Andrew Ertel”™s corner office at 10 Bank St. in downtown White Plains overlooks a bleak expanse of asphalt parking lot marked for development. It is not the choicest of views in Westchester County, but that matters little to the globe-hopping, soft-spoken, financially far-sighted 40-year-old president and CEO of Evolution Markets Inc.
He and his company”™s two other founding partners share a green global vision that has made Evolution Markets a pioneering brokerage and financial services firm in emerging energy and environmental markets. Acting on that vision has made their company one of the fastest-growing technology-based companies in the New York region. “The company had a 55 percent combined annual growth rate over seven years,” Ertel said. “Last year we exceeded that.”
Under Ertel”™s leadership, Evolution Markets has brokered more than $50 billion in environmental transactions.
Ertel, who has described his company as “a missionary for market-based solutions to sustainability,” founded Evolution Markets in 2000 in Manhattan with two other brokers, managing directors Peter Zaborowsky and Stephen Nesis. The company, which moved its still-expanding headquarters to White Plains in 2003, has grown to about 80 employees with branch offices in San Francisco, London, England, and Buenos Aires, Argentina, a midtown Manhattan office for its new merchant banking division, and, positioning itself in potentially huge Asian markets, recently opened operations in New Delhi, India and Beijing, China.
Eight years ago, “I think the three of us thought there was a better way to build a brokerage business at the time,” Ertel said on the eve of a business trip to India. “We also thought the environmental and energy markets would have a huge increase in terms of the opportunities and the fact that energy trading was really the right way to help the environment. That led us to form Evolution.”
Since then, the company has brokered some of the first deals in the European Union”™s greenhouse gas emissions trading system and was involved in the first transaction under the Kyoto Protocol’s international emissions trading program. Since forming Evolution, Ertel has seen the international market in carbon credits and offsets grow from about $50 million a year to what he estimated will be close to $200 billion this year.
That market alone accounts for about one-fourth of the company”™s business and is “one of our rapidly growing sections,” Ertel said. The company has continued to grow in other directions too in the U.S. emissions, renewable energy, weather derivative, freight, and over-the-counter coal, natural gas, nuclear fuel and biofuels markets. “We”™ve been involved in almost all of the firsts of all the markets,” Ertel said.
Its investment banking division, which company spokesman Evan Ard said is “really the new direction of the business,” is involved in “green” investments such as raising capital for a deep-ocean fish farm off the coast of Hawaii. “We act as the deal structurer and matchmaker,” Ertel said. “We don”™t take principal positions in any of those projects.”
“All of our client base is institutional,” he said. “We have over 100 of the Fortune 500 companies today.”
In March, Evolution Markets joined with some of those Fortune 500 companies and the parent company of the New York Mercantile Exchange to form The Green Exchange for what NYMEX officials described as trading in environmental futures, options and swaps for markets focused on solutions to climate change, renewable energy and other environmental challenges.
Other partners in the venture include Morgan Stanley Capital Group Inc., Credit Suisse, JPMorgan, Merrill Lynch, Tudor Investment Corp. and, most recently, Goldman Sachs.
“Environmental markets give companies and individuals an incentive to overcomply” with emissions regulations, Ertel said. “We think that”™s very important. That overcompliance is the key to a successful environmental market, doing more than what”™s regulated, because it”™s a very powerful tool to drive companies to do the right thing.”
“It”™s not just think globally, act locally. You”™ve got to think globally, act locally and act globally.”
On the speaker circuit, Ertel has become an articulate missionary for market solutions to climate change. Addressing an audience last winter at Westchester County”™s global warming conference, Evolution”™s CEO said, “We are believers in market-based mechanisms. Market-based mechanisms for encouraging environmental goals really have worked.” He pointed to a $70 billion global carbon market last year as an example of capitalism doing good.
“I”™m a believer in capitalism. I think it”™s great that companies have economic incentives to do more” in reducing greenhouse gas emissions, he said. “What we really need in order to get technology to where it needs to be is massive amounts of investment ”“ and we won”™t get that without a profit motive.”
Ertel did not credit market visionaries like himself for getting corporations and corporate CEOs to address the problems of climate change. “The soccer moms of the world have really pushed this focus,” he said.
Spoken like a soccer dad: Ertel coaches his daughter”™s under-5 soccer team in Armonk.
