Business is one of the few institutions with the capacity to tackle climate change on a large scale. In February, Harvard Business School’s Business & Environment Initiative convened a panel of HBS faculty and alumni to discuss the role of business schools and MBA students in climate action. Panelists included Rebecca Henderson, John and Natty McArthur University Professor, HBS; John Macomber, Senior Lecturer of Business Administration, HBS; James Matheson (MBA 2001), President and CEO, Oasys Water; and Smriti Mishra (MBA 2012), Lead Program Manager, National Grid. David Chan (MBA 2018), student sustainability associate, moderated the panel.

A video of the full panel discussion is available here, and the discussion has been reproduced (edited for length and clarity) below.

What is prompting leaders like Larry Fink, the CEO of Blackrock (the world’s biggest investor), and Doug McMillon, CEO of Walmart, to speak out on climate change? Are boards or consumers the agents of change?

Rebecca Henderson: I think the first and most important thing to be aware of (and I suspect that if you're in this room or watching, you probably know this, but we need to keep saying it) is that climate change is real. It is happening in many ways at rates faster than we expected, and it will have enormous negative effects on our economy and on our society. It's important to keep saying this when the current administration has taken down a number of pages from federal websites, but the science is still out there. It's also important to remember that the US Republican Party is the only major party in the world to hold this particular position.

It's also the case that over the last few years, we've learned that burning fossil fuels arguably has as much, if not more, impact on human health as it does on increasing the risk of climate change. A couple of my colleagues at the School of Public Health use language like “stopping the burning of fossil fuels would be roughly equivalent to curing cancer.” It would give everyone in the US an extra two years of life expectancy, and in developing nations these numbers are much bigger. The new social cost of fossil fuel burning suggests that our health costs are at least as large as climate costs and maybe more.

Forward-looking energy companies can see that there's going to be a major transition in the energy system. I was, for many years, the Eastman Kodak professor at MIT, and that's what I did. I studied firms who had trouble understanding the world was changing. I've come to start talking about this moment we face as another Kodak moment.

What kind of roles should students pursue if they hope to one day lead organizations in this battle against climate change? Which industries offer the most opportunity?

John Macomber: I encourage students to think about project finance as [a strategy for generating] operating yield. One of the great paradoxes [today] is that there’s so much capital looking for yield. There is $30 to $40 trillion in fixed-asset investing, most of which is earning 0 –to-2 percent. At the same time, there’s a huge need for the kind of infrastructure that would mitigate, or help to mitigate…climate [change]. So the paradox is: How can you bring all that capital to bear [to address] that need?

[The answer offers a path for students who want to address] three huge trends of our time. One is massive urbanization—there are hundreds of millions of people moving to cities. The second is bad and worsening resource scarcity—there's not enough clean air, not enough clean water, not enough food, not enough land, too much garbage, too much traffic. And in a perfect world, governments would plan for that, [but the third trend is government’s inability to address these needs]. But there's [an important role for MBAs] around the participation in private finance of roads, bridges, water, power, and transit, where you can imagine a cash-flowing, positive-yielding project that's bankable…. Part of what I encourage students to do is think about going after… project finance in $10- and $100-million chunks, of which there are a lot, and the kind of companies that do that, which tend to be multinationals. Students who leave here and go to work for GE or Tesla or Siemens or ABB wind up having a [big impact]…[often] without ever talking about carbon.

Jim Matheson: If you are passionate about the environment, climate change, and sustainability, there's really an interesting career that you can stitch together. There's no single route to get there. It's not just a product service question. It's not just about innovation. It's not just about regulation. It's not just about big companies, not just about small companies, not just about finance. It's about all of that together in a system, and it's a system that is in the midst of change.

Smriti Mishra: Storage is a great piece [for MBAs] to think about. There will definitely be opportunities in this space. We are all familiar with batteries— you've got them in your phones—you plug it in to charge it, and when you use it, it discharges. From the electric-grid perspective, batteries [are far more than that]. Batteries are generation…they give you electricity when you need it. [They are also] transmission…moving electricity from point A to point B in space. They are…what we call non-wire solutions to transmission projects. Batteries are so versatile, and they are really valuable.

What can we do as business schools and alumni to ramp things up so that there's a sense of urgency that's consistent with what's going on?

Jim Matheson: I've committed my career to starting companies, running companies. That's sort of the clearest manifestation of what one can do. But from that perch [it’s important] to connect and convene. I was one of the founders of the New England Clean Energy Council. We then started the New England Water Innovation network. Instead of one voice…you bring all the voices. You bring old and new industry together. You talk about these topics as opportunities rather than challenges. I think, most importantly, it requires connectivity and community. Because otherwise if you're doing it by yourself, it's too chaotic, and you're stabbing at windmills, and you get tired. You've got to do it together.

If you can leave us with a thought in the last minute or two, what words do you really want us all to remember when we leave here today?

Jim Matheson: Try to find a place in the world where you can make a difference. It takes independent thinking, creativity, courage, and community to make all that happen.

Smriti Mishra: I'll build off of that to say, especially to the students but even to the alumni on the webinars, just don't give up…. I've had plenty of opportunities to do other work and been pulled in different directions, but one of the biggest luxuries that we have from here is the ability to make a lot of choices about what we want and where we want to make a difference. When [it’s] is hard to be the voice in the room that's reminding people of [a holistic perspective], just keep being that person. Because you have the credibility. You have the ability to make a difference. So that's just my strong reminder to everyone in the room is to stick with it.

Rebecca Henderson: Money matters so much less than you think. If you're graduating from Harvard Business School, you're going to have enough to eat, you'll be safe, you'll put your kids through school. The thing I've noticed—I'm class of '85, so I go back every five years for the reunion—I promise you, money makes so much less difference than you think. There is no correlation among my classmates between how much money they made and how happy and engaged and at peace with themselves they are. And that's what people care about. When you go back to your 30th reunion, you know there are some very rich, very unhappy people. The people who are [really] alive are those who tried something that really mattered to them. It's so striking.

Smriti Mishra: I want to put that into advice that I got from Professor Macomber when I was here, which is to disproportionately value being happy.