Climate Finance: How business school students seek to accelerate climate action

The answer to climate change doesn’t lie solely in technology or politics. They are critically important, yes, and we certainly need more innovations in technology and policy agreements to address climate change. There’s no doubt about that either. But now more than ever, we need to focus on how to transform business. Climate change is the greatest business challenge of our time – and the future – and this is precisely why we need to start innovating and building transformative business models and financial instruments. The originators of these ideas will form the next generation of climate business leaders.

And what better place to do this than at a business school, in the business capital of the world? An initiative led by a group of business students at the Imperial College Business school in London – the Climate Investment Challenge – challenges graduate business students globally to develop creative financial solutions and innovations to tackle climate change. The Challenge serves as a platform to exchange and showcase early, concept-stage climate finance proposals conceived by student teams from around the world. For students, this is an opportunity to apply state-of-the-art financial innovations to disrupt the industry and to explore new ways to mobilise private capital into climate investments.

Transforming the way students think about climate change and business

The competition challenges students to concretely spell out the business case for climate-aligned investing and to devise ways to capitalise on climate opportunities. This year, the Challenge primarily attracted submissions targeting sectors with an urgent need for financial innovation; among those, agriculture, forestry, green infrastructure and transportation. Submissions to the competition included a Sustainable Rice Farming Micro-Loan Scheme, a Climate Adaptation Co-Financing Facility, a Sustainable Cattle Farming Fund, and a Sustainable Timber Real-Estate Investment Trust (REIT).

The Challenge is not only a chance to expose business students to the climate challenge, but also to connect them with experienced industry practitioners in climate finance; among those, the competition’s industry sponsors, Standard Chartered, Quinbrook Infrastructure Partners, and Candriam, as well as the competition’s academic sponsor, the Centre for Climate Finance & Investment at the Imperial College Business School. With these strong ties to industry and academia, the students behind the Climate Investment Challenge have some daring ambitions. They want the Challenge to become an important building block in the climate finance landscape and, over time, build a growing community of students motivated to discover and apply the power of finance to tackle climate change.

“We want the Challenge to be a catalyst for much needed innovation in the climate finance space. Ultimately, we want to see students becoming decision-makers at the companies they go and work for. We want to see their ideas evolve and develop into real-world financial instruments”. Rafael Alonso, MSc. student at Imperial College Business School and this year’s Chair of the Climate Investment Challenge.

Universities and business schools have a crucial role to play (and responsibility)

But it isn’t only up to students themselves to build the next generation of climate leaders. Academic institutions have a major role to play encouraging innovative business thinking within the classroom and ensuring new graduates entering the business world are well versed in climate science, sustainability and clean energy. Many of the world’s top business schools have taken notice and have started breaking down traditional educational silos in finance, policy and technology. Some have gone even further, making bold bets and incorporating climate and sustainable finance as core foundational elements of many graduate business degrees.

There couldn’t be a better time for this shift. After all, today’s business students will be tomorrow’s climate business leaders. They will be the ones making key decisions about how, when and where we finance climate investments, and ultimately how soon we achieve net-zero targets. Much like today’s leaders have a responsibility over how well global economies cope with the coronavirus pandemic, similarly the world’s top universities have a collective responsibility over how well-equipped tomorrow’s business leaders will be to fight climate change. And if universities don’t act soon, students certainty will.