Green Giants – Episode 85

Wes Ashworth (02:14)

I’d say that systems perspective really shines through and that problem-solving ability and it helps explain how you connect the dots between the energy technology and the built environment as well. So, with Climative, approaching its 10-year mark, which is incredible.

What was the original problem you set out to solve and what made you believe the industry was ready for a new approach?

Winston Morton (02:34)

Yeah, we were zooming in on kind of the human factors of using and managing energy. The utility sector, by at large, is still the same way, is delivering electrons for a business is fairly straightforward. There’s a lot of systematic challenges in delivering those electrons. But a lot of times there’s human factors that need to be taken into account when you’re delivering those services.

So, we saw an opportunity not only to help customers of utilities kind of measure the energy they’re using, but there was a really large gap in the action that people were taking to conserve energy. So, not unlike the climate world today, we see lots and lots of organizations show the problems but not many organizations showing the solutions.

So, you can show a utility customer that you’re using more energy than their neighbor, which definitely brings awareness and maybe even some annoyance. The real tricky part is what do they do about it? And so that’s what Climative was formed to do, was to kind of move that from measure to action mode.

And so, we spent a lot of time in our first few years with utilities, building those interfaces, helping customers understand their energy use. And that just naturally, as most startups do, they naturally iterate on a problem. We start to see a mass market opportunity to talk about energy transformation and resilience measures coming into effect. So, we just applied the same models and started to develop the market in a much bigger way.

Wes Ashworth (04:10)

Yeah, I love that. I love that focus on action. We’ve talked about this and we’ll get more into this as we go. And I know, so when Climative began, as you just said, their utilities were that sort of natural entry point.

What helped recognize that the greatest leverage in the energy transition comes from also engaging homeowners, financial institutions, as well as contractors, rather than just focusing solely on utilities where you started?

Winston Morton (04:33)

Yeah, it was really about finding that impetus to start the conversation with the homeowner. So, the utility obviously sends out a bill every month, but there are big life decisions that happen from every homeowner’s point of view. And so that ability to start the conversation when the homeowner, when the building owners are in the right mindset.

So, you are dealt with different life circumstances when you renew a mortgage, or you start a new mortgage, or you buy a new home, or you have a new member of the family. There are times when you should be meeting the customer where they’re from a needs point of view. And so, the utilities, as much as we love working with utilities, they don’t often have that point of view of meeting the customer from a life perspective.

We started looking at when you’re buying and selling a home, it’s a natural time to have that conversation with a homeowner. When you’re getting that really big insurance increase bill, it’s a good time to have a conversation with a homeowner. When there’s a life event happening, you’re getting close to retirement, you have a new baby in the house, or you’re moving your mother-in-law in.

These are things that are drivers to review: is my home comfortable enough, is it affordable enough, is it safe enough in today’s world? And so those are the things that are really driven by emotional decisions, not necessarily the number on the bottom line of your energy bill.

Wes Ashworth (05:57)

Right, absolutely. I think that shift highlights where actual decision-making and action happen to your point. I often say people make emotional decisions, then they justify them with logic. Comes a reminder too, just progress comes from meeting people where influence is strongest, meeting them where they are, and then driving real change. I love that. Many energy programs, you highlighted this problem, I wanna get into this.

Many energy programs rely on comparing the homeowner’s usage to their neighbors and the average homeowner goes, okay, I use more energy than neighbor X down the street. What do I do about that? So why does this approach maybe fall short when it comes to driving real action? And this is kind of where you’ve centered a lot of your business around in solving this problem.

Winston Morton (06:39)

Yeah, the kind of taking action is kind of there is three legs to that stool, right? There’s knowledge, knowing what to do. And then the second part of that is being able to afford what to do. And also, can I do I know what to do and can I afford it? Do I have the capital to do it? And the other thing is, do I know the mechanism to get it done? Do I know the right contractors? Do I have a relationship with somebody who can help me get the work done?

So those three legs to that stool, if any one of them is missing, generally action doesn’t happen, right? So oftentimes, we’re focused on kind of making it easy for the homeowner to understand the options in each one of those methods. It’s funny, in the early days of experimenting in the kind of action side of the business, there were studies that we would do. We used to do. We used to do something called non-intrusive load monitoring, which is basically breaking down your energy bill into components of use.

So, your appliance use, your heating and cooling use, your electronics, your entertainment use, and all those things. And when you break them down in front of the customer, one would think that if you give the customer more granular information, they may take action. But one of the early studies that we saw in the middle of us deploying these technologies was a study where a utility sent out a postcard to a segment of the market and they built a very sophisticated energy use breakdown portal for the other segment of the population. Let that run for a period of time, and when they got the results back, they had almost the exact same effect on energy use.

In other words, the postcard that said you should do better captures around the same amount of attention and energy rates actually dipped for a while and then they went right back to normal. And so, it just goes to show that no matter how well you’re informed, if you don’t have a path to action, it’s not an easy thing to fix from a human nature perspective.

Wes Ashworth (08:24)

No, not at all. And it’s cool that doing those studies and kind of seeing that. And I think being realistic and focusing on we’re dealing with humans here, and humans are unpredictable, emotional creatures, that you have to factor that into the equation. I think some people don’t do that, and why some solutions fall a little short, but I love that you’ve got that really at the center. Can you tell us a bit more about that?

So, I know that the focus heavily on activation rather than simple awareness is what we just kind of highlighted there. Tell us a bit about just how you focus on that. What does that actually look like? How do you get somebody to activation versus maybe just pushing data at them or a postcard and going here’s a breakdown of all your energy usage and nice little graphs and all this sort of stuff. What does it actually look like when you’re involved?

Winston Morton (09:19)

Well, first starters, we talked about the three legs to the stool, but the other one is simplification. So many homeowners are actually overwhelmed today in the sense that if you give a general, anybody in the population too much information, they tend to have paralysis by analysis.

So, inundating that homeowner with 10 different messages from 10 different sources makes it very difficult to know what to do. So, we tend to try to simplify the advice to something that means something. So, a lot of times it’s kind of bring your own journey.

So, on our platform, we allow the customer to kind of focus that journey on something that matters to them. whether that’s cost, comfort, or resilience, you can put that in context of what it means to me today. And it might not even mean the same thing today as it does in two years from now. So, this concept of providing these static programs really is not the way customers behave. Circumstances change. And so, we’re developing this concept that you’re providing a living plan for a homeowner that was going to experience different circumstances throughout the life cycle of a building or ownership of the building. So that plan really needs to be there when somebody needs to make a decision.

And close to retirement is a really good example. Your mid-career, you might not be as sensitive to your energy bill, but as you get towards the end of your career, hope I’m not speaking too much from experience, but as you get towards the end of your career, you start to think about your fixed price versus your variable costs in home ownership. And one of those things is an energy cost that everyone sees continues to go up and up.

It doesn’t take a lot of math to realize that if you’re on a fixed retirement income, one may outweigh the other. So, most of the time, if a customer is getting to the point where they’re getting close to retirement, they’re willing to make investments in their home that’re going to reduce the risk of future excessive energy bills. So that’s an example of meeting the customer where they’re at.

Wes Ashworth (11:26)

Yeah, yeah, I love this focus too, just understanding those windows of time, right, where somebody is most likely to activate and do something about it and paying attention to those, I think it’s great. I love that people focus side. And I think now that we understand a little bit of your personal story, the company foundation, and kind of how it how it works, how you operate. I want to look a little broader at just market forces shaping how buildings are valued in finance today and.

So, with that, there’s a growing shift from prevention to adaptation across the climate space. Tell us, I guess, explain that a little bit, and then what signaled to you that the shift had reached a turning point.

Winston Morton (12:03)

Yeah, I think we’re in the middle of the turn, Wes. So, it’s early days. But I will say there’s been a market change in people’s awareness of climate, and mostly because adaptation is getting built into risk, and risk gets built into costs. And so, I would say in 2025 to 2028 or 2029 in this next period, the average consumer is going to notice the cost of climate, where maybe they didn’t notice it in the past.

So, we’ve heard lots and lots about climate, and those of us in the climate business talk to each other a lot and convince each other that climates important. What’s really happening now is, and it’s a double-edged sword, but we have more costs being built into our supply chains and our properties because the cost of capital is going to include climate risk. So, the bad news of the edge of the sword is that we may have missed the boat on avoidance. Now the climate is changing, and it’s changing fairly quickly. And so, we’re seeing those losses drive risk premiums in just about every part of our lives, our food chain, our supply chains, our buildings. And so that brings visibility.

Now, we would have loved visibility without the climate losses that we’ve seen there, but the fact is, the bills are coming due. People are starting to pay more attention now. So, this is where adaptation, and then the last part of adaptation, is that climate disasters are easier to quantify than some future value of emissions.

So, one’s typically a government policy with a long-term objective, and it’s fairly difficult to price that in from a risk perspective in the average business. And that’s sort of the mode we’ve been in for many, many years. But catastrophic loss is as tragic as it is, is now being recognized and built in, and it’s priced. So that’s why we’re seeing such a big focus on adaptations, because it’s hitting just about every industry now. So, that’s really what drives visibility.

Wes Ashworth (14:12)

Yeah, and to your point, as it is tragic, we don’t want those things to happen. It is typically what drives real change. When we experience a level of pain that hits a little closer to home, most people are just gonna maintain the status quo and keep doing what they’re doing, even if they think, I should probably do something different. But until that happens, some event happens that affects you personally, affects your family, then you go, ⁓ wow, okay, drives me to action. So, that is what I think is a part of the human condition. It’s it is what it is, part of it, but I do think the observation captures a real market shift, which I think is interesting to see when that focus moves to adaptation. I think economics are starting to change really quickly, which we are seeing, and with that too.

So, banks and insurers are costing climate risk into their products in meaningful ways I don’t know that everybody knows this or is thinking about this, but how is these reshaping mortgages, premiums, and building valuations across North America?

Winston Morton (15:06)

Yeah, so if you look at the fundamentals of the value of a building, a retrofitted building or an efficient building generally is more resilient. It can last longer in an energy outage. It’s generally built to higher construction levels, or it’s retrofitted to a higher construction level. The simple fact of a building being more affordable also has an impact on the default rates because now you’re not competing for that same wallet share for a mortgage to be paid.

So, you’ve got a higher, and then the asset value goes up. So now you’ve got a more resilient building with a higher asset value because it’s more attractive to buyers, and you have a less likely chance of default because that building is cheaper to operate. So, there are a lot of benefits in the financial system to look at resilience in buildings and traditionally, that actually wasn’t taken into account. The price of your energy bill was never taken into account when you got qualified for a mortgage. But more and more, that risk is getting built into that initial decision the bank needs to make.

Wes Ashworth (16:11)

Yeah, and it’s probably still early stages. You would think that it would become even more. If that’s starting now, what’s on the horizon is that’s going to be really baked in and built into all those valuations and assessing risk and all of that as well. And obviously, I think some of those changes feel subtle in a way, but they do have enormous downstream effects on affordability and access to capital as well.

Let me ask you, so for someone who maybe doesn’t follow climate finance closely, I’d say a lot of people probably don’t follow it closely. How would you explain physical climate risk in terms that relate to just everyday decisions and expenses?

Winston Morton (16:44)

Yeah, sometimes I give the credit card example. So, you’ve got a roof that is getting close to being ready for replacement. And that roof has 15-year-old shingles, and you know that the shingles only lasted 20 years. And you can choose to replace that roof today and take out maybe a low-interest loan to get that roof replaced. And you have time, you do plan, you put a new roof on, and you’ve prevented that occurrence of a leak. Or you could wait. And you wait until that roof leaks.

Now you’ve got flood damage in your home. You’re under a tremendous amount of pressure to get that roof fixed in a real hurry. You don’t have time to negotiate bank rates. You end up putting that roof upgrade maybe on your credit card. And now you’ve got a five-time bigger problem to deal with. Well, to some degree, there’s an analogy from a climate risk perspective, we’ve waited until we see massive changes in climate, which drives a lot of climate disasters, which have a much higher premium than the prevention would have had, right?

So, sometimes I say when I’m having conversations with folks who are climate people to say, look, how would you feel if there was a credit card that got opened in your name 20 years ago and the balance has been getting added to and you just got notified that you owe the payments on that credit card, whether you like it or not. Well, we all own that credit card and now we have to pay it off, and so when we get our insurance bills this year, most people’s insurance rates are going up from you know 15 to 40 percent, that’s our increased rate and we’re paying credit card kind of charges on that, which we had to prevented the issue in the first place probably would have been cheaper.

So, that’s the way we see this, and then the other credit card analogy is, and this gets into the core of the data requirement in the market, that there is no common risk register for buildings, so the banks require a risk analysis on their part, or the insurance companies require a risk analysis. So, when you go to take out a credit card, well, the credit card you qualify for has a lot to do with your credit rating, right? And if you have no credit rating whatsoever, you’re not going to qualify for a very good credit card because the bank assesses you at a very high risk.

So, the same analogy goes to a building. If the building has no history and no rate, the bank’s forced to give that building a low or a high-risk rating because there’s no data about the building. So, our premise here is to create a register that allows the banking and insurance, and all kinds of industries to collaborate on the value and the ratings of buildings on a mass, critical mass.

Wes Ashworth (19:21)

Yeah, it’s so cool. I love the simple analogies. I think probably my favorite way something gets explained and you’re able to really just wrap your head around and go, wow, that makes sense. And you’re right. It’s all coming for us. And I would say, I said this quote last week, is like the, and I forget who said it, but the best time to plant a tree was 20 years ago. Second best time is today. So, you can start doing something about it today. That’s the second-best time. And so, I like that explanation. It makes a ton of sense as well.

So, you mentioned, obviously, we are seeing these increased climate events and I think it’s hard for anybody to really deny it at this point. you’re seeing these pop up more and more and more. Where we say like hundred-year storms that are now like, wow, this is happening on a regular basis. So, we’re seeing tens of billions in losses from floods, storms, and wildfires. Why is the pricing of physical risk accelerating so rapidly right now? Maybe it’s because of that, but it just, if you could explain that a bit further.

Winston Morton (20:32)

It’s probably not because it’s accelerating, it’s probably because it’s catching up. So, regulatory agencies in the financial sector are just getting caught up. So, I think the awareness is moving, and I think to some degree, once you move from policy into commercialized risk, those wheels tend to move faster than government policy. And there’s less unknowns once the commercial market or the commercial sectors get a good handle on risk. It’ll happen pretty fast.

Now, I’m not suggesting that we’re going to continue to escalate prices at the point we may see them in the next couple of years, because I think we are playing a little bit of catch-up here. But let’s hope that climate disasters level off, let’s hope we plant that tree today. And we hope that we can inform the next 20 years to reduce that risk. And we can’t stop thinking about that, right? And sometimes when we’re talking to commercial customers, it’s about risk and it’s a profit and it’s about savings. But at the end of the day, we have to build in the resilience and the climate impact reduction for the next 20 or 30 or 40 years, or we will be in this escalating market.

Wes Ashworth (21:54)

Absolutely. No, I like the way you clarified that, and it is more like catching up. And just thinking about climate progress. I think many people still believe policy is the main driver of climate progress. We’ve talked about it more this year on the podcast and beyond in conversations about just the economics and really that being at the forefront of the conversation.

Why do you think the next phase will be shaped more by economics than policy?

Winston Morton (22:19)

Maybe that’s the light at the end of the tunnel for us, the scales from an economic perspective have tipped for lots of climate-friendly technologies you look at. Renewables are the clear winner in economic measure in many, many circumstances. If you just let economics win, now sometimes there’s anti-economic policies in place that make that difficult, but sometimes economics are there, but the awareness isn’t there so when you can match those two things together, the planet can win, we can have the double bottom line savings or profit. And then the same thing happens back to the supply chain thing, if the price shows up in the pocketbooks of more and more people, they may take more interest in the emissions that they’re generating and realize that this is impacting them every single day. And so that’s the economics. And if a mortgage for an inefficient home cost more than a mortgage for an efficient home, markets tend to take care of themselves. People will invest to save money. And so, it’s unfortunate that we have to probably dip a little too far into the cost side of the business to do that. the fact is that’s probably how the market’s going.

Wes Ashworth (23:32)

Right, is what it is. And I think the idea that economics will carry this forward is both practical and encouraging, suggests momentum to me that is harder to reverse. There’s a select of few of us that really care about climate. Everybody cares about economics. When it hits your pocketbook, hits your budget, I think everybody’s paying attention.

So again, it’s encouraging to see if that’s happening, what sort of future is. I feel a lot of hope for where we’re headed and the growth that’s ahead. What do you think most people misunderstand about the connection between resilience upgrades, insurance pricing, loan performance, and just long-term home value?

Winston Morton (24:10)

I hate to come back to economics again, but I think your operation cost of a building will be a bigger decision factor in the future than it is today. If someone buys a new home today, sometimes they get the energy bills and the insurance bills, sometimes they don’t. But I think when you’re in the numbers in the informed buyer perspective. I think the operating costs are going to make a huge impact on the cost of that place to live. And so, as those dynamic changes, I think it will change people’s perspective on whether that home is comfortable and safe and efficient.

And the other really interesting thing that we see in the market is that you don’t get to test drive a home. And so, you kind of get what you get and this ability to maybe see the black box or the building ledger of what’s happened in that home may become a bigger part of that home acquisition process because I kind of want to know what that home’s been through and what’s been done because it’s going to have an impact on me for a long, time.

You’ve got Carfax for cars, right? And cars are a lot smaller investment than a home. So, where’s the Carfax for the home. So, I think that’s where we’re gonna see a lot more awareness in the market. Again, the market dynamic will be maybe the buyer, the buyer community will be the driver of that, rather than the owner. But we’ll see how that shakes out.

Wes Ashworth (25:43)

Yeah, for sure. I think it’s coming. But I think outside of just seeing resilience, seeing this as a value creator rather than a cost, it wasn’t too long ago when it really was viewed as a cost. And I think some people are still stuck in that old kind of mindset. But now it’s creating value, as we’ve said several times over here. So, powerful ends for homeowners.

I want to shift now from just the market landscape to Climative’s platform and the data foundation you’re building. And so, there’s a helpful analogy just comparing, and you said this a bit ago, I just wanna kinda double click on it a little bit. So, just comparing that today’s climate risk landscape to a period before credit bureaus existed, and you talked about sort of the credit score for a building. How does the absence of standardized climate and building risk data affect decision-making today?

Winston Morton (26:27)

There are a lot of guesses that happen today. So, I think the economics will drive the investment in more data. Most markets today, the financial markets, the healthcare market, just about every market you can think about has been digitized. And the energy market generally, people are getting home energy assessments on paper and they’re left a binder on their kitchen table and that binder never gets used again and the cost of that is substantial.

And the scale of it is very challenging because we just can’t assess enough homes in a year to have a substantial impact on the resilience and the retrofits as we need them to change. So, I think that’s one of the areas that from a data point of view is, and we need to move quicker. This is one of the areas where we use fairly sophisticated machine learning models and AI models to do this. It’s one of those use cases that makes sense to augment the existing system that’s there today and provide a lot more data to a lot more stakeholders so we can get the economic engine moving. And it’s one thing we didn’t touch on from an economic perspective.

This is probably one of the largest economic opportunities in North America is the retrofit business itself, whether it’s upgrades to the home or its renewable installation, you’ve got over a trillion dollars of backed up positive return on investment projects sitting on the books. And so why aren’t we unlocking those? It’s saving, it’s making homes more affordable, its saving homeowners money, and it’s making homes more resilient. It’s making them more comfortable and safer. And why aren’t we doing way, way, way more retrofits? Well, it’s because we don’t have the data to justify it.

Wes Ashworth (28:11)

Absolutely. Yeah, it really points, I guess, how big the opportunity is and the problem, and of course, what you’re solving. So, with that, the opportunity, so you’ve spoken out of market includes roughly, you know, 120 million buildings across North America. What does it take to build a data layer that can operate on that kind of scale?

Winston Morton (28:30)

Yeah, so from our point of view, we tend to lean on third-party and maybe even mirrored markets to validate what we do every day. So, having a Climative score, if you will, or a third-party score is not very valuable if it doesn’t meet some industry standard that the industry can rely on from a repeatability and credibility perspective. So, we work on most of the time we work in ecosystems that have similar accuracy and similar approaches from a statistical analysis point of view.

So, I’ll give you an example. The automated valuation market, which is the ability to value a building in the market, actually started with Fannie Mae 20 years ago or more. And so that ability to create a digital value of the building really sped up the mortgage process. Now, is it 100 % accurate? Absolutely not. Is it close enough that it produces risk to that mortgage issuer? Absolutely, as long as it’s within a range. And that accuracy continually gets checked and validated.

So, the banks and insurance companies already use digital assessments in their business practice, right? So, we look to take inspiration from markets like that to say, okay, what’s the old adage? All models are wrong; some are useful. So, what can we do to create transparent, trustworthy data that is good enough to reduce the risk? And to some degree, we’re replacing something that just isn’t scalable today.

And so that’s what we do, we look at kind of mirrored markets. We spend a lot of time with regulatory and standardized bodies that are doing similar work in the space. Canada and Europe have quite sophisticated taxonomies on energy and emissions. And we leverage those kinds of lessons that solutions have been in the market for quite some time. And so, we leverage those things to kind of come up with this category and say, okay, this is an example of what’s been used in the past and maybe a little bit of an ancillary industry that we can replicate. So, yeah.

So that’s how we build it. The data we use typically starts out with taxation data, which without question, all buildings get taxed in North America. That’s one variable that we can be assured of. And so that database is generally helpful for us because it provides us with base data, we can use to feed our platform and has things like age, size, and location and construction type things that we need to kind of start that conversation. So, we use that as ubiquitous data. And after that, we have homeowner engagement methodology. We can collect utility data. It all adds more and more validity and accuracy to the data.

Wes Ashworth (31:20)

Yeah, it’s really cool. I mean, obviously, the scaling complexity of it shows how ambitious the effort is. But I love a couple of things, you know, looking to those sorts of parallel places and industries that have done something similar, kind of building off of that and not reinventing the wheel entirely. I would imagine too, with just how prominent machine learning and AI and everything else is coming into play as well, to probably certainly helps it tackle a problem that large as well too.

It is super interesting. And I want to talk a little bit about just this activation model that you have that connects knowledge, affordability, and execution. Why did these elements fall short when they operate separately, and what becomes possible when they work together?

Winston Morton (32:01)

Yeah, some really good examples. One would be the average conversation between an insurer and a homeowner, where it may benefit the insurance company to have more resilience measures for that home. Let’s take a sump pump, for example. If you’re in a flood risk zone and you want to install a sump pump in your home.

There’s almost no circumstance where the return on investment of discounts off your insurance premium pays for that sump pump. But if you look at that house in a more holistic way and say, hey, I actually think my basement’s a little uncomfortable. I was thinking about renovating the basement to make it more energy efficient. And I’m going to install a sump pump as part of the overall project.

Well, there’s actually quite a lot of return to create more self-healthy and safe spaces in your home. And that’s a bonus check. So, you’ve checked the cost, you’ve checked the comfort, you’ve checked the resilience, all in one upgrade. So traditionally, those two conversations don’t happen at the same time. And the homeowner doesn’t even think that there’s an opportunity. So, the same thing would happen if you’re going to insulate your attic or replace your roof. Well, maybe I’ll hold off on my solar panel installation until I replace my roof, because I’m going to have to re-replace my solar panels. And while I’m at it, I could put a steel roof on, which is more fire resilient. And it might cost 10 % more, but in the overall project, it doesn’t have a major impact on the return on investment.

So, these are things that you can check off as part of that conversation with the homeowner. And not all contractors or all service providers think about maybe there’s a better way to expand that conversation with the homeowner at the point where they’re doing the project. So those are the kind of things that we see; it’s a great time to have that, to have that discussion.

Wes Ashworth (33:52)

Yeah, and obviously Climative’s doing this. So, I’m curious just how it actually works. And I’m probably listeners are wondering the same thing. What is it actually that happens? So how does Climative pre-educate homeowners so that they are prepared, confident and ready to take action? Like, what do you actually do?

Winston Morton (34:07)

Yeah. So, we tend to work in jurisdiction by jurisdiction. So, we’re launching, you know, in the US, we’re launching by region. And in a region where we’re active, you can have you get access to your home energy or your home navigator that allows you to evaluate those three pillars, right? Comfort, cost, and resilience. And you can actually change those priorities depending on your life circumstance to be able to provide some advice.

And that advice is independent advice. It gives you some things to think about. You can put more information into the tool about your home and the upgrades you’ve already done, which gives us a more accurate advice basis.  And then the other side of the platform is there’s offers available. So, you can see if you’re interested, and see what offers are available for your home. Is there a special rebate or a financing opportunity that matches your home specifically?

So, this is all about that personalization. We’ve all become accustomed to personalized things, right? So, we don’t; no one wants to be treated as a generic program adopter. And that’s what happens today. An efficiency organization just blasts out these rebates. Nobody knows if they qualify or not. And so, we pre-match those. And that makes it easier for you to kind of look, think through the numbers. And it’s not just numbers, its comfort, or it’s resilience as well.

So, that journey is one where you claim your home, you fill in a little bit more information, and we then try to find those life points, and that isn’t the end of the conversation. It could be next year; there’s a new product in your area that might benefit you. We’ll pre-assess the benefit of that product. It could be in two years you’re changing a life circumstance, and you’re moving your mother-in-law into the basement, and it’s kind of drafty and damp down there, right? So those of us who don’t want a drafty and damp mother-in-law, we might have to go do something in the upgrade of our home. So, I think that’s the point is that we want to make an online personalized experience for the homeowner.

Wes Ashworth (36:04)

Yeah, and I think it’s true with how people want to interact and make buying decisions today. They want to be informed, want to kind of go at their own pace. They don’t want somebody to sell them right away. Like, I kind of want to go through and be informed a little bit and know what I’m walking into, know what questions to ask, you those sorts of things too. So, it makes so much sense. It’s such a powerful solution. And to that too, like most homeowners do want this sort of industry-neutral guidance. What does neutral advice look like at scale and why is that so important?

Winston Morton (36:31)

Yeah, and the other term here is empowerment. So, I don’t necessarily want to be sold something. I want to be informed so I can make the right decisions. And there are stakeholders that actually do not necessarily have a horse in the race from the point of view of what you do. It’s just encouraging you to do something. So, municipalities are a really good partner for state-level governments when they’re trying to address an affordability or a climate transition goal in an entire market.

Well, it doesn’t really matter as long as you’re making good decisions. It’s going to, you know, rising tide floats all boats, right? So, those kinds of partners for us align very well because their intentions are aligned with personalized advice. So, whether it’s on your phone, however you want it delivered. Do you want a text message, or maybe it’s part of another third-party system where you’re in your bank app and you have a little widget saying, your mortgage is coming up for renewal.

Did you know that there’s a project available that’s going to save you X amount of dollars per month or per year, and you’re already approved for the finances, right? And so, it makes it easier for you to kind of check those boxes off and start that conversation.

Wes Ashworth (37:52)

Yeah, I love this kind of integration of all those things. You even your banking relationship, those kinds of things and connecting those dots makes so much sense. Many sectors in the space still do operate in silos, and so can you tell us a bit more about how does Climative help banks, utilities, insurers, government programs, and contractors, all align around shared data and shared incentives?

Winston Morton (38:11)

Yeah, that’s maybe the most powerful. So having a transparent data platform allows collaboration against multi-industry. So, banks may not track the attributes of the building that insurance organizations or state and local governments and oftentimes there’s whether real or artificial barriers on sharing that data. Those data service bureaus exist all around us all the time and so it does speed up the market from a digital adoption perspective.

So, our opinion is that it actually can’t be owned by one of those sectors because it may default by not being available. It’s the reason one large bank doesn’t own the credit reporting agency is that all the other banks probably wouldn’t use it, right? So, there’s this transparent independent component to the platform. And then even down to the contractor level, a contractor just wants educated customers who can make decisions quickly.

So, there may be more than one contractor competing in a given region, but having educated customers is good for everyone. And the contractors can compete on their own products and services, and quality.

Wes Ashworth (39:14)

Yeah, I love it. And back to that kind of credit analogy, sort of that common data language, obviously, can speed progress in a way that individual programs just never could. As we get a little closer to time, I want to transition a bit into just the broader opportunity, the workforce behind it, and also your expansion into the United States as well, too.

So, you mentioned this earlier, and I want to go back to it a bit. So, there’s roughly a trillion dollars of retrofit opportunity waiting to happen. What’s holding it back and what needs to change unlock it?

Winston Morton (39:46)

Well, capital is probably, I mean, knowledge is probably equally as challenging as capital. So, we’ve only provided professional advice to less than 10 % of the building stock today in North America. So, we’ve got, and that’s taken us 20 years. So, we’ve got 90 % of the building stock with no professional independent advice.

So, without that, we’re probably not going to move the needle very far. Using existing methods, we can probably only give advice to somewhere around two or three percent of the market. Fifty percent of those customers do something, right? So, our activation in traditional models, and we’re mostly talking about physically going into buildings and providing advice. There’s still definitely a role for physical assessments. It just doesn’t scale very fast.

So, we would say first advice, and then that gives you the knowledge, and then the second part is the capital market. Climate-aware funding is still a niche market. It’s available. It varies widely across the United States. Some states are very active in climate financing, some aren’t. But even when there’s an active climate financing program, they have a hard time convincing customers to use it. So, activation of capital and allocation of capital, I think, is probably the next biggest thing we need to do. We believe that climate-aware capital can take advantage of that. And when we talk to banks in the US, it’s just activating capital for very low-risk projects. So that’s really the goal here: to put this front and center in the capital stack and say, hey, there’s a huge opportunity here.

 And then the last part of it is the ability to do the work. So, we may not have enough electricians, plumbers, construction crews, and renewable energy companies to provide that trillion dollars’ worth of service. But the cool part of this is we can plan for that. So, the great thing about the US is that if there’s a commercial opportunity, the market will expand and take advantage of that opportunity.

Tons and tons of economic development opportunities right across the country. This isn’t just big cities. In rural areas, to a large degree, the rural areas need this more than the larger cities. And so, we put people to work. And the better we can plan that workforce development, the more we’re all a little bit worried that AI is going to take over the world. But we need a ton of work done on the places that we live and work. And I think if we harness that, we could create a whole new economic benefit in North America.

Wes Ashworth (42:23)

I agree. are the You made those points perfectly. Those are things I get really excited about and fired up about in terms of where we’re heading, the enormous potential and opportunity, which is incredible through that as well.

So, you’re also expanding. I know you expanded into the northeastern United States with new projects and a presence at Greentown Labs. What made that the right moment to grow into the US market?

Winston Morton (42:44)

We took the New England market or the Northeastern market because there’s a lot of collaboration between Canada and the U.S. right across, anywhere close to the border, it’s a collaboration from an energy perspective. So culturally very similar. Programs are very similar. And from our point of view, it’s just a natural place to launch into the U.S.

Now, having said that, there are some amazing pockets of opportunities all over the United States from a business development perspective. So, we just choose to watch there, but we’re pretty opportunistic. can move wherever the opportunities are.

Wes Ashworth (43:18)

Yeah, it’s cool. It makes sense. know, it’s logical, opportunistic. It can make that happen. So excited to see your growth and that continue. As we get closer to closing, a couple more questions. As we close, I want to look at the world you’re working to build and how people can really take part in that.

So, let’s imagine Climative fully scaled. How would everyday life change for homeowners, lenders, insurers, and contractors?

Winston Morton (43:43)

Yeah, so I think we’ve alluded to it a few times in the interview, but the ability to easily determine next steps and your impact on the climate goal would be our goal. So, the activation of every, in this case, building owner, which represents more than 20 % of our emissions in the country, and physical property risk is one of the biggest challenges we’re going to have as we see these climate impacts; every building should have a plan, every single building.

So, our vision would be that everybody gets to participate in that plan. And there will be actors who are going to support that plan in many different ways. And so having an easy way to attach stakeholders to that plan and do that digitally, so we can move very, very quickly, I think, would be our vision. The outcome would be to hit four or five times the number of retrofits that we are doing today, and that will just hit our climate goals for 2050.

So, back to your tree analogy, if we don’t plant the tree today, it’s never going to be mid-size or full-size in 20 years. So, we’d like to plant as many trees as we possibly could as fast as we possibly can in our world. That’s creating these plans.

Wes Ashworth (44:58)

Yeah, great vision. It’s ambitious, but I do believe it’s achievable, and I’d agree. Start today making those things happen. So, final question, I’ll just kind of open it up.

Anything you didn’t get to share, things you would like to kind of add, things you’d like to leave listeners with, final pieces of words, wisdom, advice, hope, anything else you want to share?

Winston Morton (45:17)

No, I really appreciate it. I think this is a fundamental shift in the market today. So, we’re really looking for, particularly as we experiment to some extent on how these models work, we’re looking for partners in the market that share the vision. And we really appreciate influencers like yourself spending time thinking about how we could make big changes in the market because it’s going to take a village, as they say, to get these things done, so feel free to reach out. We’re moving fairly quickly into this expansion mode, and yeah, we really look forward to engaging a lot more lot more folks.

Wes Ashworth (45:46)

Yeah, excellent. Excellent way to wrap it up. And I’ll link a lot in the show notes just for you directly to the company. So please check those out. Anyone who’s listening and reaches out and makes contact.

Winston, this has truly been a fantastic conversation. I’ve enjoyed it so much. Your work at Climative brings clarity to an issue that affects every community and every building owner. And it helps define how climate risk translates into financial decisions and long-term opportunity. To our listeners out there, thank you for joining us.

If you found today’s episode valuable, which I’m sure you did. Please subscribe, share it with someone who would appreciate it, and leave us a rating. It helps us bring more conversations like this to a wider audience. And with that, we will see you next time.