Private Equity Investment Wave Drives Renewable Leadership Hiring

Last year, PE and VC transactions in the global renewable electricity sector hit a five-year high of $14.58 billion. Across North America, Europe and Asia, investors are placing big bets on a future that needs clean energy, particularly as many governments are still catching up with the sector’s pace of change.

This trend is part of a broader movement within PE to develop funds supporting clean energy, water management and sustainable agriculture. With a growth in dedicated funds, renewables now constitute up to half of some PE firms’ portfolios.

But such unprecedented levels of investment place a heavy demand on talent - green jobs are the fastest growing job sector in Europe and the UK faces a green energy skills gap of around 200,000 workers, while in Ireland, demand for green jobs has doubled since 2016. McKinsey predicts the demand for over 4 million blue and white-collar workers across renewables between now and 2030.

We are also seeing this play out at the leadership level.

Below, we explore these trends, explain the demand for these specific roles and discuss the challenges in hiring high-performing talent from traditional energy sectors.

Founder replacements

Founders with the innovation and talent to create a successful product or service do not always possess the skill to scale it into a larger company. This is a decades’ old trend and is no different in the cleantech and renewable energy sectors.

Odgers Berndtson helps large numbers of start-ups appoint CEOs with the commercial ability and leadership agility to drive the growth of a renewables business. These appointments are crucial in enabling earlier stage companies to penetrate new markets, streamline operations and manage intricate board relationships, which often consist of several investors.

Importantly, the right CEO is able to attract and retain the type of talent that can sustain growth and innovation, while maintaining the ‘DNA’ that made the business so attractive in the first place.

Management team build-outs

Such is the scale of PE and VC investment currently pouring into these sectors, that many start-ups require full management teams in order to deliver on the funding. We are helping many of these businesses build out their management teams, in particular, finding leaders with a comprehensive understanding of operations, finance and human resources.

The aim is to transition these start-ups from having a good product or service to becoming an organization capable of achieving and exceeding its developmental goals. In many cases, this is the company’s first complete management team.

Non-executive directors and board chairs

As is often the case with mature start-ups, their investors form much of their initial board. This can sometimes result in the company lacking sector experts, real customer insights, and significant governance oversight.

We partner with mature start-ups to appoint board directors with an existing network in the sector. These directors have links to larger companies and are able to help start-ups with their eventual sale.

Also, their corporate backgrounds provide deep insights into market and customer dynamics, enabling them to help the start-up scale more rapidly. Our extensive relationships with large incumbents across the global energy sector means we are well placed to find and appoint these board directors.

Tackling challenges: The compensation conversation

While these leaders have a real motivation to transition into cleaner energy sectors, pay can prove to be a hurdle.

We approach this by changing an executive’s mindset around the breakdown of pay and compensation. The classic remuneration composition of a three-year long-term incentive plan, often in the form of stocks or share options, a bonus and a competitive base salary, is very different from a start-up package.

Cleantech and renewables start-ups cannot match this, particularly if they are pre-profit. However, executives will get a slice of the pie in the form of equity, often resulting in a seven figure pay out, typically in a three to seven-year timeframe. This will far exceed the overall compensation from traditional corporate employers and is usually enough to convince leadership talent to make the move.

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