Fletcher’s GOAL Team Runner Up in Kellogg-Morgan Stanley Sustainable Investing Challenge

By Sarah Foote
 

Each year Morgan Stanley holds the Sustainable Investing Challenge in conjunction with Northwestern University’s Kellogg School of Management. Graduate students around the world are invited to submit investment ideas that will resolve an environmental, social, and governmental issue. Student competitors from schools such as Yale, Columbia, and Northwestern compete and put their classroom knowledge to the test. In the process, they also create real solutions to problems around the globe.

Fletcher School students Kathy Huishan Hu, MIB’23, from China, Olivia Luciani, MALD’22, from the United States, Riya Mehta, MIB’23, from India, and, Nino Sakvarelidze, MALD’23, from the country Georgia, met while competing in the MIT Retail Conference Unilever Case competition during the spring semester. That team also took second place. The group—all interested in finance, investing, and sustainability—decided to compete in the Morgan Stanley Sustainable Investing Challenge shortly after finishing the retail and other competitions. The four students (the only all-female team in the Morgan Stanley competition) created the GOAL Team.

After running two ideas by Fletcher Professors Jacque, Jaffe, Kates-Garnick, Schena, and Tran the four decided to pursue the environmental challenge of cleaning abandoned oil and gas wells while financing the work with carbon credits.

“This is a problem that not many people know about,” Kathy said. “After writing a blog post with Professor Jaffe and conducting more research, we decided to pursue this idea. We focused on documented but abandoned oil and gas wells in Pennsylvania because there is a large concentration of the structures in the state. We found that these decommissioned structures do pose a threat to public safety because they leak methane and arsenic and are contaminating the ground soil and air. The wells also contribute to climate change and even though very rare, they can explode.”

“There are more than three million abandoned wells in the US. Only a small percent of the wells in the US are documented because they were drilled before the legislation was passed where they had to be documented with the government,” Nino said. “These wells are not talked about in the press but do cause quite a bit of damage and that’s another reason we decided to pursue this topic.”

Speaking with over 40 people over two months, and conducting online research, watching YouTube videos on oil wells, the group then began work on their two-page perspective on how to plug the abandoned oils wells in a financially feasible manner.

“We became passionate about the project. This isn’t a problem just in the US—it’s all over the world. We wanted to find a way to help clean up these orphaned wells. If governments don’t create more regulations on these wells, more will be abandoned in the future—creating environmental and many other issues,” Riya said.

Olivia added, “We calculated the amount of carbon emissions sequestered per acre based on location, blend of trees, method of planting, and tree age. This combined with the costs of forestry management to build out our cash flow and impact assessments. We also discussed scaling and impact KPIs.”

Their plan is one where investors can use private equity funds to plug the decommissioned oil and gas wells and then clean and reclaim the land. Reclaimed lands will then be reforested, used to generate carbon credits, that will be eventually sold on the voluntary market.

“The idea is to attract environmentally conscious investors,” Nino said. “The funds invested would be used to plug the oil wells, to reclaim the land, reforest the land, and then create carbon credits. This is the interest of many companies because of the net-zero pledges that they are making. They are interested in buying this high-quality carbon credit to offset their carbon footprint. It also makes the land more valuable when it is cleaned up. Selling the land is another way to generate revenue.”

Riya added, “Carbon traders have a stock exchange where they trade carbon credits. It’s an exciting new market. The financing gap is huge, but we need to plug these wells as very few are being plugged each year.”

“By plugging the wells, methane is no longer released into the air and this creates methane credits for companies to buy for their offset programs. Many organizations have pledged to buy these credits to become carbon neutral,” Kathy said.

“We practiced our pitch with Professor Tran and many others, including our classmates as well. Several of them heard our pitch, gave feedback on the presentation, and helped us work out technical issues. We were lucky to be able to consult with several professors internally,” Olivia said.

After searching many buildings on campus to find the best WIFI connection, the team gave their presentation to the competition’s judges by Zoom. They strategically did not watch the other student presentations as a way to stay focused on their own.

“We worked well together as a team, and that’s a necessary attribute to winning any competition or to succeeding on any given project,” Nino said. “Despite the energy and time invested in the competition, we will be sure to enter other competitions together next year. We’re especially grateful for Professor Schena’s help. He took calls from us on any given day, even on Friday nights. He was never too busy to help us. Or to help any other Fletcher student.”

“We had a great team dynamic,” Kathy said. “Because we had an understanding of each other and our strengths from the other competitions, we were able to succeed.”

Olivia said, “This was a great opportunity to gain experience with private equity models as well as socially responsible investing. Fletcher's unique perspective, culture, and blend of course offerings helped with this.”

The Judges listened to all of the pitches and asked questions to better understand how these proposed financial solutions would work. The Fletcher took home a $5,000 prize for their second-place finish.

Fletcher’s GOAL Team idea has generated interest from the judges and students plan to meet them in the near future to discuss the feasibility of the project or any other opportunities within the field of Finance.

Fletcher’s Institute for Business in the Global Context supports students showcasing their sustainability, finance, and casing talent in such prestigious competitions. Every year, student teams form to compete and represent the best of Fletcher in the CFA Institute Research Challenge and The Turner MIINT (MBA Impact Investing Network & Training). We are so proud of Team GOAL and their accomplishments!