Nov 05, 2014

Making the Case for Low Carbon Investing

 

SOM hosts inaugural low carbon case competition

In September, the public showed it was engaged on environmental issues of the day: 310,000 marchers protested at the largest climate rally in history. While they gathered to champion different causes - fossil fuel divestment, reforestation, environmental justice, etc. - on the whole, they were demanding effective government action on emissions reductions. Many are watching closely as world leaders prepare for the climate summit in Paris next year.

Given the precipitous rise in emissions despite the existence of multilateral climate treaties and recent congressional inaction on several key issues, many doubt the efficacy of national level leaders to deal with climate change. Instead, a growing number of environmentalists are calling for a bottom-up approach, which engages local government, large institutions, and corporates. Local policymakers, for example, are more accountable to the public on quality of life issues. Therefore, they have more incentive and know-how when it comes to designing policies to spur investment and innovation in clean technologies, to impact the on the ground-realities of climate related problems.

Similarly, institutional investors have enormous agency with regard to climate action, in their portfolio strategies. Recognizing this, the Responsible Investing Group at the Yale School of Management spearheaded the organization of an inaugural case competition on low carbon investing.  On the premise of the competition: “a lot of people are talking about low carbon investing, but not many people know a lot know about what a roadmap for low carbon investing looks like”, says Logan Yonavjak, MEM/EMBA ’16, in an interview with the Yale Climate and Energy Institute.

There are a plethora of areas for institutional investors to invest in resource optimization for low carbon opportunities: energy, water, waste infrastructure, food agriculture, and forestry. However, the mechanics of fossil fuel divestiture, or investment in low carbon public equities, are little known. “At this stage” says Gavin Fernandes, MBA ’15, “we’re not just talking about divestment, we’re talking about the mechanics of it, and looking internally, at what exactly the impact is when it comes to liquidity, risk, and return for investors”.

The low carbon case competition will bring together top MBA and environmentally-focused graduate students from around the country to compete. Selected teams will receive case materials one month in advance. The event will also feature panels with experts such as Bob Litterman, Chairman of Kepos Capital and former Chief Risk Officer of Goldman Sachs, Verne Sedlacek, President and CEO of Commonfund, and Nancy Pfund, Managing Director of DBL Investors.  The event will take place on November 14th at Evans Hall, from 8am-5pm, culminating in a reception at the New Haven Lawn Club. Check out the event page for more information, and to stream the event.

The Yale Responsible Investing Group was started in 2014 with a mission to remain on the forefront of ESG and sustainability issues at Yale University. To read more about the history of socially responsible investing at Yale, click here.