United States of America
Every year, the Kellogg School of Management and Morgan Stanley partner to host the challenge where teams of graduate students from around the globe develop and pitch creative financial approaches to tackle our world’s most pressing challenges. The Kellogg-Morgan Stanley Sustainable Investing Challenge seeks to identify outstanding proposals offering novel investment strategies to meet some of the most pressing global challenges ahead.
In 2020, more than 308 students from over 34 countries and 74 schools proposed novel financial instruments to create positive impact.
The Challenge identifies, empowers, and inspires the next generation of sustainable finance practitioners and connects them with leading industry professionals.
Contestants must propose and defend a strategy that uses finance and investment tools rather than an operating enterprise to address an environmental or societal challenge. The competition is an opportunity to apply core finance principles to target the economic, social and environmental challenges that drive the field of sustainable investing. Pitches might focus on areas like water, energy, food, social mobility, climate change, education or healthcare, among others. Contestants are encouraged to apply the entire spectrum of investment tools, styles and asset classes.
The Challenge seeks to identify the next generation of sustainable finance practitioners, connect emerging leaders with industry professionals, and foster even greater emphasis on sustainability at graduate schools around the world.
Teams of graduate students are invited to submit a two-page prospectus in February that outlines an innovative financial vehicle that addresses a sustainability challenge and meets the requirements of an institutional investor (social operating enterprises are not applicable). Each prospectus should appropriately address the guidelines provided. Ten finalist teams will be selected from the pool of submissions and announced by March. Finalists will present their proposals to a panel of judges at Morgan Stanley in New York on April 8, 2022.
As the world’s population approaches 9 billion people by the year 2050, the challenge of meeting human demand for scarce global resources will intensify. Finance has a key role to play in meeting this challenge. Moreover, an increasing number of institutional investors are seeking sustainable investment opportunities for their portfolios. Specifically, these investors seek to identify investment strategies that can meet the financial needs of their organizations by investing in funds, investment vehicles, or direct investments that are consistent with the principles of sustainability and impact. 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. Integral to this competition are first, that you are creating a financial vehicle, and second, that your financial vehicle will have social impact.
Institutions seeking investments may include but are not limited to:
- University Endowments
- Retirement and Pension Funds
- Family Foundations
- Family Offices
The proposal must be a fit for an institutional investor who is seeking:
- Both competitive returns and positive social and/or environmental impact
- Risk management that is commensurate with the target returns
- Transparent performance metrics for both the financial and social return
- Clear linkage between program outcomes and social impact
The institutions are open to multiple asset classes, including but not limited to:
- Private equity/venture capital
- Real assets
- Public equities
- Fixed income securities
- Microfinance lending and investing
The Kellogg-Morgan Stanley Sustainable Investing Challenge is looking for innovative investment ideas that balance the tension between financial and social return rather than sacrifice either priority. There is no limitation on asset class or investment vehicle and teams are encouraged to think creatively. The focus is on investment vehicles and fund strategies versus companies.
Student Prospectus Submission
Please click on “Submit a Prospectus” to submit your two page prospectus. Remove all identifying student name and school information from the prospectus before submission.
The ten teams selected from the previous round will convene on April 9, 2021 at Morgan Stanley headquarter in New York City for a day-long competition. Each team will have 10 minutes to present its pitch to a panel of judges and will be expected to answer 10 minutes of questions from the selection panel. Presentation suggestions are provided below. The selection panel will be composed of experienced institutional investors and officers of foundation funds and endowments, as well as other professionals in the field. The same selection criteria will be used in the first and second rounds of competition.
For the finals competition, prepare a presentation for the selection committee that lays out your investment strategy and identifies the environmental and/or social impact that your investment vehicle will address. Presentations should:
- Clearly explain how the financial vehicle will achieve the desired social and/or environmental impact defined in the proposal.
- Communicate the details of the investment vehicle including potential market size, strategy for managing risk, target investor, and why the proposed is a fit with their portfolio, financial viability, potential returns, and investment timeframe.
You may include individual team member names in your presentation but please do not include any identifying school information. You may also include a list of organizations/individuals you have consulted.
Opportunity is About:
Candidates should be from:
Description of Ideal Candidate:
Graduate students from around the world are invited to participate in the Kellogg-Morgan Stanley Sustainable Investing Challenge. Teams are limited to a maximum of four members, all of whom must be enrolled in a graduate program at the time of the prospectus submission, and the team cannot include more than one member who is pursuing an Executive MBA. A team may include members from different graduate schools. All ideas must be the original ideas of the team members. Each team is required to submit a two-page prospectus outlining their proposal. From the submitted prospectuses, ten teams will be selected to present at the finals competition. At least one team member should be available to present at the finals competition, if the team is chosen to advance to that round, and all team members attending the finals competition should plan to stay for the entire event. Please note that any team member not in attendance at the finals competition will not share in any prizes awarded to that team.
Entry Submission Requirements
Two-page prospectuses must be submitted in February. The prospectus should outline a unique sustainable investment strategy. The selection committee is familiar with the broad area of sustainable investing, so avoid overemphasizing general observations about this section of the market. A list of required elements is below. Take special note of two short videos entitled “Why You Should Participate” and “Expectations for Your Prospectus.” The judging criteria used in this round is the same as that used in the final competition.
Prospectus Required Elements
- Investment thesis
- Target geography
- Size of addressable market
- Estimate of scalability
- Risk factors
- Diagram of fund or instrument
- Asset class and capital structure
- Fees and incentives
- Target investor pool(s)
- Fund size
- Investment size and investment criteria
- Due diligence process
- Returns and cash flows (If instrument requires concessionary returns, proposed migration path to achieving market rate returns)
- Time horizon
- Environmental or social impact
- Metrics for social impact
Is this competition open to undergraduate students?
No, only students enrolled in a graduate degree program are eligible to participate in this competition. All students on a team must be graduate students.
The following criteria are applicable to both the first and final rounds of the competition:
Creativity & Financial Innovation (25%)
- Has the team proposed an innovative investment vehicle that is designed to drive both returns and impact? We are looking for either:
- An innovative financial structure or
- A known investment approach applied creatively to a problem previously outside the scope or reach of a social or environmental challenge
- What’s interesting about this project? Is it just like a dozen others or truly innovative?
- Does the proposal have a unique capital structure, e.g., including different forms of capital, employing diverse types of institutional investors?
- Does the proposal uncover new ways to drive returns, a new asset class, or a new cash flow or value stream?
Impact and scale (25%)
- Does this provide a scalable solution that can mobilize sufficient capital and forge significant environmental or human impact?
- Are there specific metrics for impact? Is the impact real and persistent?
- Does the impact derived from the proposed approach stem from the financial levers rather than ancillary charitable remains?
- Has the team demonstrated diligence in defining and projecting impact to be derived?
- Does the investment thesis seem plausible?
- Are there real sources of risk-adjusted market rate returns here? (even if considering a gestation period with concessionary returns)
- Could you see institutional investors responding to and funding this?
- Was the thesis thoroughly researched and is there strong evidence of financial depth that incorporates the overall economy?
Quality of due diligence and financials (20%)
- How thorough and deep is the research on the thesis?
- Do the returns and cash flow projections hold water? Has the team demonstrated strong financial logic and validity of key financial assumptions?
- Have the key investment questions relating to returns, asset quality, underwriting, and risk management (both market-based and non-market) been identified and addressed?
- Does the team have the skills needed to execute? Have they defined the skills needed on the investment team?
- Are the proposed fees and incentives reasonable?
- Has the team been clear, compelling, and concise with their proposal?
- For the final event: Have all team members participated in either the original presentation or Q&A?
Deadline: February 12, 2022
Program Starts: April 08, 2022
Program Ends: April 08, 2022
Cost/funding for participants:
$15,000 in prizes will be awarded to the winning teams. Awards will be made for the overall quality of the proposals based on the judging criteria.
- Overall First Place: $10,000
- Overall Runner-Up: $5,000
Along with the overall first place prize money of $10,000, the winning team will be invited to attend and present at the Morgan Stanley Headquarters in New York City, and participant airfare and hotel will be covered by the competition. The conference convenes approximately 3,500 of the best minds in the world to tackle the most stubborn challenges.