Leadership Spotlight: Julie T. Katzman, former COO of the Inter-American Development Bank
Leadership Spotlight: Julie T. Katzman, former COO of the Inter-American Development Bank.
This interview is part of a series of blog posts highlighting prominent members of the Smart Surfaces Coalition team. Over the coming months, we will publish interviews with Coalition Steering Committee members as they talk about their work, our environment and the Smart Surfaces mission.
As its chief operating officer, Julie T. Katzman oversaw the Inter-American Development Bank’s efforts to help Latin American and Caribbean countries reduce poverty and inequality by financing sustainable development in the region. Julie currently serves on the Boards of the MacArthur Foundation, Instituto de Empresa, Laboratoria.la (training low-income women in tech in 5 countries in Latin America) and Nilus (applying technology to fight food insecurity).
This interview was conducted by Ivy Moore (IM), Digital Media and Communications intern at Smart Surfaces Coalition.
IM: When was the first time you learned about the severity of climate change? And what did that realization mean to you?
JTK: I started to think about policy and climate change, and the disconnect between where we were on climate change and what we were doing about it from a policy perspective, when the Stern Report was published in October 2006. That report reframed climate change as a market failure in the context of the global economy. Around that time, I was also involved in the Obama presidential campaign and I think this was the first campaign to begin thinking in terms of climate change and national security.
IM: Did this realization change the way that you interacted with your career and work?
JTK: I went from being an investment banker to being the Chief Operating Officer of the Inter-American Development Bank, which is the largest provider of development finance in Mexico, Central America, South America and the Caribbean. Addressing climate change became a driving force of my work.
Before I became the Chief Operating Officer, I initially ran the IDB’s grant arm that focused largely on the not-for-profit and the private sectors. While much of the climate efforts were focused on large emitters like utilities, we began to focus on the emissions coming from the bottom of the pyramid. These billions of small emitters, whose lives and livelihoods turned on the cost of inputs like energy, had few options to become more “green” and in fact, often existed in a public policy environment that skewed their behavior toward inefficient and poor choices from a climate perspective.
To reach this group of people, we asked how we could use microfinance institutions to finance and allow people at the bottom of the pyramid to change their carbon profile and overall impact on climate. We developed a successful program that both “greened” the microfinance institutions themselves and that created climate positive products for micro and small businesses.
Overall at the IDB, we became a catalyst for the countries of Latin America to change their policies, their frameworks, their approach, and therefore their overall carbon footprint. For example, in Mexico, we provided a loan that helped the government create a framework to allow wind or solar generators to sell energy back into the grid. We helped Uruguay, which has a great deal of wind, shift its energy matrix quite substantially away from fossil fuels. Uruguay now generates over 98% of its electricity from renewable sources, primarily hydropower and wind. And before I left the IDB, we agreed with our shareholders that 50% of our lending overall, or about $6 billion to $7 billion a year, would be climate change-focused.
IM: I'm curious, in your experience at the Inter-American Development Bank, what did you notice was a selling point when you were to pitch ideas or to come up with solutions in these other countries?
JTK: Most of Latin America is highly susceptible to the ravages of climate change. For example, natural disasters have exacted very large economic and human costs and agricultural yields have fallen substantially. These costs were clear to countries. Country leaders could quite easily see the importance of addressing climate change once presented with a clear, scientifically-based case and options for doing so.
The IDB, as well as others like the Global Environment Facility and the Green Climate Fund, provided economic incentives to undertake reforms and projects; whether through the provision of grants or lower interest rates. However, a country can use its borrowings for a number of purposes. So the rigor of the economic and social analysis needed to be compelling.
IM: Why do you support the idea of Smart Surfaces and how did you get involved as a member of the Steering Committee?
JTK: The thread that ties most of the Steering Committee members together is Greg Kats. I met Greg while working to “green” the various forms of infrastructure that are built in the context of IDB loans focused on things like education or health. At the same time, I was seeing day to day the effects of expanding cities (Latin America is the most urbanized region of the world with 85% of the population living in cities) with more and more impervious surfaces and fewer and fewer trees. It was easy to see and to imagine the cost and devastation that continuing to build and put surfaces in place in the same old way was having and was going to continue to have. And particularly on the most vulnerable, who lived in often unregulated parts of expanding cities. It just made sense.
At the same time, it was also clear that broad adoption would take interacting with cities and convincing them to make decisions in a different and more holistic way. Smart Surfaces have big economic benefits, often from the first year, but they require a city to think about the economy of the city as a whole when they evaluate which material to choose for paving, for example. What is the job impact, the health impact, the heat impact and how will that translate to the number of tourists who visit and spend money? That is not the way most cities make decisions today.
That’s why the creation of the coalition is so critical. It is a way to package the concept and interact with cities and organizations with which they have a historical relationship and which know how they work. I've rarely seen such a broad group of organizations brought together in a way that creates mutual interest and collaborative action. Each organization hooks in to a different aspect of city life and working together can make an extremely compelling case for Smart Surfaces, as you can see in the recent work in Baltimore and Stockton.
IM: What sorts of challenges do you see preventing Smart Surfaces from being widely adopted?
JTK: There isn't a technology problem here, we've got the materials, we know how to install, how to build, landscape, etc. We know that adopting Smart Surfaces is not only net present value positive, but the recent Baltimore example shows that it's cash positive almost from the very beginning. We know that smart surfaces reduce city temperatures and address the heat island effect, which has been so extreme this summer and affects poorer populations more significantly. I could go on and on. So then why isn't this just happening?
A big part of the issue is the nature of cities and the way they make decisions. To incentivize cities to act differently, they need to see examples like Baltimore to see how positive this can be – from job creation to improved health outcomes, from the benefits of summer tourism to improvements in quality of life and equity. So the idea of creating a coalition, which has experience working with cities, has credibility and can help evaluate Smart Surfaces—that’s an important ingredient. Then you need some incentives – financial and/or regulatory to really drive early adoption. Government is not a natural innovator or risk-taker, so we need to take some of the perceived risks out of early adoption.
IM: As an SSC Steering Committee member, is there a short-term goal that you feel needs to be achieved?
JTK: That's a really interesting question. Currently, there are only a handful of cities in the world that know the profile of its surfaces, what that implies for emissions, how they would implement a change. So, it is essential that we fund and get cities the data that they would need so they can then use the coalition’s analytical engine to be able to see the benefits that could imply.
Second, we need to quickly ramp up the number of cities that are on this path. Because like most things in life, success begets success. And when you have, 10 cities, 20 cities, quickly adopting Smart Surfaces, then a couple of things happen. One, it’s no longer this weird thing or this risky thing, but it becomes a normal thing. Second, you end up with many more people who are out there in the world and in the job market who understand the benefits of Smart Surfaces and how to implement city-wide adoption. That creates momentum that starts to spread organically.
IM: Where do you see the disconnect between President Biden declaring a heat warning and launching an approach to combat extreme heat and the widespread adoption of Smart Surfaces and other solutions alike?
JTK: It’s a question I’ve been asking myself. I think perhaps we have to get the forward leaning policymakers, the members of the Senate’s Climate Solutions Caucus or the House Select Committee on Climate who are trying to find solutions and are willing to look beyond the things we already know about or are currently on the tip of everyone’s tongue and to understand the Smart Surfaces story and then be willing to help create some of those incentives I mentioned earlier.
IM: What is giving you hope?
JK: Well, I guess a couple of things give me hope. One is from some new polling that came out today from the Yale Climate Lab. It showed that between March and September of 2021 the percentage of Americans who think global warming is happening went from 70 to 76%. That’s a very big shift in only six months. And we can guess that a big cause of that shift is weather. That's based on people's lived experience that something is wrong; that these fires aren’t normal, that these temperatures aren’t normal, that these droughts aren’t normal. That gives me hope because ultimately that 76% [of people] vote.
A second thing that gives me hope is youth. The planet that my new nephew, my grandkids, and everyone under 30 are going to inherit is already going to be drastically different. And the activism and focus on this issue that that has caused gives me hope.
And last would be the way that capital is beginning to act. That finally institutional money, trillions of dollars, is waking up and saying, ‘Yeah, no, we can't own these companies and allow them to behave as they have been. The activist slate of shareholders that were elected to the Exxon/Mobil board, the actions that have been spurred on by shareholder initiatives, these are important changes and signals. It remains to be seen how careful and serious these investors will be. Will they react against the companies who, for example, are making climate pledges out of one side of their mouths while lobbying against climate provisions in the Build Back Better Act? That remains to be seen. So on this front, I guess I am guardedly optimistic.