In May, The Wharton School of the University of Pennsylvania graduated its first cohort of MBA students with a new Environmental, Social and Governance major. The program came in response to the pressure climate change has placed on businesses and industries to grapple with related financial risks—and capitalize on the transition to renewable energy.
Along with studying traditional Master’s of Business Administration subjects like marketing and finance, the 52 students also delved into topics such as water governance, carbon offsets and greenhouse gas emissions.
Environmental, Social and Governance, or ESG, refers to the means by which a corporation’s social and environmental impacts are measured and assessed. In recent years, the term has been dragged into culture wars, with many Republicans claiming it’s a tool to advance liberal policy goals, such as reducing greenhouse gas emissions, rather than maximizing shareholder returns. From the left, ESG has at times been criticized for enabling corporate greenwashing.
Wharton, one of the top business schools in the country, launched the specialization in response to student demand, said Witold Henisz, vice dean and faculty director of the ESG Initiative. In its first graduating year, the major was already the school’s sixth most popular out of nearly 20. Today, two dozen faculty members from different departments contribute to the ESG initiative, performing academic research, devising industry partnerships and teaching.
While professors’ backgrounds range from law to policy, make no mistake: “This is ESG for business,” Henisz said. “We’re not training people to be environmental scientists.”
The program aims to teach students how to identify where and when ESG factors hit the bottom line, Henisz explained. About 80 percent of the school’s MBA students go on to careers in consulting or finance, where they increasingly need to consider how rising temperatures, climate policies or legal environmental battles put companies’ returns at risk.
But it’s not all about risk. The climate crisis presents plenty of growth opportunities for startups, Henisz said. The Apples and Amazons of tomorrow could be green technology companies, and he hopes they will be staffed with Wharton graduates. “We’re not sure what they’re going to be, but this is clearly going to take innovation,” he said. “Some people are going to become fabulously wealthy and drive progress on climate transition.”
Where there’s innovation, there’s a need for capital. To achieve a fully decarbonized energy system by 2050, the world needs $215 trillion, according to a BloombergNEF analysis. The number of climate investment funds has surged in recent years, with more than 70 percent of their total value coming from funds started since 2020, according to data from investment research firm MSCI. Unsurprisingly, careers in green investing are increasingly exciting to MBA students, Henisz said.
Jyotika Chandhoke was one of the students who graduated with the MBA ESG major in May. The 27-year-old is now working at Burnt Island Ventures, a fund that invests in water technology. When she first studied business as an undergraduate five years ago, careers in energy and climate were far less popular, she said. Today, she thinks investor appetite, hiring demand and higher salaries have made the field a less risky path for new graduates.
“There’s now a generalist interest in the sector because the economics are favorable,” she said.
William Liuzza, CEO of EnergeiaWorks, a recruiting agency, said the demand for hiring people with an ESG background is here to stay: “There’s no turning back from the energy transition, so we need more people.”
The Biden administration’s Inflation Reduction Act has ignited a “clean energy boom” that could create jobs for years to come. Investments generated by the IRA could create more than 9 million jobs over the next decade, according to an analysis by the Political Economy Research Institute at the University of Massachusetts Amherst.
Of course, not all of these jobs require an MBA, and many are highly technical. Liuzza noted that electricians and engineers are in particularly high demand today. However, every project needs finance teams, especially in the clean energy sector, where complex financing structures use debt, equity and government subsidies.
Energy is not the only industry hiring for ESG roles. Some MBA students also choose to pursue corporate sustainability careers in fields like manufacturing or retail. When Liuzza founded EnergeiaWorks in 2010, it was rare for companies to have dedicated sustainability teams. Today, nearly all Fortune 1000 companies do—and they’re actively hiring, he said.
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Donate NowCaroline Haley spent the summer working as a sustainability intern at E.L.F. Beauty. She has a passion for vintage clothing, and her family is in the recycling and packaging business, but it wasn’t until recently that she considered bringing sustainability into her professional life.
“I wanted to bring more purpose to what I was doing professionally, try to be more mission-focused,” she said. “I wanted to do something that would make the future a more liveable place.”
The 27-year-old, who will start her second year as an MBA student in August, only considered MBA programs with climate and sustainability pathways. She said she felt that Wharton’s focus on ESG attracted business students with a similar mindset. “It has helped build a community” outside the classroom, she said. “That’s what I’ve gotten the most value out of.”
Across the country, more students are looking for pathways from MBAs to sustainability jobs. At Duke’s Fuqua School of Business, Katie Kross coaches students looking for roles in renewable energy, climate technology or sustainability. Kross, the managing director of Duke’s Center for Energy, Development and the Global Environment, said these industries are hiring, but that they still lack an established student recruiting pipeline.
“The climate crisis is here, it’s urgent and there is a lot of interesting work to be done.”
Traditional MBA career paths like consulting and investing firms have a well-worn career ladder for new graduates. While consulting firms start recruiting Duke students nearly a year in advance of their graduation, careers in the climate space come with more risk and uncertainty, Kross said. It also requires more outreach, networking and initiative from students to find the right role. “A lot of jobs that are being created are brand new,” she said. “So the students pursuing them are forging their own paths.”
Some students may be tempted to go the traditional MBA route and put their interest in sustainability on the back burner. Each term, she reassures students that they don’t have to wait. “The climate crisis is here, it’s urgent and there is a lot of interesting work to be done,” she said.
The students she has advised have ended up in sustainability roles at Fortune 500 corporations, at climate technology startups that have raised millions in funding, and at international renewable energy companies. “We need everyone if we’re going to solve the climate crisis: We need finance, entrepreneurs, marketers, engineers, scientists, policymakers,” Kross added. “We need all the skills across all the disciplines.”
At some universities, students are encouraged to learn from other departments outside of the business school. MIT’s Sloan School of Management allows MBA students to earn a certificate in sustainability by taking campus-wide elective courses ranging from policy to energy systems. In addition to electives and core courses, Sloan’s sustainability students are matched up with companies as part of a hands-on “sustainability lab” course.
The program has grown consistently since its inception in 2010, said Jennifer Graham, senior associate director of the MIT Sloan Sustainability Initiative. Today, nearly 100 students graduate with the certificate each year. More undergraduate programs in sustainability have also popped up in recent years, Graham said, allowing students to work in the field for a few years before getting their MBA.
“It’s one thing we’re looking at as we strategize,” she said. “How to accommodate students who are making a pivot into climate and sustainability, while also meeting the needs of students who have that experience.”
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Mathilde Augustin is a business journalist passionate about the intersection of climate and finance. She is a graduate of Columbia University in New York, where she received an M.A. in business and economics journalism and covered topics such as Canada’s logging industry and migrant workers building Paris Olympics facilities. She is French and Canadian and previously earned her B.A. in Political Science from McGill University.
