In order to fight climate change, we need to free up more capital

Michael Sonnenfeldt—the entrepreneur, investor, and philanthropist—is focused on tackling big sustainability challenges, including climate change. “I am constantly trying to think about how to have the biggest impact,” he says.

What’s most exciting to me is that the MIT Sustainability Initiative is using science to solve and address climate change.

There is a story Michael Sonnenfeldt likes to tell about his first real job out of business school. After graduating Phi Beta Kappa from MIT Sloan in 1978, he landed a spot on the mergers and acquisitions team at Goldman Sachs. It was a highly sought after job.

But after four months, he was miserable. “It was disappointing,” he says. “I worked round-the-clock and it felt like I was in an ivory tower and just moving papers.”

He summoned his courage to talk to his boss, Steve Friedman, who would later become the co-chairman of Goldman Sachs and then Chairman of the National Economic Council, and the New York Federal Reserve. Friedman asked Sonnenfeldt if he wanted to quit.

“Here I was—one of the few bearded and one of the youngest professionals at the storied investment bank, and probably the only one who wore earth shoes, and Steve in his intense way said to me, ‘You must have been smart enough for us to hire you in the first place. So let me ask you: Is there any other department where you want to work?’”

As it turned it, there was: Goldman Sachs Realty Corp. Sonnenfeldt got transferred there and the job was a much better fit. More importantly, he took away an essential leadership lesson: good managers value talent and do everything in their power to cultivate it.

“To me, this was an example of how a great leader reacts to potential difficulty,” he says. “It set the standard for my career.”

Sonnenfeldt has learned a lot about management since then. In his nearly four decades long career, he’s made a name for himself as an entrepreneur, venture capitalist, and philanthropist. In the 1980s, he famously led the development and sale of The Harborside Financial Center—considered one of the most successful real estate deals in the history of the New York metropolitan area, and the largest commercial renovation in the country at the time. And in 1999, he founded Tiger 21, the premier peer-to-peer learning network for high net worth investors whose 380 members collectively manage nearly $40 billion in personal assets.

Sonnenfeldt is also well known for his philanthropy and activism. Today he is particularly focused on issues like national security and climate change. He is on the board of several non-profits and conservation groups, including Earthjustice, the largest environmental law firm in the world. He also helped fund one of the leading solar energy research groups in the world at Ben-Gurion University in Israel, where the researchers are housed in a building named after Sonnenfeldt’s son. And he works closely with governors and senators on climate policy.

“I am putting my financial, philanthropic, and political resources to work on these very big challenges,” he says. “I am constantly trying to think about how, as one person, to have the biggest impact.”

He views his support of the MIT Sustainability Initiative as another avenue for impact. After all, he has a deep appreciation for the importance of cultivating talented business leaders ready to tackle climate change. Helping the next generation receive opportunities to learn and develop is paramount to that endeavor, he says.

“What’s most exciting to me is that the Sustainability Initiative is using science to solve and address climate change,” he says. “The school is playing an increasingly central role in designing and implementing solutions to some of the world’s most pressing problems.”

Progress on climate change requires concerted commitment from the corporate world, according to Sonnenfeldt. “In order to fight climate change, we need to free up more capital,” he says. “There isn’t enough capital in the philanthropic world alone to do the job.”

Take his position with Canada-based Carmanah Technologies, for instance. Sonnenfeldt is chairman and the largest shareholder in the company, which makes LED signaling and lighting infrastructure products, most of which are solar powered. The line includes signaling systems for marine navigation aids, ground lighting for airport runways, and industrial and commercial solar powered outdoor lighting systems for roadways and parking lots. Carmanah has nearly 400,000 installations across 100 countries, and recently became the dominant provider of lighting and marking systems for off shore wind farms in the Baltic Sea.

The environmental case for solar-powered streetlights is clear: the lights emit no greenhouse gases, do not require a connection to the electricity grid, and reduce energy use. Moreover, solar-powered streetlights are cheaper to install in most parking lots because the solar additions to a standard light cost less than the wiring and trenching and hookup to the grid. And, as Sonnenfeldt points out, “after installation the energy is free and non-polluting.”

“The cost of solar electricity is 10 times less expensive than it was 25 years ago and at the same time the lumens per watt of light output of LEDs is six times greater,” he says.

Sonnenfeldt says he’s “hungry for impact investments” that produce market returns while reducing pollutants that accelerate climate change. “Philanthropically, I support organizations making a difference in the fight against climate change; and politically I support candidates and government officials trying to be responsible about the risks we face,” he says. “I am most interested in supporting a revenue neutral carbon tax, but there are many other aspects of the issue, including the national security implications of climate change that I am trying to be knowledgeable about.”

Solar-powered streetlights represent only a small part of the remedy to climate change, of course, but Sonnenfeldt is sanguine that the industry’s future is, ahem, bright. “There’s going to be a revolution, and if we let the market do its magic, we could accelerate the transition to a clean future.”