MPA-ESP Students Reach Final Round of ESG Dilemma Design Challenge
Three Master of Public Administration in Environmental Science and Policy (MPA-ESP) students, Fatou Kiné Gueye, Jada Johnson, and Kimberly (Mingyue) Liu, took part in the ESG Dilemma Design Challenge, aiming to apply their classroom knowledge to a practical financial situation. Organized by the Alliance for Responsible Capitalism and co-sponsored by the Erb Institute and Business+Impact at the University of Michigan, approximately 50 teams from universities nationwide participated in the competition. After a stringent selection process, only 10 teams advanced to the final round, including the trio of Gueye, Johnson, and Liu.
The heart of the challenge was based around GeneriBank, a fictional mid-sized regional bank reeling from financial losses linked to climate-related disasters. Wildfires, hurricanes, and other extreme weather events had led to loan defaults and cash flow issues due to the devastation inflicted on mortgage holders and small businesses. Investor groups were pressuring the bank to bolster its climate commitments, emphasizing long-term financial risks. However, in states like Texas and Florida, where ESG initiatives were a contentious subject, the political landscape made it challenging to implement such measures.
There was internal discord at GeneriBank, with employees split between those advocating for robust sustainability policies and others believing that ESG detracted from the core business focus. Adding to the complexity, California’s new regulatory requirements compelled GeneriBank to expand its sustainability reporting.
Each competing team was tasked with creating a strategic ESG roadmap that balanced climate risk management, financial stability, and stakeholder engagement. However, just before the final round, a twist was introduced. Teams had to incorporate the evolving U.S. political environment under the Trump Administration into their strategies, with key ESG regulations being rolled back, such as the U.S. Securities and Exchange Commission’s climate disclosure rule and restrictions on considering ESG factors in investment decisions. GeneriBank’s leadership was now confronted with the challenge of navigating political uncertainty while maintaining financial competitiveness.
Liu discovered the ESG Dilemma Design Challenge and invited Johnson and Gueye to form a team, leveraging their collective interest in sustainable finance, corporate responsibility, and environmental policy. Having worked together previously in workshops and class projects, the team was confident in their ability to tackle the case at hand.
Their academic background laid a solid foundation for addressing the challenge. Liu’s coursework in the Sustainable Investing Research Consulting Project class deepened her understanding of corporate sustainability frameworks, while this semester’s Financial Management class equipped the team with tools to assess climate-related financial risks. By engaging in group discussions, the team broadened their perspective on ESG finance. Johnson further expanded her understanding by enrolling in Emerging Financial Systems this semester to explore how ESG strategies manifest in various financial contexts.
In addition to their academic knowledge, the team drew insights from a stakeholder briefing provided by the competition, featuring perspectives from industry executives, government officials, civil society representatives, and academics. These perspectives illuminated the tensions between voluntary ESG commitments, regulatory uncertainties, and financial incentives, guiding the team in refining their approach to the case.
Rather than pursuing direct political lobbying, the team advocated for positioning ESG as a financial risk management tool. Their strategy focused on expanding green finance solutions, developing market-driven ESG policies, enhancing transparency and accountability, and mitigating climate-related financial risks through AI-driven carbon footprint tracking tools and client partnerships.
The team received feedback from Jason Fraley, chief ESG officer at Huntington National Bank, helping them refine their risk assessment and stakeholder engagement strategy. This feedback session ensured that their final recommendations were aligned with real-world financial decision-making.
On February 1, the team presented their updated proposal to a panel of industry experts, policymakers, and sustainability leaders. The presentation was followed by a Q&A session challenging the team to defend their approach. While they did not secure the top prize, the experience helped them grow and reinforced the significance of sustainability in financial decision-making.
Gueye valued the intense learning experience in financial strategy offered by the competition, highlighting the importance of understanding the financial mechanics behind ESG, even coming from a policy background. The team emphasized that a background in finance is not a prerequisite to making an impact in ESG, emphasizing the evolving nature of the field and the necessity of bringing diverse perspectives to the table to shape the future of sustainable finance.