stakeholders. You know, that was part of the secret sauce of making the bank carbon neutral, and also just create an environment for people to participate and learn and quickly sharing best practices. It was a organizational framework to drive innovation and collaboration.

Dave Karlsgodt

06:44

So how did you get this gig? I mean, was this something they just posted on monster.com? Back then,

Ron Herbst

06:50

Yeah, this is a time when, when sustainably as a leadership opportunity was just becoming evident, and the European banks were competing on who could be carbon neutral, and nobody knew what that meant. I think HSBC was the first bank that said, we're going to be carbon neutral. And they decided they're going to buy renewable power projects around the world. So it was quietly advertised through a, you know, head executive search company. And since I was leading the practice at CBRE I had already gone through a number of client, you know, cycles with 30, or 40 so you know, real estate centered companies, they're outsourcing energy and sustainability functions. So I was a pretty safe bet for them.

Dave Karlsgodt

07:35

Well, that's great. So when when you took the job, how did that work? I mean, was you came in as an executive, or what was the charge that they gave you or the resources you had to work with?

Ron Herbst

07:45

I was a director of energy and sustainability with with no resources. But I did have the opportunity to create a plan, underwrite the plan with executive leadership, and then go execute it. It was an opportunity to build an internal business. I I liken it to if you're familiar with the term of an entrepreneur, there's an intrapreneur, when you step inside of the organization you use, you have a new mandate to go innovate around, it was a startup.

Dave Karlsgodt

08:16

Well, this wasn't this right after the.com crash, or what time period are we talking about here?

Ron Herbst

08:21

Oh, no, it's right after the financial crash. So yeah, those are interesting times I imagine this scenario hired on bank wants to become carbon neutral, they don't know what carbon neutrality means. The board is meeting to sign up to a commitment. And we we got through the commitment so far as how we're going to set aside money for carbon offsets. And then we had the financial crash. So so it's many ways, kind of like what institutions are facing with right now with with COVID-19, a paradigm shift and the availability of capital and what people are focused on. So it was an opportunity to drive initially savings for the organization, because there was no ability to to carve out capital for any function. And that was actually a great place to land. Because I think energy and sustainability when it's well executed, is really around operational efficiency and driving excellence. And the way organizations use resources and report on the use of their resources.

Dave Karlsgodt

09:22

Okay, so they basically gave, you know, resources and said, go achieve better than any of the other banks. And by the way, you got to pay your own way by finding money within the organization. Is that a good summary?

Ron Herbst

09:33

Well, no, I had I did have an assignmet so but there wasn't a agree to budget for the execution, you had to know like most institutions, you have to come and you have to build the case for this new initiative. And this was rightly identified as an operational initiative rather than a communications initiative. And I think that might be kind of unique, because a lot of companies have started on the sort of communications and outreach side and then done some key procurement activities like renewable power and put their reporting functions in place. And then operations comes latter. This was a intentionally, you know, one click away from the chief operating officer. So, so it was a different level of sponsorship.

Dave Karlsgodt

10:19

Okay, no, that makes sense. But but similar to a lot of higher ed institutions, it sounds like you didn't get a huge staff to work with or you weren't operating an existing team. You were building this from scratch.

Ron Herbst

10:29

That's right.

Dave Karlsgodt

10:31

Okay, so you got started, you work for a bunch of different firms, you got recruited to come work at the bank, you built a team from scratch, essentially making the business case for different things. What did you actually accomplish? Let's talk about some of the projects you got involved with or some ways that you instituted change throughout the bank.

Ron Herbst

10:50

Well, that I like to see where I could be valuable. Yeah, so like any large organization, there's capital being spent, there's operational initiatives being spent, they all can have a improved view on how you invest. And particularly you look at things from a total cost of ownership perspective, there was a major building coming out of the ground in Frankfurt, the new headquarters, there was an aspiration for the building to be of the highest rating relative to round performance. So one of the first places I went to work was helping underwrite the incremental investment for the Frankfurt headquarters renovation project, and working with, with key stakeholders on on the levels of certifications we aspire to. But most importantly, taking the incremental capital, which was required to make this you know, LEED Platinum, very high performance, energy and carbon through governance and governance in a bank is fiscal governance, which means that you have to put a number on it, you know, so that was a very interesting learning process to see how real estate made decisions around essentially operational efficiency investments. And and that actually set the framework for our Global Green build program, because the way we were able to essentially take the US GBC framework around the world, is by creating a discipline around capital, and executive committee sign offs, and making sure that the costs the incremental cost of all these investments was positive for the ownership cycle of the asset.

Dave Karlsgodt

12:34

All right, so so let's decouple that a little bit. So you're saying like, when you're building a new building, there's money being spent to build the building, but you were looking at it more in a lifecycle cost perspective? Is that what you mean,

Ron Herbst

12:45

exactly? So the features that were deemed green, you know, were everything above required code, which, by the way, in Germany are, the code levels are already pretty high. Right?

Dave Karlsgodt

12:54

Right.

Ron Herbst

12:55

So, you know, that was the baseline. So taking it through a energy modeling process, we had this great Swiss engineer, this is one of the first you know, I think, a standalone heat pump, heat chiller recovery systems in a high rise with thermal storage, you know, so that along with the triple glazed high performance buildings, which by the way, which were, you know, we're had smart ventilation systems, which is a pretty cool thing to have nowadays. Right?

Dave Karlsgodt

13:21

Right.

Ron Herbst

13:22

Yeah. So there was a passive cooling, operating mode. So lots of different things that were built that building, nevertheless, that that sort of got started on what green build could look like, it was sort of like the lighthouse project. And then we just started marching around the world. And typically, our green building projects were backed by green lease agreements, because most of the new build was in Asia Pacific and, and so we campaign green lease standards throughout the world to establish you know, sort of core and shell requirements that we would take ownership of, and then we would match the rest of the build out.

Dave Karlsgodt

13:58

So for a bank, they don't necessarily own the buildings that they work in, right, they're renting space. So you're saying the headquarters you owned as a bank, or the bank owned

Ron Herbst

14:06

Even even just, you know, once it was um capitalized and released, it was sold off as a essentially a green investment product.

Dave Karlsgodt

14:14

Okay. All right. I guess a bank is gonna think about how to monetize everything they got right. That's That's how that's their DNA.

Ron Herbst

14:20

Yeah, there are there are thousands of people that own a piece of the Frankfurt headquarters.

Dave Karlsgodt

14:25

Interesting. Well, okay, so but in that case, then really what you're doing is you're saying, we're going to lease space. So really, the only point we have to affect it would be at the time we signed the lease. So when you say green lease, tell me what you mean by that.

Ron Herbst

14:38

Oh, it's simple stuff. Meters, you know, the efficiency of the equipment that's owner provided. In some cases, when we had lease renewals, we would establish refit targets. So far as performance targets of the building would require the developer to achieve a LEED standard. We were the first organization to get LEED certification of anybody Building in India, and then we, you know, within a couple of years, we were just rolling out Platinum buildings in all of India. So it was amazing how quickly it happened. But most of that happened upfront with a good partnership model so that the with the builder developer.

Dave Karlsgodt

15:13

Got it so they knew what kind of building you wanted to build, after you built a couple of them, and you kind of learn together on how to make that happen?

Ron Herbst

15:21

it's not too different than what's happening now, as developers, you know, set a target for green buildings. And the one thing that's that was slightly different is we always ran through the business model, to make sure that we were getting that investments were looked at through the lens of operating expenses for the term of the lease, it's such a simple thing. But you know, if you sign up to a five year lease, or 10 year lease you want, you want to have make sure all the investments there are made have a positive cash flow during that 10 year lease period, including the ones that you're asking the landlord to make.

Dave Karlsgodt

15:56

Right. Okay. Yeah, that makes sense. As campuses are thinking about maybe expanding but maybe not building their own space, this is a pretty powerful tool. Can you translate that into you know, since we're the campus energy and sustainability podcast, if I'm sitting at a campus, and I'm not a bank, and I tend to own my own buildings, how could you translate the same concept?

Ron Herbst

16:17

Oh, I think that's it's already part of the planning process is you, is netzero aspirations are baked into campus plans. And you have a campus localized campus plans relative to building standards, which push the envelope relative to code from from an operational execution standpoint, you want to have, you want to build on successes, you want to pick the suppliers that continue to show work well, in driving efficiency, we call it green building standards, verticalization. Like what, what products, services and technologies you want to continue to use? And then you want to centralize your energy modeling? That's a key thing, because, you know, the modeling is core, the decision making process, and if you just have it done, by architects and by their chemical engineers, then buy some energy modeler. Yeah, that's way down, you know, the, the sort of the responsibility chain, you don't get integrated design delivery, because you're not you're not testing and validating the performance potential of the building. I mean, this is the way the GSA builds our high performance buildings. Those of you who are interested in integrated design delivery, I'd encourage you to look at the Rocky Mountain Institute body of knowledge in this area.

Dave Karlsgodt

17:31

Yeah, in other words, you can't rely on just the developer to do all this work for you, because they're making their money basically building the building. So they're, they're incentivized to basically learn low first cost, or they can maximize their profit, rather than what you're going to get stuck with, which is a building that operates over time. So you want to make that optimized, that makes sense. Well, so I know that the glede building was just one project to do the torture bank, explore some of the other areas that were under your role. And let's dig into some of those.

Ron Herbst

18:03

So let's start with the reporting function. Right. So like, like main institutions started with spreadsheets. And all we saw were the big buildings, right. At the time, you know, there were the large centers had environmental health and safety working committees that did reporting under an ISO Quality Framework. So the key thing was to get global utility bill management systems in place. So this took about two to three years to implement well, but slowly country by country, we deployed a central utility bill processing and data analytics extraction around the utility bills for 37 countries. And for a number of countries, we interface, you know, all the real time metering data. So another byproduct was, you know, over 300 buildings with with real time hourly data feeds, that was all sort of one initiative, the the value of doing that is now then all the data was was flowing back for energy and carbon reporting. We linked that with our renewable power purchasing agreements. So so as each country, you know, we first analyzed what the procurement approach was. We aggregated it to create regional or usually government, statewide, or country wide procurement strategies, and we bought renewable power. And that data helped us do better purchasing. That was those were actually all the quick wins. You know, the first few years where we were so constrained, we just started carving out savings who aggregated procurement of power and using our standardized renewable power purchasing approach.

Dave Karlsgodt

19:43

I'm going to stop you there though, right? Because I think you glossed over the first part, which is you got reporting for 37 countries, how many different locations are we talking about here?

Ron Herbst

19:53

I think there were like 5400 sites.

Dave Karlsgodt

19:55

So you had 5400 different locations and you had, in some cases, hourly data on many of them, not all of them, but in different, how many different utilities that that's pretty crazy. So tell me how you'd got that far first, because I think once you have that data, that's what you're jumping to. But I want to talk I want to stop there first.

Ron Herbst

20:13

Yeah. So the, the process of setting up a centralized utility bill payment service or Bureau is, is to slowly redirect the, you know, the, all the invoices to one place, have the data extracted, they basically had country level supports that could do language translation, make sure all the units of measures were properly applied and, and put into a central database. The next step was to centralize the pay function. So you created one pay center, and you got lots of savings, by the way through pay optimization and auditing. So utility bills service, the cost of it pay for itself in the first three years based on on realized savings.

Dave Karlsgodt

20:53

So in other words, instead of having every individual office pay their own utility bills, you did it all in one central location, you save money that way.

Ron Herbst

21:00

Yes, but there's a there was a lot of block and tackle because, you know, live is handled by the local real estate manager, you know, getting the redirection function, working validated clothes, not dropping the ball on a pay obligations, and getting the systems up and running globally. So we just yeah, we went through the you know, each country at a time but the the outcome was that data reporting for our external reporting was automated. And and it was very easy for us to overlay a compliance and it's third party audit system because the data resided in one place. After we finished the global utility build services, we started going after a scope three so you know, that was attacking all the the business travel getting, you know, data pulled back on all the trips, we actually audited down to completed trips. So once the interesting yeah, trips are completed, we we had to find routing, we calculate the greenhouse gas emissions, we gathered up our transportation, other transportation, data from the supply chain, mailings, postal services, car services, and we, you know, just slowly got our supply chain report back to us and do in such way they just fed into our Global Management Systems.

Dave Karlsgodt

22:14

Got it. So once you had the information, then what do they say you can't manage what you don't measure. So that was Step one is to figure out a way to measure it all. But the process of measuring paid for the cost of implementing the measurement?

Ron Herbst

22:26

it pains me to see organizations that have do this still on spreadsheets with a lot of people chasing data, that's not sustainable. From a from a reporting function, and it doesn't provide real time data on what's actually happening. You know, one of the byproducts of having this is we were able to create for our top hundred buildings, you know, quarterly scorecards on how they were performing on energy, water, waste, if they were doing that, and carbon emissions, and normalized for weather, and compare them with with their peer groups. So you essentially had business units and buildings competing on reductions through data, which was, which was validated, and third party audited. So if you want to get someone to really rise up to a performance challenge, make sure the data you provide them is timely and accurate.

Dave Karlsgodt

23:18

Right. Okay, that makes that makes a lot of sense. Okay, so we've gotten, so you got the buildings covered, we got the measurement and verification. What else there was other other ventures that you got yourself into as your intrapreneur instead of doing your bank?

Ron Herbst

23:33

Well, that we haven't touched on the importance of communications, and, and outreach, we call it resource awareness. But it was an internal campaign just to recognize the leadership inside of the institution that was there doing good works, you know, both on the operation side and and and financial products and services, and maintain a continuous news feed of what was happening internally and externally. So that resource awareness campaign evolved from a sort of pre static website to personal carbon calculators, pledge sites, educational sessions, community outreach programs, you know, for my recognize that this is climate week in New York City, but for five years, we were a key sponsor of climate week, we were able to create these forums around being a responsible citizen. But that whole communications program created a transparency and visibility and excitement inside the bank. And feel felt proud, you know, with all their stuff that was going on that, that this was something that was actually creating a positive impact to the environment to the community.

Dave Karlsgodt

24:41

Yeah, I guess it's shouldn't be. It should be noted that you were doing this right after the financial crisis, like you said earlier. So banks were not the most popular at that point in the country's history.

Ron Herbst

24:52

Yeah. And this was, this was, I guess, productive defense, but it was actually I'll take any crisis to a good purpose.

Dave Karlsgodt

25:00

Yeah, fair enough. Well, you know, a question I often ask university presidents, when I'm able to interview them is, what percentage of the of their time do they get to think about energy and sustainability topics? My guess is, it's usually a pretty low percent. I think the most I've ever heard a university president Tell me was like one or maybe 5%. And those are some of the ones that I met at sustainability conferences. So they were like, you know, the cream of the crop. I assume the chief Operations Officer for Deutsche Bank probably also didn't spend most their time thinking about sustainability. But how did you get their attention? And how did you get them on board with making this much change, because you know, the things you're talking about are pretty substantial initiatives, even at the scale of a company like Deutsche Bank.

Ron Herbst

25:44

Now, I think one to 5% is probably right to ask from your your leadership team. And most of it is input based, a lot of it is commitment based, and you want to create, you want to translate a person's current job responsibility into what they can do to contribute it and and, and make that part of their goal setting, you know, for the year and be their partner too, you know, so if you're working with the, essentially the head of real estate services, you'll be their partner in making sure that the green building program is executed on a consistent way that they have the best consultants supporting the work, and that their standard governance and sign off for capital. And then you, you pick out an Innovation Initiative going, Hey, let's go, let's go figure how to do green leases, because you're gonna be able to write better agreements around the world and save money. If you're talking to the chief infrastructure architect who ran IT, the green IT initiative was a tremendous opportunity for them to look at scaling and new technology to build free cooling data centers and reduce the IT footprint of the workplace. So you work with them to develop the Eco reporting framework, and the life cycle costing approach and the board level briefing materials so they can go do that work, by the way, it results in lower operating costs and better performance, you just kind of carve off these leadership opportunities. With each person that is part of your working committee, the first thing that we did was form a an eco operations committee, and include stakeholders from different parts of the organization from global sourcing, to the global carbon and renewable energy markets, you know, to real estate investments. And each of these people had a different lens of what sustainability meant to them. And you just help them evolve that.

Dave Karlsgodt

27:45

So with the senior leadership, so like the chief Operations Officer, the CEO, folks like that, they're going to be recipients of information from their departments under. So it sounds like you're saying, You worked with people that reported to them to make sure they had a way of telling a sustainability story within their own context. Is that a good?

Ron Herbst

28:03

That's, that's exactly right. You know, and then then you are then you're an insert to the, you know, the global sustained report, which had a broader set of sustainably attributes that were being reported on, you know, a lot of in the HR world and, and giving world so you just, you were part of the environmental operations, leadership team. And, and

Dave Karlsgodt

28:23

Okay.

Ron Herbst

28:24

The interesting thing, too, is that as part of doing this, you we started to invent new products that were used in the financing world, you know, so it was opportunity for us to operationalize some global funds for climate change for energy efficiency in Europe, a private equity fund for energy efficiency and real estate, the work that we did internally became productized, in the fund management world.

Dave Karlsgodt

28:50

So in other words, you piloted some of these ideas within the operations of the bank. And then once you understood them, you could sell that as a product to your client.

Ron Herbst

28:58

Yeah, we've had sessions, we were the operations backbone for the product, you know, so right, green green bonds right now have standard ways of reporting and disclosure. So So now, it's it's still evolving world? You know, we had we build this expertise around project accounting, and disclosure of performance of investments, and that became used in financial products.

Dave Karlsgodt

29:21

Okay, that makes sense. So then back to your committee, you said you had a committee from different departments, which I think is pretty common in lots of organizations. When you built that committee, how senior were the folks on it? Were they fairly high level or were they a little bit more down in the management hierarchy?

Ron Herbst

29:37

No they're pretty high level. So you know, head of Global Head of real estate, Global Head of data infrastructure, Global Head of workplace IT, Managing Director of, you know, carbon and renewable markets, the Office of the Vice Chairman, yeah, I mean, so they, they lead of operational function, central operation functions. Across the business,

Dave Karlsgodt

30:02

I assume you worked with them individually then to on their particular initiatives. At least that's the way you just described it, maybe walk us through, how did you approach conversations with each department lead, or maybe take us through a couple examples.

Ron Herbst

30:15

We've gone through some of them already, you know, in real estate that was focused on the green bills, the green leases, and the greening of the FM contracts. A lot of outsourcing...

Dave Karlsgodt

30:26

FM being?

Ron Herbst

30:27

facility management contracts, right. So, so, you know, we didn't perform around facility management, we outsourced it. So putting the sustainability requirements and energy program management requirements into the facility management contracts, allowed us to basically get staffing from our supply chain, to go do all the right things. on tax and regulations and incentive management, that was an opportunity to interface with finance. So as we started collecting money for solar projects, we had to create all the linkages, there was regulatory frameworks, we were tracking and managing things like the voluntary carbon reduction, you know, so it, there's every, we had this thing called 10 point plan. But the 10 point plan was constantly socialized, with performance improvements shown against the plan. And so each of the plan elements had a KPI, you know, this is management one to one, you showed how the key performance indicator improved over time and what the outcomes were. And you know, that dashboard just kept getting better.

Dave Karlsgodt

31:38

All right, well, one of the one of the things I've struggled with in working with higher ed clients is they don't actually think like banks. I mean, there are a few people that work there that think in those terms, you know, folks in the budget office, potentially, let's dig into this Capital Planning concept. So it sounds like most of what you were doing at the bank was you're leveraging contracts or leases or relationships with other vendors. And a lot of cases to get done, what you wanted to get done is that is that a fair summary of the work, I don't mean to minimize it, but that that was kind of the major lever that you pulled. A lot of times when we're talking with higher ed clients, it's really about making that choice to spend more money on a building, so it operates more efficiently. But those budgets are so different, that you can never cross the void between the Capital Planning budget and the operational budget. For example, as we're looking at Campus energy systems doing the steam to hot water conversions, that's another one. It's really capital intensive, but it saves an insane amount of operational dollars. But you, you have to overcome that void. Is there anything you can share from the work? You did it at Deutsche Bank? That kind of translates into that topic? Maybe a bit of a curveball here, but I hopefully,

Ron Herbst

32:50

Yeah, no, I think that there, there are models that are in work right now. So revolving funds, where savings from, from efficiency and and which is really facility management function gets captured at a central operations level, like the utility plant level, and you just have a better accountability of that service. Very important, as campuses roll out their smart campus infrastructure plan to do that as central level and not just do it building by building on the new construction side, a little bit more tricky. You know, you can write it into your, your, obviously, your procurement requirements for architects, engineers to do lifecycle cost modeling, and maybe write in aspirations for LEED targets. Those are the foot holes or hooks to build better buildings. But my guidance is that just a certification is not enough. I mean, I've seen way too many green build buildings that use an excess amount of energy and water and way more than they were modeled and estimated, so a good post performance assurance programs, you know, enhanced commissioning, is important to ensure those investments and high performance buildings are actually realized.

Dave Karlsgodt

34:04

So when you were at the bank, I mean, it sounds like you were able to cross that void, though. Is that true? And is that different than my experience in higher ed that I've seen? Is there something separate or different about the way that the for profit world works? And then higher ed works? Or is it just people need to get out of their own way?

Ron Herbst

34:21

It's more of the latter, we had a very simple a KISS principle is that any business decision we made had to have the highest cash flow return on investment for the term of the investment. Right.

Dave Karlsgodt

34:34

Okay.

Ron Herbst

34:35

Yeah. So viewer building, we would we would go 10 year standard lifecycle analysis, you know, and if it had a positive cash flow, do it and invite to the greatest, greatest extent possible, have your partners do the work and help prepare, whenever it is a building or technology platform for that. So it's more of a service rather than go build it yourself.

Dave Karlsgodt

35:00

Again, as you're thinking about a building, you'd have to think about coming up with the budget coming up with a design, that lifecycle cost has to be thought of at that moment, because that once it's built, that's too late.

Ron Herbst

35:11

it's too late, you can't build your way to carbon neutrality. I mean, and typically, that's that that's what's happening with a lot of higher ed. clients, they're building, you know, New Student Life facilities, new buildings, they're adding to their footprint, and they're wondering why they're why they can't achieve their their baseline reductions. So we were in a growth mode, we built a lot of work points, the numbers, I'm most proud of is, we were we were able to achieve carbon neutrality in five years fully audited, create, you know, over $70 million of baseline savings, or business as usual. And that's an accounting for all the program management costs.

Dave Karlsgodt

35:50

Let's come back to this concept of the Eco eco PMO. I guess that's our our general topic. And as with many conversations with you, Ron, we can go all sorts of different directions, which is what one thing I love about talking to you, but back to this office, you were essentially given authority to work with the different departments, you were given some, I guess, top level goals to achieve. I maybe let's talk a little bit about that. What was the role of what senior leadership asked you to do? You've talked a little bit about how you've actually accomplished it, but what was the message they gave to you? And then how did you report back to them in such a way that they knew you were on the right track, and so that you could build momentum?

Unknown Speaker

36:32

Well, the highest aspiration was to be carbon neutral in five years, and to do it an exemplar manner, you know, scope, one, two, and three, and put up the systems in place that we can maintain that carbon neutrality commitment. So that was the board level commitment. Underneath that was really just the execution of the work. And the energy efficiency, renewable power purchasing, building green buildings, our eco IT program, the way we we managed our utilities and build process all were just execution levers to get to that goal. So it's no different than higher ed institutions that sign up to the Paris accord or some, you know, a state aspirational goal. How do you get there that reporting function and glide path to, that was was key.

Dave Karlsgodt

37:27

When you say reporting function here you mean, how do I tell the executives: Yes, we're on track to meet our carbon neutrality goal, or Yes, we're on track to meet our energy efficiency target or something like that? Is that what you mean?

Ron Herbst

37:40

That's exactly so that was that annual reporting function that was linked with the sustainable reports, CEOs will change up on you, I think I went through three CEOs. Every time there's a revalidation of what the programs are, what you're spending money on how it benefits the business. So this was always this is a durable initiative, the carbon reporting the information management systems that back that carbon reporting are still in place, the green build programs are built into the way projects get built. The procurement, renewable power is just business as usual. The carbon offsets are now fully certified, you know, renew your selective renewable power projects that are marginal and incremental. So the system just now runs on its own. In fact, you know, I, I tell my colleagues who want to be energy and sustainability managers is that their goal is to work themselves out of a job in three to five years.

Dave Karlsgodt

38:33

That which is what you did, right?

Ron Herbst

38:34

Yeah, that should be their goal, you know, if they if they execute the operational systems Now, granted, there's a lot of leadership, leadership will come on with new ideas of how to, you know, right now, the supply chain initiatives are really exciting in our world, we carved off IT equipment, furniture, paper, print services, hotelling. I mean, there was a couple of supply chain issues he had, we were required, as part of the CDP reporting to report on it. One of the things that we did that was really interesting is our car lease program in Germany, is that since we knew how many miles are being driven by our employees and their leased cars, we actually provide feedback on the efficiency of the German automobile industry, to the industry

Dave Karlsgodt

39:22

Interesting.

Ron Herbst

39:22

And we use that we use that to rack and stack and eliminate inefficient vehicles and our lease programs. But those are those are all things that the innovation is all happening in scope three right now. But on the operational side, if you do your job, right, it should be an embedded function in a three to five year period.

Dave Karlsgodt

39:39

Well, one of the questions that you get a lot with anybody that's doing something ambitious is how much of it is real. And I mean, most of what you've just described really is operational efficiency, as you mentioned up front. So I mean, I would characterize that as real stuff, right. This is not not greenwashing. But how do you keep a program like this from Becoming just greenwashing or being, you know the aspects of it that you're doing being kind of overstated by folks in communications that want to just tell a story that sounds good in a few sound bites versus it being something that is durable, like what are the elements to that?

Ron Herbst

40:15

I'm just constant, being transparent continuing to innovate around projects and programs and being data ready. Since we had a constant reporting, internal website, passion for the pad website, it's very easy for the people who were doing external comms to drop into our, you know, essentially our virtual work environment, see what's going on. And then we had, you know, once a month, we we pick something out of the operations side of the bank to celebrate, you know, so and those were those were all they were engineered financially and engineered projects, so they could be reviewed and validated. And one of my most satisfying role was to act as a climate ambassador. As we learned how to do this. Well, we had the chance to work with other corporations and government entities and establishing systems and procedures to do this. Well. It was just constant focus on operations. And transparency.

Dave Karlsgodt

41:16

Now, fair enough. Okay. Well, so Ron, you don't work at Deutsche Bank anymore. You work with me, which I'm glad to have you as a team member. How did you work yourself out of a job?

Ron Herbst

41:26

Um, well, I moved back to the beautiful green Seattle for one reason and did no longer we live in the financial services centers of the world. And I really wanted to take my learnings and translate them into the public sector. All the work that has been honed and deployed in the private sector is transferable. It's a common name is a playbook. So for each of these sort of activities, green leases, you know, greening, FM, capital, project development, utilities and functions. there's a there's a playbook and a playbook is is a living, breathing set of suggested plays, in order to win energy sustainably is a fantastic area to play and win. And to create, you know, triple bottom line impacts that celebrate operational excellence and facility management and capital programs celebrate the impact students have and theirs in their stewardship of their sustainability programs, and executives who are willing and brave enough to be creative in the way that they do partnerships and source capital and accelerate their work. This is an opportunity for us to continue to do this at scale. And there are so many institutions that have made commitments. And I think our role is to help them execute on those commitments.

Dave Karlsgodt

42:47

As we sit here and maybe a little bit smokier than normal Seattle, but still green Seattle, and looking forward to working with you on all that. Getting a lot of these ideas out into the higher ed space. I know a lot of these are in various levels have implemented at different campuses. But that does seem like there's a lot of learning from what you've done at Deutsche Bank that we can apply together. So I look forward to working with you on that.

Ron Herbst

43:09

Yeah, and my heart and prayers go out to all the people suffering at home stuck due to COVID or or fires right now that focus on keeping communities health and safety in the part infrastructure plays is at a unique focus point. So let's make buildings and communities more resilient.

Dave Karlsgodt

43:31

Here here. Alright, anything I didn't ask you that you'd like to share with the listeners?

Ron Herbst

43:38

Don't give up.

Dave Karlsgodt

43:39

Okay, fair enough. Well, good. Ron, I as I mentioned, I look forward to working with you on this. Thanks for taking the time to talk about a little bit about your past and look forward to helping to shape the future with you

Ron Herbst

43:52

Take care of David.

Dave Karlsgodt

43:53

Well, that's it for this episode. Thanks to Kelsey Harding for production assistance. As always, you can find show notes, transcripts and contact details for our guests at our website, campus energy podcast.com. If you'd like to follow our show on social media, our Twitter handle is at energy podcast. You can find us on LinkedIn by searching for campus energy and sustainability podcast. If you'd like to support the show, consider leaving us a rating a review on iTunes or just sending a link to a friend. As always, thanks for listening.

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