MBA Course
The MBA course on "Risks, Opportunities, and Investments in an Era of Climate Change" is ideal for students who aspire to become entrepreneurs by starting their own company or joining a start-up that is driving innovation and solving challenges posed by climate change. Additionally, the course will benefit those who wish to lead or advise firms on transitioning their operations and business models to become more sustainable and innovative. Finally, the course will be beneficial to students seeking to understand the full spectrum of climate opportunities pursuing a career in venture capital, private equity, or public markets investing.
Cases accompanied by teaching plans for instructors include:
1. Apple's iPhone and developing circular economy models: The trade-in program encouraged customers to trade in their old devices, which were then refurbished and resold, or recycled for valuable components. With about 80% of the second-hand smartphone market comprised of iPhone and an increasing percentage of materials being recycled and reused in manufacturing, Apple was making progress towards circularity. But what was the impact of circularity on revenues, operating profits and carbon emissions?
2. BMW's decarbonization and electrification strategy: automakers, consumers, regulators, and investors were focusing on the transition from internal combustion engine (ICE) vehicles to electric vehicles (EV). While this would reduce tail-pipe emissions, the production of EVs—and especially their batteries—increased emissions in the supply chain. BMW was focusing on life cycle emissions and was pursuing a flexible powertrain strategy by offering vehicles with several powertrain options: gasoline and diesel-fueled ICE, plug-in hybrid electric vehicles (PHEV), and battery electric vehicles (BEV). Was this the right strategy to pursue?
3. Galy's efforts in lab grown agriculture: GALY, founded in 2019, aimed to produce cotton and other crops from cells grown in the lab. The company hoped to create 500,000 tons of products by 2030, and by 2023, had produced proof of concepts of cotton, coffee, and cacao. Bueno had a number of decisions to make. How should the company scale? Where should it locate production? Should it build its own production facilities, or license its intellectual property to partner firms? Should the company continue operating an office in Brazil, or centralize operations in Boston? The answers to these questions would point the way forward, but which path was best?
4. Solvay's product portfolio management tool: The case describes the announcement of a new strategic plan to grow the business, increase return on capital, decrease absolute emissions and transition the product portfolio to be a leading environmental solutions company. Were those objectives in conflict or synergistic? Solvay had developed a sustainability tool called Sustainability Product Management to identify promising business applications. How effective was the tool? What business lines should Solvay promote to grow and at the same time be more sustainable?
5. Northvolt's development of a vertically integrated battery producer: Having raised billions of dollars of capital and secured tens of billions in customer offtake agreements, Northvolt was making progress towards building gigafactories to produce batteries and compete with established battery manufacturers. How did the founders succeed to get both the capital and customer agreements? Where should they focus their expansion plans?
6. Itau's offering of financial products that link credit terms to sustainability metrics: Itau BBA had structured dozens of sustainability linked bonds, which made future interest payments a function of the borrower meeting a target for a sustainability metric, and had solidified its reputation as a pioneer of sustainable finance in Latin America. Should Itau expand its sustainable debt business to firms with high ESG risks and if so, what must be done to gain support from Itau executives, investors, and high-risk issuers? What systems should Itau adopt to alleviate concerns and would the transaction costs of these systems, such as enhanced disclosure or monitoring, be too steep to justify underwriting the product?
7. EKI's role as a broker and developer of carbon credits: Within nine months from the time of its Initial Public Offering (IPO) in April of 2021, EKI Energy Services (EKI) shares had increased by more than 8,000%. However, several commentators started doubting the credibility of the carbon credits that firms purchased or developed and sold to customers worldwide. Was this a reasonable price to pay for EKI’s assets and future profitability? How sustainable were the earnings of the company and its stock market valuation in the fast-changing carbon credit market?
8. Neuberger Berman's climate transition investment strategies: While most climate transition strategies almost completely divested from the energy sector and relied on a single quantitative data metric, NB’s approach invested in energy and other high carbon intensive companies, used a plethora of quantitative metrics and qualitative analyst judgments, engaged with management leveraging bottom-up fundamental analysis, and over time re-assessed firm alignment with net zero goals. Given that NB’s climate transition approach included high carbon emitters and its complexity, how could NB communicate its approach effectively to asset allocators? A second question revolved around “how high to set the bar.” Lastly, climate focused funds had seen significant inflows in China and NB wanted to integrate its net zero alignment indicator into the construction of investment products there. Given this, should the net zero transition alignment standards be different across geographies?
9. KOKO Network's biofuelled clean cooking: By August 2023, KOKO served over one million households across ten cities in Kenya and planned to expand further in Kenya as well as build greenfield utilities in Rwanda and other African nations. Yet, the co-founders knew that the road ahead was full not only of opportunities, but also of challenges. KOKO’s approach required the development of new customized policy on standards, regulations, and taxation – within consumer fuel, hardware and carbon credits - and the ability to persuade and inspire the development of this policy at the necessary pace.
10. Elon Musk's entrepreneurial venture at Tesla: This case gives an overview of Elon Musk’s career arc through the lens of the 2003 founding of Tesla and its growth through 2022. The case also contains information on Musk’s early life and endeavors beyond Tesla, with a focus on his management style and the implications for Tesla’s success and his aim to influence human civilization for the better.
11. EU CBAM's policy: a carbon border tax intended to address business competition challenges plaguing EU ETS by establishing comparable carbon costs within EU borders for imports and local goods. The enforcement of CBAM raised several questions for cement and steel producers around the world. First, what would be the impact on their strategies and financial performance? Second, what actions could they take in response? Would CBAM be effective at reducing emissions and addressing emissions leakage? How would other countries respond to CBAM and would the response affect those countries’ carbon emissions reduction efforts?
Teaching plans are under development for other cases in the course.
Cases accompanied by teaching plans for instructors include:
1. Apple's iPhone and developing circular economy models: The trade-in program encouraged customers to trade in their old devices, which were then refurbished and resold, or recycled for valuable components. With about 80% of the second-hand smartphone market comprised of iPhone and an increasing percentage of materials being recycled and reused in manufacturing, Apple was making progress towards circularity. But what was the impact of circularity on revenues, operating profits and carbon emissions?
2. BMW's decarbonization and electrification strategy: automakers, consumers, regulators, and investors were focusing on the transition from internal combustion engine (ICE) vehicles to electric vehicles (EV). While this would reduce tail-pipe emissions, the production of EVs—and especially their batteries—increased emissions in the supply chain. BMW was focusing on life cycle emissions and was pursuing a flexible powertrain strategy by offering vehicles with several powertrain options: gasoline and diesel-fueled ICE, plug-in hybrid electric vehicles (PHEV), and battery electric vehicles (BEV). Was this the right strategy to pursue?
3. Galy's efforts in lab grown agriculture: GALY, founded in 2019, aimed to produce cotton and other crops from cells grown in the lab. The company hoped to create 500,000 tons of products by 2030, and by 2023, had produced proof of concepts of cotton, coffee, and cacao. Bueno had a number of decisions to make. How should the company scale? Where should it locate production? Should it build its own production facilities, or license its intellectual property to partner firms? Should the company continue operating an office in Brazil, or centralize operations in Boston? The answers to these questions would point the way forward, but which path was best?
4. Solvay's product portfolio management tool: The case describes the announcement of a new strategic plan to grow the business, increase return on capital, decrease absolute emissions and transition the product portfolio to be a leading environmental solutions company. Were those objectives in conflict or synergistic? Solvay had developed a sustainability tool called Sustainability Product Management to identify promising business applications. How effective was the tool? What business lines should Solvay promote to grow and at the same time be more sustainable?
5. Northvolt's development of a vertically integrated battery producer: Having raised billions of dollars of capital and secured tens of billions in customer offtake agreements, Northvolt was making progress towards building gigafactories to produce batteries and compete with established battery manufacturers. How did the founders succeed to get both the capital and customer agreements? Where should they focus their expansion plans?
6. Itau's offering of financial products that link credit terms to sustainability metrics: Itau BBA had structured dozens of sustainability linked bonds, which made future interest payments a function of the borrower meeting a target for a sustainability metric, and had solidified its reputation as a pioneer of sustainable finance in Latin America. Should Itau expand its sustainable debt business to firms with high ESG risks and if so, what must be done to gain support from Itau executives, investors, and high-risk issuers? What systems should Itau adopt to alleviate concerns and would the transaction costs of these systems, such as enhanced disclosure or monitoring, be too steep to justify underwriting the product?
7. EKI's role as a broker and developer of carbon credits: Within nine months from the time of its Initial Public Offering (IPO) in April of 2021, EKI Energy Services (EKI) shares had increased by more than 8,000%. However, several commentators started doubting the credibility of the carbon credits that firms purchased or developed and sold to customers worldwide. Was this a reasonable price to pay for EKI’s assets and future profitability? How sustainable were the earnings of the company and its stock market valuation in the fast-changing carbon credit market?
8. Neuberger Berman's climate transition investment strategies: While most climate transition strategies almost completely divested from the energy sector and relied on a single quantitative data metric, NB’s approach invested in energy and other high carbon intensive companies, used a plethora of quantitative metrics and qualitative analyst judgments, engaged with management leveraging bottom-up fundamental analysis, and over time re-assessed firm alignment with net zero goals. Given that NB’s climate transition approach included high carbon emitters and its complexity, how could NB communicate its approach effectively to asset allocators? A second question revolved around “how high to set the bar.” Lastly, climate focused funds had seen significant inflows in China and NB wanted to integrate its net zero alignment indicator into the construction of investment products there. Given this, should the net zero transition alignment standards be different across geographies?
9. KOKO Network's biofuelled clean cooking: By August 2023, KOKO served over one million households across ten cities in Kenya and planned to expand further in Kenya as well as build greenfield utilities in Rwanda and other African nations. Yet, the co-founders knew that the road ahead was full not only of opportunities, but also of challenges. KOKO’s approach required the development of new customized policy on standards, regulations, and taxation – within consumer fuel, hardware and carbon credits - and the ability to persuade and inspire the development of this policy at the necessary pace.
10. Elon Musk's entrepreneurial venture at Tesla: This case gives an overview of Elon Musk’s career arc through the lens of the 2003 founding of Tesla and its growth through 2022. The case also contains information on Musk’s early life and endeavors beyond Tesla, with a focus on his management style and the implications for Tesla’s success and his aim to influence human civilization for the better.
11. EU CBAM's policy: a carbon border tax intended to address business competition challenges plaguing EU ETS by establishing comparable carbon costs within EU borders for imports and local goods. The enforcement of CBAM raised several questions for cement and steel producers around the world. First, what would be the impact on their strategies and financial performance? Second, what actions could they take in response? Would CBAM be effective at reducing emissions and addressing emissions leakage? How would other countries respond to CBAM and would the response affect those countries’ carbon emissions reduction efforts?
Teaching plans are under development for other cases in the course.
