Tackling The Challenge Of Our Generation: Decarbonization Through Corporate Innovation

How can corporate ventures become active in the field of zero-carbon transition? 
We talked to Marie Cheong from ENGIE Factory about all things sustainability in corporate innovation. Marie works with founders to build new ventures in energy efficiency, smart cities, green mobility, and renewable energy. 
In this episode, she guides us through corporate innovation in the field of zero-carbon transition, explains how ventures can become active in this space, and shows how ENGIE Factory helps ventures achieve their carbon goals in addition to high commercial growth.

Transcript

Marie: (00:02)

You know, I think this is a space that just needs all of the innovation and all of the disruption that we can get. So, you know, if we want to avoid the worst impacts of climate change, and keep global warming to below two degrees Celsius, then basically we have to halve our carbon consumption in the next decade.

Christine: (00:23)

Welcome to the Lost in Transformation podcast series dedicated to the complex world of Digital Transformation. We feature guests from large corporations, start-ups, consultancies and more, to shed light on the success factors around Innovation, Transformation, and adjacent topics. 
We share first-hand insights and inspiration from experts for all the intrapreneurs, entrepreneurs, and anyone curious about Digital Transformation.

Christine: (00:52) 

Marie Cheong leads the Venture Build program at ENGIE Factory in the Asia Pacific. She’s working with founders to build new ventures in energy efficiency, smart cities, green mobility, and renewable energy. In this episode, she guides us through corporate innovation in the field of zero-carbon transition and shows how ENGIE Factory helps ventures achieve their carbon goals in addition to high commercial growth. We hope you enjoy this episode. 

Christine: (01:21)

Hi Marie, really happy to have you on our show for today on Lost in Transformation, and thanks so much for joining. So you are leading the Venture Build program at ENGIE Factory in the Asia Pacific, where you're also focusing on building new ventures in energy efficiency, green mobility, and so forth. And I'm really excited to hear more about the whole story of corporate innovation in the field of zero-carbon transition today. And to begin with, I would like to learn more about you, basically about yourself and your work at ENGIE and ENGIE Factory. Basically to understand more about the work you're doing in general. Could you share a bit about that?

Marie: (02:03)

Sure. So first of all, thank you so much, Christine, for inviting me to be a part of this podcast. Really excited to share what we do at ENGIE Factory. So as you mentioned, I lead the Venture Build program for ENGIE Factory. So ENGIE Factory is an ENGIE venture arm in APAC. For those of you who don't know, ENGIE is one of the world's largest independent power generators. And about five or six years ago, we made a strategic decision to be a leader in the transition to a carbon-neutral world. And that involved a whole host of activities, including divesting ENGIE coal assets. So a real commitment to this space at EBGIE Factory. What we do is partner with founders to build and invest in brand-new ventures that accelerate the zero-carbon transition.

Christine: (02:53)

Nice! Really interesting to hear about your work and to learn more about what ENGIE does. So how did you then end up at ENGIE? Essentially what is your journey that brings you to where you are today and what you're focusing on with ENGIE Factory?

Marie: (03:09)

Probably, also around five or six years ago, you know, I started to think about what are the things that I really enjoy doing. And, I realized that I found a lot of purpose in being a builder. So I loved the challenge of building new value propositions, new solutions, new business lines. So I did that for a little while at a construction company and then helped to build a digital and innovation practice at a consultancy firm, and then joined a startup before ENGIE Factory. So I think just like so many people, in the last few years, I started to feel a real growing urgency around climate change. And, you know, really started to think that addressing climate change and decarbonizing our economy is sort of the challenge of my generation, of our generation.

Marie: (04:02)

And given my love for building and my love for ventures, I started to think about how we can apply that exponential growth trajectory that we see in ventures to decarbonization. So with a venture lens, we think about how does a new business or a startup makes its first dollar of revenue? How does it make its first million, 10 million, a hundred million? And then I started to think, okay, is there a way to combine that thought process with de-carbonization? So in addition to the venture lens, we also add a carbon lens where we think about how do we save or bait our first kilogram of carbon, our first ton of carbon, our first megaton of carbon, and then hopefully, you know, a gigaton of carbon. So I think that there's an incredible space to combine ventures of decarbonization. And in fact, at Davos earlier in the year, you know, the CEO of StanChart said that that de-carbonization is a $50 trillion opportunity. So just as we saw the last kind of great sort of economic transformation around the internet age and how the companies that were founded 20 years ago, like your Facebook and your Google's kind of dictate so much of our lives now, I think it will be exactly the same story, but with the transition to decarbonization.

Christine: (05:22)

It's super interesting to hear about your background and how this actually connects to your role of what you're doing now at ENGIE Factory and how basically your background and passion and experience all lead together. And, given that this is something that's super relevant today, I think this is somewhere really exciting to work in. And how does ENGIE Factory’s approach now kind of differ in venture building from other organizations that do it?

Marie: (05:49)

So you know, the ENGIE Factory was started about three years ago and the reason that we looked at venture building, which is actually kind of a more difficult or more advanced form of corporate innovation is quite simply because there wasn't enough deal flow of ventures, addressing kind of the real sort of pain points and the spaces that need disruption in the energy sector. And, that's simply because it's hard. I mean, energy is an incredibly technical infrastructure, high CapEx space. And unless you've been in an energy insider for the last like a decade, and sometimes even then, it's hard to know where innovation is really needed. So, that's why we chose a venture building as a model. And, our goal is to build these strategically aligned ventures that represent new growth horizons for ENGIE core business.

Marie: (06:40)

So in order to do that, what we've done is we've set up a program that we consider as lasting for about two years, where we spend a lot of time recruiting founders and entrepreneurs that really have that kind of high growth venture kind of mindset, but don't necessarily have a background in energy or have an idea or startup that they want to work with. And we see ourselves as being co-founders with them. So, we supply ideas and, you know, opportunity spaces where we believe that there's really sort of venture great opportunities, both in terms of the billion-dollar target addressable market, and also the potential to abate, you know, a significant amount of carbon. So we would like to hope that we could build ventures that could abate 0.1 gigatons of carbon at scale.

Marie: (07:28)

And then what we do is we work with these founders to find the right ideas and opportunities to validate those using a really robust kind of venture validation methodology, where we interview anywhere between 50 to a hundred customers during this process. And then we work with these founders over the next 18 to 24 months to launch their MVPs, get that customer traction, and start to build their businesses. Throughout this program, ENGIE also provides a stipend to the founders, as well as pre-seed capital in order to really help these ventures grow and scale.

Christine: (08:05)

Cool. I really liked the fact that you're saying you're basically co-founders with them and you're going on this journey together. And I feel like that kind of makes it, you know like you're collaborating more closely together, which is exciting. And also in some of our previous podcast episodes, we've already covered some views about corporate venture building. But now adding the focus on sustainability here in the corporate venture building, is kind of a new angle here. So why would you say is corporate venture building so important in zero-carbon transition?

Marie: (08:39)

So, you know, it's interesting, because a lot of times when people think about clean tech or climate tech and, you know, there was a huge climate tech bubble that burst about a decade ago where investors lost billions of dollars. They always think it's a technology play. So they think it's about more efficient solar cells or the latest hydrogen or carbon capture technology. But actually, you know, what we found is that the real kind of barriers to decarbonization often lines in adoption. So the example that, I always kind of fall back on is that you know, all of the technology that is needed to reduce the energy consumption of buildings by 10 to 30% exists at the moment, it's not cutting edge R & D or science that's needed, what's needed is new sort of business models that help to address the kind of barriers to adoption that exists at the moment.

Marie: (09:34)

So for example, addressing kind of different misaligned incentives between owners and operators or creating financial incentives, for example, for suppliers to green their operations. So those are where the challenges really are. And I think that's where the benefit of corporate innovation in this space comes from and why it's so important. One is that you know, a real understanding of what are the challenges to decarbonization, and challenges that can be addressed immediately through these kinds of venture models. And the second thing is kind of what I mentioned before, which is that the energy transition space is in an infrastructure play, it's really high CapEx. You need a lot of technical expertise. So we just recently launched our 20, 21 cohorts, one venture build program.

Marie: (10:23)

So working with founders actually this week to kind of ideate and find new spaces to build ventures. And, you know, one of the founders that we're working with, actually took one of his last ventures to IPO. So he's an incredibly seasoned and knowledgeable entrepreneur. And he actually tried to launch a venture himself in the decarbonization space, because this is an area that he's incredibly passionate about. And what he found was that it's really hard to get cities and government agencies and large building owners to trust kind of newcomers and startups in that space. You know, you really need that kind of expertise and track record in order to convince potential customers. And, that speaks to exactly the kind of ventures that we want to build. You know, we want to build ventures that without ENGIE being there initially as kind of a catalyst or providing that extra set of capability or resource would be really difficult to exist otherwise. 

Christine: (11:23)

So basically what you’re highlighting is that the barriers especially lie in the adoption, which also implies that, you know, people need to be involved and people need to be trained. So that's also something really important - understanding the challenges, addressing them immediately to kind of drive this forward. And, now we're also hearing more and more organizations kind of prioritize a sustainable approach in their work. And why would you say, do we see such a growing interest in sustainability also in the venture building space?

Marie: (11:57)

I think it's something like 260 organizations last year made net zero commitments. So there is definitely this kind of growing momentum around, I would say the recognition of corporate responsibility to addressing and tackling climate change. And, I think that's fantastic. But you know, just to kind of go back on your point around creating incentives and making sure there's a real focus on adoption in a business context, a lot of these corporations are kind of like, they're facing an uphill battle. So, for example, for a lot of large MNCs and manufacturing companies, in particular, the vast majority of their carbon emissions lie in their supply chain. So for example, it's typical for clothing manufacturers, or pharmaceutical companies to have anywhere to 80 to 90% of their emissions line, their supply chains.

Marie: (12:51)

And a lot of these supply chains exist in the region, in APAC, and particularly in Southeast Asia now. And these factories and companies, you know, they're operating in an environment where unlike in Europe and in North America, there's no carbon tax, so there's no effective pricing on carbon. And also there are incredible fuel tariffs as well. So, you know, it's greening their operations, is not so straightforward. So, for one of our ventures, which is sustainability and linked supply chain finance platform, we did a little bit of a case study of one of the factories for a major garment producer. And this is a factory that was based in Malaysia, and we use one of our kinds of other ventures.

Marie: (13:33)

We estimated that they had the capacity for a one-megawatt solar installation on their roof. Now, if you go to this factory and you say, you know, we can help you install this one megawatt of solar, you can kind of green your operations. They'll look at the economic model. And because energy is so cheap in Malaysia, you know, this one-megawatt solar installation would only save this company anywhere between sort of like 20 to 40 K. And this is a company that has like over a hundred million in revenue. So, it's the incentive model, which currently isn't right in the region. So we have to look at different business models that help to create those incentives. So for example, our venture that looks at sustainably linked supply chain finance is looking at giving suppliers, preferable financing, working capital financing, as a result.

Marie: (14:19)

So what this could mean is now the same supplier by installing this one-megawatt rooftop installation could suddenly say if somewhere in the region of 900 K, in working capital financing, now that's creating a real incentive to green operations. So in the context of these companies, making these huge net-zero commitments, there's still this kind of challenge of, okay, what is the right way to incentivize your supply chain, your partners, even your employees, right? To change their behavior and adopt kind of more sustainable practices.

Marie: (14:51)

I think the other thing that I would add to that is, there's kind of been an explosion of interest in the venture building space as well because we've now I've noticed a lot of intersectionalities. So, you know, for example, the venture I just mentioned operates at the intersection of sustainability and finance, which means that there's an opportunity to collaborate with banks that have venture-building arms, which I think is super interesting. Similarly, if you think about the intersection between sustainability and transport, and for example, the logistics space, there again is a lot of opportunities to build some really exciting partnerships with other venture builders that are also looking at the same kind of questions.

Christine: (15:28)

It's quite interesting to hear about all of the ventures basically first hand and how, you know, they have that intersection of different industries that you're bringing together in partnerships, which is quite cool. And, you were already sharing a bit about the ventures that you're collaborating with. And you've been with ENGIE for quite a while now, and I’d kind of like to know more about your learnings from your time there. Is there anything that you'd like to specifically pass on to our listeners on what's important as part of a venture's journey?

Marie: (15:59)

I think that's a great question, and you know, our model for venture building is evolving every year. So every year we've made kind of little tweaks and adjustments to our process, to kind of, you know, try and see if we can continue to make ourselves more scalable and operate more smoothly as well. So, it's a continuous journey. I would say that the learnings that we had so far fallen into two categories. So the first is around being as close as possible to our core business. So that's not necessarily building ventures that are exactly aligned to our core business, but doing things like really taking the time to define the strategic fit of the venture and our core business early.

Marie: (16:46)

So where does the venture get value from a partnership with ENGIE and where does ENGIE get value from a partnership with a venture? So defining that really early on, I think helps to set the parameters for ideation and venture building. The other part of that, and the other importance of being very close to the corporate is around, you know, delivering this unfair advantage. So, as I mentioned before, what we're really interested in doing is making sure that our ventures, that we invest in our ventures that really have a leg up, that move faster than a venture that was started in the same space at the same time. But didn't have a partner like ENGIE, or is it a space that's kind of difficult to tackle without the support of a partner like ENGIE? So those are the types of ventures, which we're most interested in building because, you know, we really do want to accelerate the zero-carbon venture ecosystem that exists in the region.

Marie: (17:42)

So, I think, in order to deliver that unfair advantage, the strategic alignment with the corporate is really, really important. So I think that's one really key learning that we want to make sure that we invest in that. And then the second thing is really around attracting the right talent. So, you know, this is the third year of our venture build program. And I think every year we learn better the types of entrepreneurs that work really well in this kind of corporate venture building context and the types of skillsets that we really value. So, I think, especially at an early stage, the team and the entrepreneur are everything. So, we spend a lot of time finding the right entrepreneurs that we want to partner, and invest in, ultimately. So, whenever we talk to entrepreneurs, we sort of say that rather than invest in an idea we'd like to invest in the founder and know that we can find the right venture opportunity with the founder.

Christine: (18:35)

I think those are super hands-on learnings to take away. And, I think you've probably made your own experiences with, you know, attracting the right talent and then working with them, and then also defining from the beginning where you want to go and what's important. So now that we're also talking about the learnings and basically what you took away along the road, what would you say does success look like for your ventures, or on the other hand, what does success look like for corporate venturing in the space in general?

Marie: (19:08)

So when it comes to what success looks like for corporate venture builders, in the energy transition, I think that it all comes down to how the ventures add value to the core business. So, ultimately corporate venture builders need to sort of demonstrating return, right? And return can be in a number of ways. It can be around the increase in the value of the companies and therefore the corporate stakes, stake in that. Or it can be through value from other ways, for example, through accelerating access into new markets or providing a pipeline of new project opportunities or even expanding the existing offerings that corporates can add or deliver to their existing clients. So, you know, I really strongly believe that because energy is such a unique sector.

Marie: (20:02) 

So, I really strongly believe that because energy is such a unique sector, it's very different from, you know, for example, like a Grab or an Uber where everybody understands transport and what it takes to drive a car and take a taxi somewhere. This is a kind of highly technical space. So, I think that that corporate venturing is a really important innovation model for the energy sector. And success comes through the form of being able to demonstrate how these new ventures add value to and represent new growth horizons for the core business. So one of them, one of the big kind of breakthroughs that we had at ENGIE Factory last year was around developing a lifestyle PR life cycle process for our ventures, where we help with the found recruitment and the ideation and incubation of ventures, but that the ultimate goal is for these ventures to be integrated back in some form into the core business. Whether they take over the stake in the particular venture or through, for example, acquisition or sort of M&A into the core business.

Marie: (21:01)

But it was really important for us that the ventures that we built actually meaningfully contribute to the core business. And, don't just sort of drift in some sort of innovation, another world, without ownership. And one of the things that we found is you're creating this sort of life cycle process. It's sharpened the focus of sponsorship at the beginning of the process and throughout because, you know, the sponsors know that we are actually building businesses for them, which has changed kind of the perception of the ventures that we're building and the kind of opportunities that we go after. And I think that's really important in this space and why I love the challenge of venture building at ENGIE Factory is because we're really trying to unlock, how do we create value through venture building for corporates.

Christine: (21:46)

That's really cool to hear about your ventures and their contribution, their meaningful contribution. Really inspiring, and also to see what success looks like in the space. I think there are so many facets that you also just mentioned, also to really understand that this field might not be as easy perhaps to grasp as compared to different spaces because it's very technical. 
So this is also really interesting for me to hear, what success basically looks like there. And, given the growing interest in the topic of sustainability that we've already covered, we also see a growing demand in getting involved and supporting in the field. Maybe now on a more practical approach, do you have a few tips or advice to founders who want to start their own ventures in this zero-carbon space?

Marie: (22:37)

So, you know, as I said before, I think this is a space that just needs all of the innovation and all of the disruption, that we can get. So, if we want to avoid the worst impacts of climate change and keep global warming to below two degrees Celsius, then basically we have to halve our carbon consumption in the next decade. So between now and 2030, between 2030 and 2040, we've got to halve it again. And then we've got to halve it once more before 2050, right? So that's an incredible pace of change, and you know, innovation, digitalization, decentralization, that's going to play a really, really big part of this. So, I think this is, as I mentioned earlier, a fantastic opportunity for entrepreneurs.

Marie: (23:22)

I think the key is that that rather than focusing on, you know, these big tech plays, like rather than focusing on the R&D that's needed to build, carbon capture systems or the next fuel cell, or more efficient solar panels, I think the key is to really look at where are the barriers to adoption. Because if we're talking about having the carbon budgets, so our carbon budgets about 40 gigatons of carbon per year, if we want to cut 20 gigatons out in the next 10 years, we need solutions that can help us to that right away, which means this is about business model innovation, creating the right incentive structures, doing education, changing mindsets, creating visibility of the challenge. And these are all areas, where you don't need a lot of R&D, don't need a lot of science. Where we can learn a lot from the innovation that's been done in e-commerce, or the consumer space and apply it to some of these spaces which are the big users of carbon in the world. 
  
Christine: (24:28)

That's super important what you were just basically summarizing, what it takes, also the focus on business model innovation, educating as well and creating visibility. I think that's super interesting to learn about this field. And now when we're looking at the current situation that we're in and also looking into the future, is there anything where you would say you're especially looking forward to? Or in general, something that's next for ENGIE or ENGIE Factory that you can share with us already?

Marie: (25:01)

Immediately this year, we're launching two new venture builds in Australia. So it's the first time that we're where we're launching ventures in the Australian market. So we're very actively recruiting founders, who might be interested in joining us on this kind of journey. So, if you are a founder and you are interested in building a new venture that contributes to decarbonization based out of Australia, please feel free to look me up on LinkedIn or connect with ENGIE Factory. We'd be more than happy to hear from you. 
Beyond that, I think we're really looking at how we can kind of grow and scale this model of corporate innovation and venture building in APAC or beyond. And looking at being more and more ambitious in terms of the types of ventures, and the decarbonization targets that we set ourselves so that we have a chance of really making a significant impact. For example, I mentioned before, our carbon budget of 40 gigatons a year, you know, if we're able to build 200 companies that have the potential at scale to abate 0.1 gigatons, and 30% of them succeed, then, you know, we're in a space where we can make a 10 to 15% impact on the carbon budget of the world. 

Christine: (26:31)

It's really inspiring to hear what kind of significant impact you can make in terms of venture building, and also your goal of, you know, being more ambitious in this space. And it’s also very interesting to hear about the Call for applications and that you're launching ventures in a new market now - quite exciting. 
So for anyone curious and interested out there, get in touch with Marie or with ENGIE Factory. So we covered a lot about the journey, of yourself and with ENGIE Factory and all you're doing in the world of corporate innovation. Marie, thank you so much for sharing your personal journey with us and with the ventures you're working with. And of course all the work you're doing in driving sustainability forward in venture building. It's been amazing having you here on the show, thank you again.

Marie: (27:23)

Thanks so much, Christine. It's been fun.

Christine: (27:26)

Thank you for listening to this episode of “Lost in Transformation” from MING Labs. If you enjoy our podcast, please subscribe to our channel and leave us a review on iTunes. Join us next time for another episode of our podcast.