Galvanize Climate Solutions’s Nicolette Jaze On Sustainable Proptech

Big banks and big government are not often identified with successfully spurring small business entrepreneurship and growth. Now, though, a private-public partnership may be helping such growth in proptech’s sustainability realm.

As head of environmental, social and corporate governance (ESG) and sustainability for real estate at Galvanize Climate Solutions, a cross-industry platform that invests in technology to combat and mitigate the effects of climate change, Nicolette Jaze is particularly familiar with one such partnership — that between Wells Fargo and the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL).

Galvanize Real Estate (GRE), the property asset owner of Galvanize Climate Solutions, is part of the Wells Fargo Innovation Incubator (IN²), a $50 million clean technology program funded by the Wells Fargo Foundation and co-administered by NREL. In August, it selected 10 organizations to participate in its inaugural cohort of what it calls the Scalable Tech Track program for cleantech adoption. And Jaze is the program point person for Galvanize.

As an owner of properties whose value can be enhanced through improved sustainability, GRE has adopted a strategy focused on investing in and decarbonizing industrial, residential, student housing and self-storage properties while improving cash flow and increasing asset value.

GRE’s first two transactions were an 84,000-square-foot industrial facility in Maryland that plans to execute on a community solar program and other carbon reduction measures, and a 246,000-square-foot industrial facility in southern New Jersey where it is renovating a rooftop solar array. In addition, GRE currently has two additional deals in the works, both of which are industrial buildings on the East Coast. 

PropTech Insider talked to Jaze last week about the Wells Fargo incubator, how such private-public partnerships can work, and what Galvanize seeks to get out of its participation in the program.

This interview has been edited for length and clarity.

PropTech Insider: Let’s start with the ABC’s of Galvanize, if you will.

Nicolette Jaze: Galvanize Climate Solutions was founded in 2021 by Tom Steyer and Katie Hall. Our headquarters is in San Francisco, but we have offices in London and New York as well.

What is Galvanize’s mission?

We are a global investment firm that delivers capital and expertise to accelerate climate solutions across asset classes. Galvanize Real Estate, which is where I sit, has a differentiated strategy that drives attractive risk-adjusted returns in an asset class that is responsible for 40 percent of greenhouse gas emissions.

Did this company come out of the ESG movement?

I don’t know if that was the catalyst for this, but rather that Katy and Tom are sort of generational investors and saw climate as a kind of catalytic asset class of our generation. They were really passionate about the moment in the market and being able to invest capital in climate solutions that will accelerate the transition.

What was your background, and how did you come to the company?

I spent almost 20 years in sustainability-type roles as the field has evolved, most of it at Goldman Sachs. Toward the end of my time at Goldman I was focused on bringing sustainability into our real estate, and that’s where I met Joe Sumberg, who is the managing partner and founder of Galvanize Real Estate. I worked for him for many years at Goldman doing sustainability across our investment life cycle, but we realized there was a bigger opportunity that needed to be done on an integrated platform that is purpose-built for climate to take it to the next level.

How did Galvanize become part of Wells Fargo’s scalable tech incubator cohort?

Our goal at Galvanize is to decarb all our assets 100 percent within three years of ownership. To do this we have in-house scientists, technologists and policy experts that help inform our investment team on how to do that. And then we incentivize everyone with long-term incentive allocations to figure out how to integrate new technologies and practices to decarb these assets.

Through those relationships we were introduced to and invited to participate as part of the adopters’ cohort in the National Renewable Energy Lab, which has partnered with Wells Fargo to deliver the IN2 program, which is an incubator program funded by Wells Fargo but really executed by IN2. The partnership allows for wide-scale adoption of new technologies that have been proven and tested in NREL’s labs and connects them with adopters such as us, who own and operate buildings to bring these technologies to market and to do so at scale. One example is heat pumps, which have been around for a long time and are proven technologies, but they haven’t been widely adopted in the U.S. real estate market. IN2 is helping bridge that gap.

How long does the incubator run?

Six months. It started in August and will end next January.

Have you found any decarbonization proptech companies in the incubator to use in your assets?

We have not actually adopted any of NREL’s new tech, but there is a matchmaking process that we will be part of in the program where we say, “Here are the buildings that we own in which we think the decarbonization initiatives could potentially manifest.” Then they would match us with those new climate technologies and say, “Hey, we think this company could help with your HVAC retrofit.” So they’ll do some matchmaking. I think, broadly, we’ve seen a ton of potential in a few main categories, like geothermal.

Is this the first incubator in which Galvanize has participated?

This is the first program that Galvanize Real Estate has participated in that does bespoke custom matchmaking, and which may result in a grant from Wells Fargo that actually subsidizes the cost of this. So, all of the participants, the 10 adopters, are writing business plans, if you will, that will be presented at the end of the curriculum. And if Wells Fargo and NREL deem that this is a worthy endeavor, they’ll give up to $250,000 each to help subsidize the cost of implementing these technologies.

And, again, this is with the goal of incentivizing, but also accelerating, the adoption of this technology, because real estate as an industry has been very slow to adopt technologies. Even today’s technologies that are already proven have really not been adopted at scale, let alone tomorrow’s technologies that are already proven, but are going to be much slower on that adoption projection.

What is the total pool of money available?

Initially it’s $750,000 total between NREL and Wells Fargo and it is for the built environment only. It spans different property types though — anything from hospitals and universities to data centers; and also the property types that Galvanize Real Estate invests in, which are primarily industrial, garden-style multifamily, student housing and self-storage.

Generally, proptech incubation has not been on the radar of big banks like Wells Fargo. Why have they gotten into this now? Did it stem from federal financing and partnerships like the one with NREL?

I can’t speak for Wells Fargo’s program, but from my perspective there’s very high demand from a consumer and corporate tenancy perspective. People are seeking sustainable choices at home, and corporate tenants and companies are really looking for net-zero-type assets to fulfill their own sustainability goals. And then we also have some urgency here. President Biden has said that the U.S. needs to be net zero by 2030 and we’re pretty close to that date and haven’t done much.

On the feasibility side, it’s never been a better time either. Capital markets have seen historic highs in terms of the acquisitions and investments in climate tech, and policy through President Biden’s Inflation Reduction Act have infused billions of dollars into helping transition our economy across different asset classes. Specifically for real estate, we’ve seen a huge infusion for electricity and building improvements, and it’s never been more cost effective than now. Solar, for example, is 50 percent cheaper than any other fossil fuel source, but 85 percent cheaper in a whole solar module.

As you move through this incubation process, overall are you finding that proptech is offering enough solutions for companies like yours?

I think there is no shortage of new cleantech and proptech. What I think needs to happen is much wider adoption. The real estate industry in general just needs to be more brave and needs to look at these technologies in two categories: What are today’s technologies that are essentially de-risked, that are already proven, that can be widely adopted and scaled very quickly? And then we also need to have our eye on the future of these newer technologies, like the ones that are being presented by NREL and funded by Wells Fargo to really accelerate the adoption transition. 

Because it’s certainly an urgent need and can be profitable, most importantly. A lot of these technologies reduce your operating costs and can contribute to higher returns. That’s ultimately one of your goals, and ultimately, that is our goal.

Philip Russo can be reached at prusso@commercialobserver.com.