Lucas Joppa, Microsoft’s former chief environmental officer, is filling a new role at Haveli Investments, a new private equity firm focused on video gaming. The firm is owned by founder Brian Sheth, a billionaire private equity investor based in Austin, Texas. Sheth has raised over $500 million toward a goal of $750 million in initial funding.
Joppa initially joined Microsoft as a computational ecologist in 2010 and was promoted to chief environmental scientist in 2017. Microsoft appointed Joppa as its first environmental chief in 2018. The Redmond, Washington-based software giant announced its climate plans in 2020, along with its intention to become a corporate leader in this space. Microsoft also created a Climate Innovation Fund worth $1 billion to invest in technologies that will help control the global climate, supporting Microsoft’s plan to become carbon-negative by 2030. Joppa was one of the chief architects of this plan, which got Sheth’s attention when he started looking for someone to fill a similar role at Haveli.
“So I was very lucky to get the opportunity that I did at Microsoft,” Joppa told Bloomberg. “It was the opportunity of a lifetime at that point in my life, and I think it proved extremely transformative for corporate sustainability on a global scale. But then the second step of the strategy was always, ‘OK, prove you can repeat it.’”
New Role at Haveli
Joppa will make investments on behalf of his firm as a member of Haveli’s investment committee. This committee will primarily target well-established gaming studios with meaningful sustainability goals. The purpose of these investments is to help those firms “retain talent and take creative risks,” according to Joppa. Haveli also expects to expand into other areas within the tech industry.
The investments will allow Joppa to shape sustainability initiatives for multiple companies simultaneously. He reports that private equity requires investors to make deeper engagements with longer financial commitments than other types of investments. As a result, investors must give greater thought to a company’s ownership, operations, and governance.
Impact
Joppa says he has always wanted to have an impact on his company’s sustainability by placing it at the core of its operations. He compares this process to debugging an operating system, where the goal of each step is to make it run a little bit more efficiently. Joppa was also motivated by the opportunity to make changes at a powerful company when he accepted his position at Microsoft. He considers it to be the opportunity of a lifetime, since Microsoft’s program has become so influential in corporate sustainability.
He told Bloomberg, “I’ve always had the thesis of impact — prove that a company can take sustainability and start placing it at the core of how it operates. What inspired me to do this when I joined Microsoft, it was almost like debugging a corporate operating system with, ‘Hey, can you really steer this thing in the same direction, but in a slightly different way? Running a little bit more efficiently?’ And if you’re going to try to get a company to do something, you can try to get a big, powerful company to do something.”
Repeating Success
Joppa is currently attempting to duplicate his previous success with Microsoft. His new roles as Haveli’s chief sustainability officer and senior managing director will help him build a company from scratch, which has been a long-standing goal for Joppa. He intends to accomplish this through parallel efforts, meaning that he’ll operate across multiple companies simultaneously while ensuring that each one meets its sustainability requirements.
Timing
The timing of Joppa’s move to Haveli was largely influenced by the results of COP26 in 2021, a conference on global climate held in Glasgow, Scotland. His main takeaway from that event was that money was finally starting to move with respect to corporate sustainability, marking the second wave in this space. The first wave was characterized by large corporations making meaningful commitments and reporting their progress on meeting these pledges, even when these actions don’t require significant resources.
“Coming out of COP26, the furthest I came from the thought of that incident was, ‘Wow, the money is starting to grow.’ I knew this because I was moving money to Microsoft, but I actually came away with, ‘The second sustainability wave has begun.’ The first wave was all about large corporates making meaningful commitments and showing progress on their promises. The second was that the corporate leadership was then about to start the flow of resources into the economy.”
Brian Sheth’s ‘Biggest Challenge’
While companies are creating their own sustainability targets, Joppa has some concerns about how seriously they take them. This issue is one of the reasons he went into private equity, now that organizations are starting to enter the climate space in earnest. These businesses often include companies in the early stages of venture capital funding that can be particularly vocal about environmental concerns. However, Joppa looks for businesses with deeper engagement on these issues, which is possible through the majority ownership that private equity allows.
This is what makes Joppa such an ideal fit for Brian Sheth: A self-made billionaire, Sheth has long been consumed by environmental activism.
“The biggest challenge of my generation is to maintain some sense of ecological balance and [to ensure] that we have clean air and clean water for my kids and hopefully several generations after that,” Brian Sheth said in an interview with Worth magazine.
“If you look at something that’s going to impact all of the people on the planet — and disproportionately impact people who are used to a great standard of living, i.e. Americans — environmental degradation is No. 1 on the list.”
Environmental, Social, and Corporate Governance
Environmental, social, and corporate governance is the process of evaluating the extent to which an organization works toward social goals. It has become particularly politicized in some U.S. states, although ESG isn’t a political issue. In Europe and the U.K., ESG is trending toward greater transparency in emissions, but this has yet to occur in the U.S.
Current Climate Changes
Recent summers have been particularly hot, making it a challenge to remain optimistic about reversing climate change before it’s too late. Joppa believes it’s already too late in the sense that humans have been manipulating the climate and other aspects of the environment on a global scale for many years. He adds that this situation was dire two years ago, but is even worse today.
At this point, achieving a solution to these problems needs to occur as quickly as possible. However, we have historically failed to take on climate change, so it’s reasonable to assume that we won’t be willing to pay the necessary price until we really start to feel its impact. Joppa remains optimistic about this outcome because he believes it will occur while it’s still possible. Unfortunately, this scenario means that we must learn from our mistakes.
Joppa remains hopeful. “I am very optimistic that we, as a species — we, as a global society — will respond to the inputs that come into our systems,” he said. “And the good news is that solutions are beginning to form. Financing is now available. It’s all happening. Sure, it’s a race against time, but I’m optimistic that it’s a race we’re going to win.”