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Impact Insights

HBS Business & Environment Alumni Conference

By: Lynn Schenk 06 Apr 2020

On March 4, 2020, the HBS Business and Environment Initiative and Alumni Relations hosted Risks, Opportunities, and Investment in the Era of Climate Change.
We talked to Lynn Schenk, Associate Director of BEI about the alumni conference.

How did this conference come about?

This conference was a long time in the making. Early on, Ramana Nanda, Sarofim-Rock Professor of Business Administration, voiced the need to engage more HBS alumni on the subject of understanding the risks facing businesses from the impacts of climate change. In recent years the School has been ramping up its research
and its MBA classroom content around climate change. Professor Nanda sought to leverage the School’s unique convening power to expose alumni to leading thinkers on this increasingly urgent topic.

What was the process of getting it going?

BEI started to build an alumni audience for this event by having regional meetings, in partnership with alumni clubs in San Francisco, Miami, New York, Chicago, Boston, Los Angeles, and Washington DC, around the topic of how climate change was having an impact on different sectors and the role of managers in addressing this challenge. Turn out at these events was strong, and the level of discussion was deep – further evidence that it was time to invest in a major conference at HBS.

BEI faculty chair Mike Toffel agreed to partner with Ramana Nanda to lead the conference and George Serafeim agreed to be the third faculty chair, adding to the expertise of the group. The team then worked to determine the core themes of the conference based on faculty research as well as input from the BEI regional gatherings. The next, critical step was to assemble the most relevant leaders in the field as speakers.

What was the unique angle you were going for? What made this conference different?

First, we sought to dive deep into a sector where a number of our alums are engaged and is likely to be strongly impacted by the risks and opportunities stemming from climate change: the finance sector. Finance practitioners across a range of disciplines needed to come up the curve on how to identify, assess, and approach pricing of climate risks, and also how to identify and value the opportunities presented in innovative adaptation, mitigation, and sequestration technologies.

Second, the conference sought to emphasize that the topic of climate risk is less explored than most practitioners think. In contrast to the valuable and more frequent discussions around the influential role of finance on a company’s environmental impact (how investment decisions and pricing drive a company’s behavior) this conference was focused on the profound effects that climate risks are likely to have on the finance sector itself. For example, it aimed to provide a chance for investment managers to understand what those risks are, how to value and measure them and make portfolio allocation decisions based on that understanding.

How did it go? Did you succeed in those objectives?

Great! The conference shed light on some ground-breaking and forward thinking aspects of climate risk and innovation that stems from an understanding of risk. Ron O’Hanley (MBA 1986), CEO of State Street Corporation, one of the world’s largest asset managers, discussed the distinction between values and value, emphasizing that climate risk assessment is about value—in other words, the risk climate change poses to the value of financial assets, regardless of one’s own set of personal values. Following a case discussion led by faculty member Vikram Gandhi (MBA 1989), Hiro Mizuno, CIO of the Japanese Government Pension Investment Fund (the single largest pool of retirement savings in the world), discussed his view that investors know that climate risk exists but don’t know how to price it. And, throughout the day alumni learned the lexicon around physical
risks of climate change caused by wildfires, droughts, floods, and extreme heat, and transition risks of an impending price on carbon emissions to incentivize shifting to a low carbon economy. Audience members learned from one of the world’s experts on transition risk – Bob Litterman, Founder and Chair of Risk Committee at Kepos Capital, and former head of Risk at Goldman Sachs. Litterman’s view is that a carbon price in the U.S. is closer to becoming a reality than one might think and moreover, that when this transition happens, it is likely to happen quickly and abruptly (a “slam on the brakes” scenario), which has massive implications for investors and those holding potentially “stranded assets”. Alumni also heard from innovators who had developed mitigation, adaptation, and sequestration technologies, learning about the technology disruption and about their path to funding.

We emerged from the day with compelling research questions, stronger relationships with the leading practitioners in this area, and a stronger network with our alumni around this important topic.

What was the response from alumni?

We clearly struck a chord with this conference. We had over 85­­­­ registrations within 24 hours of the original invitation and ultimately had nearly 307 registrants including 256 alumni from 25 states and 5 countries outside the US.

Early survey results have demonstrated very positive feedback and interest in continued engagement. Since the conference, there has been a wave of requests for further research materials, more information, and more insight into tools to apply to one’s work. That was the goal. We know that it is, for many, still early stages on the learning curve, but we hope that we have helped move the needle with this conference: that HBS alumni in their leadership and rising-leadership positions in the finance sector are more informed and are thinking critically about how to manage climate change in their work.

Where can people learn more?

Information on our work on climate change can be found on the BEI website. BEI will continue to update these sites with more research and analysis as it is released.