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Management in Practice

Q4 Update: Can a double bottom line help in tough times?

Solving problems at the intersection of business and society may pay dividends for a small Bay Area venture capital firm.

Solving problems at the intersection of business and society may pay dividends for a small Bay Area venture capital firm. DBL Investors provide startups not only capital but also expertise on issues that straddle the lines between public and private sectors. The firm has been quietly working on, among other things, tax incentives for green manufacturing firms in California and the thicket of arcane issues surrounding the electrical grid transmission infrastructure. Now these issues are major components of the economic stimulus bill being debated in Congress and have become the subjects of widespread discussion and concern.

Last Fall Q(n) wrote about ways that a second bottom line supporting social, environmental, and economic improvement can pay off in unexpected ways. With a new administration seeking a different approach to finding solutions to long-standing problems, it is a good time to update the story especially since companies DBL invested in include electric car company Tesla Motors and solar power provider BrightSource Energy both of which have significant stakes in current debates on how to address the economic crisis.

DBL’s founder, Nancy Pfund ’82, said, “Little did we know that when we started working on incentives for Tesla’s car assembly plant and began to develop preliminary solutions to some of the transmission inadequacies faced by Brightsource Energy , we would find ourselves in the middle of the auto bailout debate and the stimulus package.”

She added, “The work our fund does to navigate between the private and public sector and to enhance job creation continues apace, only the stakes have become that much higher. On the plus side, the commitment to use innovation in energy as an important economic recovery tool will in the long run enhance our ability to meet climate change goals. And, at a time when the distance between Wall Street and Main Street threatens to divide our society, the double bottom line investment approach can help to build an effective bridge to unite us.”

A story in Forbes highlights the challenges of the business model of the big three U.S. automakers while pointing to upstarts, including Tesla, as an alternative model.

The Obama administration is pushing for an update to the transmission infrastructure for the electrical grid as part of an economic stimulus package. Bolstering that drive is a new report prepared for the Department of Energy underscoring the critical importance of a smart grid for moving into a new energy economy. Summarizing the report’s findings, the trade publication writes, “While much of the technical and policy discussion about how to ensure a sustainable energy future focuses on energy efficiency, renewable energy sources, storage, and plug-in electric cars, it is often forgotten or underemphasized that these solutions all depend on a smarter grid to achieve scale and cost effectiveness.”