26 May 2022

Divyanshu, Paúl, and Shaurya share their experience of participating in the Kellogg-Morgan Stanley Sustainable investing Challenge (KMS-SIC).
Kellogg-Morgan Stanley Challenge

The challenge

The KMS-SIC is the most prestigious sustainable investing challenge globally that looks for innovative investment ideas that balance the tension between financial and social return rather than sacrifice either priority.

The challenge was first organised in 2011; since then, this challenge has been a testament to the growing opportunities available to investors looking to do well by doing good. It seeks to identify outstanding proposals offering novel investment strategies to meet some of the most pressing global challenges ahead.

Teams are encouraged to think beyond social enterprises, venture capital fund vehicles, and strategies. This competition requires you to propose and defend a sustainable impact investment strategy that uses finance and investment tools to create an innovative solution to an environmental or societal challenge.

The initiative was created by the Kellogg School of Management at Northwestern University. It was then joined by the Morgan Stanley Institute for Sustainable Investing, which builds scalable finance solutions that seek to deliver competitive market-rate returns while driving positive environmental and social impact.

Why this challenge?

There's a vast market inefficiency that's creating a gap in the decarbonisation of developing countries. Private investors are not supporting the technology necessary for transition in the emerging economies because of systemic risk. At the same time, developed economies are having problems with decommissioned renewable energy assets. Therefore, we considered this an opportunity to decarbonise the energy sector while efficiently using renewable energy assets rather than putting them into landfills.

We decided to participate in this challenge for the following reasons. Firstly, the zeal to effectively manage the existing assets while reducing the environmental and increasing the socioeconomic impact of these resources. Also, there is no better competition to apply the knowledge and skills that we gained during this programme and present it to a broader audience.

The process

This all started in September. Ian Cochran (Programme Director, MSc Climate Change Finance and Investment) presented the competition to our class at the very beginning of the programme. Many of us found KMS-SIC fascinating, and almost immediately, a dozen of us started to meet and brainstorm ideas.

Along the way, we received feedback from last year's runner-up Lauren Chin and professors from the Business School and Engineering School. Later, we formed groups with specific ideas. Ours consisted of Paúl Alcívar, Divyanshu Sethi and Shaurya Lal, all studying the MSc Climate Change Finance and Investment programme at the University of Edinburgh Business School.

The formal process started in January, as we submitted a general idea of our business proposal. After this initial evaluation, the idea was approved, and a tutor was assigned to guide us through the competition and help us build a viable climate-change project. In February, we submitted a financial prospectus focusing on the opportunity to reuse and upcycle wind turbine blades. The model offered an approach involving a leveraged leasing and private equity fund that would help prevent wind turbine blades from being wasted and put into landfills. A couple of weeks later, we were informed that we had reached the finals.

The finals

The Circular Blade Fund, as we called it, pitched the idea on 8 April in front of a panel of top experts. The presentation lasted 15 minutes, with 5 extra for a Q&A in which we defended our business model and motivations. We got technical advice from lecturers from the Business School and Engineering School to make it possible. Additionally, we got assistance from specialised lawyers, investment bankers, and experts in the field, which helped the idea evolve and make the business model feasible.

The final model involved the mobilisation of blades from wind energy facilities located in Texas and the Isthmus in Tehuantepec, Mexico, the region with the highest wind-energy generation potential in the world. We put into practice the knowledge we got from several of our programme lectures: Carbon Accounting, Sustainable Finance, Advanced Energy Finance, and Climate Change Policy.

What we learned

We learned a lot from participating in this investment challenge. We developed skills such as:

  • Structuring a new idea and converting it into a profitable business opportunity
  • Creating a goal-oriented team
  • Presenting climate finance concepts in front of a wider audience

This competition was a once-in-a-lifetime opportunity to connect with leading industry professionals, from top financial experts to world-leading academics. In the end, even though we didn't make it to the final four competition, we enjoyed this experience while reinforcing skills highly valued in our industry.

Stats: In 2022, 77 teams from 51 schools worldwide participated. 16 teams made it to the final stage.

Divyanshu, Paúl, and Shaurya are all studying for the MSc in Climate Change Finance and Investment.