MBA 'Energy Detectives' Help Companies Cut Costs

Sustainability has become the new buzzword at business schools in the past few years, with dozens of MBA programs offering classes, clubs, and projects on the topic.The number of schools that require students to take a course dedicated to business and society issues has doubled since 2001, jumping to 69 percent in 2009, according to the Aspen Institute's 2009 Beyond Grey Pinstripes Survey, a biennial ranking of the best green MBA programs. Beyond the classroom, student interest continues to grow. There are 170 student-run chapters of the sustainability-oriented nonprofit Net Impact at graduate MBA programs around the world, and students are doing everything from completing new responsible management certificates to taking electives on such topics as Sustainable Supply Chain Management, according to a 2010 Net Impact report.

One organization that has responded to the groundswell of interest among students is the Environmental Defense Fund, a Washington (D.C.) nonprofit that runs the Climate Corps summer internship program in conjunction with Net Impact. Every summer, the EDF selects a group of MBA interns to uncover potential energy efficiency improvements at companies, asking the students to become energy detectives, examining their summer employer's lighting, computer equipment, and heating and cooling systems.

The MBA students—known as Climate Corps fellows—then develop in-depth energy-efficiency investment and implementation plans for their host companies, which this year included McDonald's (MCD), Target (TGT), and Xerox (XRX). This past summer was a record year for the Climate Corps program, with 51 interns identifying $350 million in potential net operational savings at the 47 companies they worked for, up from $54 million last year. If the companies implement the 2010 Climate Corps fellows' recommendations, the measures would save more than 400,000 metric tons of greenhouse gas emissions per year, according to the EDF.

Bloomberg Businessweek's Alison Damast recently spoke with EDF Managing Director Victoria Mills, who oversees the Climate Corps program, about how the program has grown since it was launched in 2008. Here is an edited transcript of their conversation.

This is one of the more unusual internship programs for MBA students today. What was the original concept behind the program?

We find that companies know there are opportunities to save money through energy efficiency, but it is finding the time, having the resources, and making the business case that often gets in the way. The Climate Corps fellows are specially trained and have a laser-like focus on energy efficiency, because that is all they do for the summer. By making a compelling business case for energy efficiency at companies, they can help overcome organizational barriers, cuts costs, and reduce greenhouse gas emissions.

Do you think this program is filling a void in the MBA internship world?

The interest among MBA students is tremendous, but what has been lacking is the opportunity for them to get real-world experience building the business case for sustainability. We're the only internship program I'm aware of where, in just 10 weeks, an MBA student can get on-the-ground experience working across the company and deliver them a customized energy efficiency investment plan for the company. This is not lofty, in-the-clouds sustainability. This is bottom-line sustainability, and this kind of experience translates directly into real résumé-enhancing skills.

How has Climate Corps grown since you started it three years ago?

We started this program in 2008 with seven fellows in the Bay area, and those MBAs found $35 million in cost savings at these companies, by factoring in both the initial investment and the cost savings projected from future cash flows. We realized we were onto something, and the results just kept on getting better. In 2009 we had 26 fellows, and this year we are up to 51 MBAs. In just the first three years of the program, students have identified $439 million in net operating savings.

This program has emerged as interest in sustainability has skyrocketed at business schools across the country. Are you seeing more students applying?

We had 250 applications for 50 spots this past summer. We are seeing an explosion of interest, not only from the dual-degree sustainability programs that have been around for a while, but also from more and more stand-alone MBA programs that are integrating sustainability into their curricula. We go every year to the Net Impact Conference, a group that is our partner in recruiting fellows, and we are just mobbed by students.

What are some examples of some of the energy savings the 2010 Climate Corps fellows identified at companies this past summer?

One MBA who worked at Verizon (VZ) this summer, Ryan Mallett, found that if the company invested in a thermal ice storage system [to reduce cooling costs at the company's Manhattan headquarters], the company could save $9.16 million over the lifetime of the project. At eBay (EBAY), MBA intern Megan Rast identified ways for the company to save $1.5 million by installing new project management software and lighting retrofits and replacing older computers. Another student, Jen Snook, worked at AT&T (T) evaluating the lighting used in about half the company's real estate portfolio. By putting in occupancy sensors, she determined the company could realize an 80 percent reduction in energy costs.

Are any of the companies that worked with the Climate Corps fellows implementing any of their energy-efficiency recommendations after the internship is completed?

Yes. Projects accounting for 84 percent of the energy savings identified by 2008 and 2009 fellows are either complete or under way at the companies the students worked at. We are particularly proud of that figure. It would be a different story if the fellows were making recommendations and going back to business school and the companies were not doing anything with them, but the opposite is true.

What type of jobs are the Climate Corps fellows going into after they graduate from business school?

What we are finding is they are going on to take jobs at institutions or businesses where energy and the environment are key to the business. Ryan Whisnant, one of our 2009 Climate Corps fellows, went on to get hired by the same company he worked for, SunGard, as director of sustainability. Patrica Kenlon, also a 2009 fellow, worked at TXU Energy in Texas during her internship, and she is now director of energy and sustainability at Ann Taylor (ANN). We have about half a dozen examples of fellows who have parlayed their Climate Corps experience directly into jobs in fields they are passionate about.

How big do you envision the Climate Corps program becoming?

We're trying to figure that out now. This is a program that is scalable, and there is plenty of interest from MBA students. Interest is also increasing among companies, and more and more they are seeing the value proposition of Climate Corps and how it can accelerate their goals around greenhouse gas reductions. So I think we could potentially be seeing programs of several hundred fellows a year over the next five years or so.

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