The investment proposal, by a four-member team from Haas School of Business at UC Berkeley, aims to alleviate drought and reduce forest fire risk, while seeking market-rate returns for investors.
An investment vehicle that aims to alleviate drought and reduce forest fire risk, while seeking market-rate returns for investors, has won first prize in the 2015 Morgan Stanley Sustainable Investing Challenge.
Blue Forest, a four-member team of students from the Haas School of Business at the University of California Berkeley, presented the investment strategy on April 17, 2015, at Morgan Stanley's London headquarters. The proposal outlines a proactive and strategic forest-thinning program that works to monetize the value of forest management to numerous stakeholders, including water and power utilities and government agencies.
The target market: California, a state that perennially struggles with wild fires and is currently suffering its worst drought in decades.
"I've lived in California for a number of years now," said Zach Knight, a member of the Blue Forest team, which included Leigh Madeira, Chad Reed and Nick Wobbrock, "... being able to solve an issue that's so close to home, impacting real people on a daily basis is so important to us, and I'm glad that our passion for this project has come through today."
From left to right, Nick Wobbrock, Chad Reed, Leigh Madeira, and Zach Knight. Source: Peter Matthews for Morgan Stanley
The Challenge, organized by the Morgan Stanley Institute for Sustainable Investing, INSEAD and Northwestern University's Kellogg School of Management, invites student proposals to address critical social and environmental challenges, geared to attract institutional investors seeking positive impact and competitive returns. The Blue Forest team was one of 10 finalists who presented their proposed investment vehicles.
"This year's winner... deals with an issue—the devastating Californian drought—that is of the moment," said David Hutchison, CEO of Social Finance UK and a Challenge judge. "Inevitably this is what will get people round the table to invest in an innovative solution and look to play their part."
The Challenge recognizes that sustainable investing requires a pipeline of innovative thinkers, and seeks to identify and nurture the next generation of business leaders. This year, submissions increased sharply, with environmental sustainability a popular theme. A total of 380 students made up 127 teams from 78 schools in 20 countries.
Their proposals spanned the globe and sought to address a range of pressing sustainability issues, such as resource conservation, food shortages, and access to health care. The first round judges selected 10 finalists, who worked with experts in the field to hone their final presentations.
“We commend all the students for creating sustainable investing concepts that combine ambitious visions for impact with a focus on financial rigor," said Audrey Choi, CEO of the Morgan Stanley Institute for Sustainable Investing. “The Sustainable Investing Challenge is a call to the next generation of finance professionals to match their business acumen and investment creativity with their passion for producing a positive impact, and this year's participants answered the call with great success."
Those who rose to the Challenge recognize that now is the time to seize both the responsibility and opportunity of sustainable investing, which is growing as a mainstream financial force. A February, 2015, Morgan Stanley survey found that investors, particularly women and Millennials, are strongly interested in sustainable investing and believe that the investment approach is poised to grow, as more companies and investors embrace the performance potential of an environmental, social and governance approach to doing business.