The global structure of Total Carbon Neutrality Ventures had necessitated online communication making it relatively well prepared for Covid-19 related social distancing, CEO Girish Nadkarni has told Global Corporate Venturing.
France-based oil and gas supplier Total rebranded its corporate venturing arm from Total Ventures to Total Carbon Neutrality Ventures in October 2019 to reflect a policy requiring each investment to contribute to the cutting of carbon emissions.
The unit has teams in Paris and San Francisco in addition to teams focusing on Asia and emerging markets such as Africa, South America and Southeast Asia, and so a lot of its work was already being conducted online.
“To a great extent, a large part of what we were doing was virtual anyway, in terms of reaching out to potential investors and talking to companies,” Nadkarni said.
“Of course, at the right time we visit them, kick the tires and meet with management, but a significant part of our business is conducted electronically and virtually through Zoom or GoToMeeting, and documents were already being signed through DocuSign.
“From that perspective I would say that in terms of communicating with each other, that has not been a significant issue. In one case we needed to visit a biofuel company’s plant and we could not do that because of the travel restrictions, so some impediments are clearly there, but we can continue to do a large part of what we were doing before.”
While the economic downturn is having some effect, Total is not as exposed to the Covid-19 crisis as companies in industries such as entertainment, media or travel which may well see long-term adjustments spurred by the shutdown, and Nadkarni does not expect substantial changes to the unit’s focus.
“I think we need to distinguish between short and long-term impact,” he said. “Though in some cases the short term does tend to influence the long-term impact.
“For example, the consumption of energy will certainly go down in the short term. It is simply a fact that today people are not driving cars, are not flying anymore, and many industries such as the hotel sector have shut down, so you are clearly seeing a fall in energy usage and that affects us in the short term in terms of revenue.
“But on the other hand, once things go back to normal it will pick right up. People are still going to drive to work, they are still going to take flights. Will there be some change in habits? That is yet to be seen, but, generally, things will be different.”
Prior to joining Total in 2017, Nadkarni had founded power and automation technology producer ABB’s corporate venturing subsidiary, ABB Technology Ventures, in 2009 in the aftermath of the last crash.
Although there is obviously some crossover, Nadkarni was careful to illustrate that the nature of the crises is intrinsically different – an issue with Main Street rather than Wall Street, or the difference between a car running low on petrol and running low on oil. However, he sees it as part of a recurring pattern.
“People forget that we have had a financial crisis – almost like clockwork – every 10 years, and people always forget the lessons of the old and make new mistakes,” Nadkarni said. “As stocks keep going up people think they will keep going up to the sky, and you end up with either too much bad credit or overvalued stock.
“Then things come crashing down, and the higher it goes the harder it crashes, because to some extent everyone is afraid it is going to crash but no one wants to leave the party while the music is still playing. Then the moment the music stops everyone rushes to the door, so it is not an orderly exit and people get crushed and killed along the way.”
Nadkarni said he worries most about science deniers, some of whom are at the heads of governments, and pointed out that elements of climate change have contributed to the spread of pandemics, making the unit’s carbon neutral outlook more pressing.
However, despite the doom and gloom hovering over the economy and the world as a whole right now, there are some reasons for cautious optimism as long as investors can pick out the right targets and investment partners.
“As many people are pointing out, some of the best companies, such as Google and Facebook, are formed in some of the worst financial crises,” Nadkarni said. “It isn’t always the case that just because there is a crisis you should stop investing, you just have to be more careful.
“Investing when things are going very well is in fact more risky, because the standards are lower and the valuations go up, so now is actually not a bad time to invest, particularly as people will be very careful what they invest in and what the valuations are.
“The lessons are that there are always opportunities, you just have to be careful how you evaluate them. It is about picking the right sectors and the right companies for the times.”
Photo of Girish Nadkarni courtesy of Total.
