How student-run ESG funds teach sustainable investing

The Hindu

4 days ago

In business school, reading Environmental, Social, and Governance (ESG) case studies may introduce the concepts, but it does not replicate the real-world pressures of active investing. In today's classrooms, however, students are no longer passive learners but active investors, taking the reins of student-managed ESG funds. At many MBA programmes, students are deciding whether to back a promising energy start-up despite its murky supply chain or divest from a once-stable company now facing climate-related lawsuits. Simulated through student-run ESG funds, these choices are making sustainable investing a lived experience rather than an abstract concept.
These initiatives immerse students in live decision-making with donor-backed capital or mock portfolios where every buy and sell carries reputational stakes. Students are placed squarely at the intersection of ethics, analytics, and risk, resulting in an education that's high-stakes while being hands-on at the same time.
Experiential learning
Starting out as extracurricular CSR clubs, experiential ESG has matured into a cornerstone of business education. A decade ago, sustainable investing was often a single elective or a guest lecture within traditional finance modules. Today, the process of building and managing ESG portfolios that rival professional standards is undertaken by entire cohorts. It reflects both corporate priorities and growing student demand. Programmes like NYU's Impact Investment Fund entrust students with actual donor capital and allow them to vet opportunities, perform due diligence, and track long-term performance. Competitions like the Turner Impact Portfolio Challenge have added a dynamic, competitive edge to ESG literacy.
At the heart of these initiatives is a simple but powerful idea: learning by doing. MBA cohorts typically begin by allocating a simulated or real portfolio across sectors. They then apply ESG ratings from agencies such as MSCI and Sustainalytics. Thorough stakeholder mapping and an understanding of corporate net-zero targets is required for each investment decision. Regular reviews mimic real-world portfolio management, where teams must rebalance holdings in response to market shifts and ESG controversies. Faculty advisors push them to defend positions, manage compliance considerations, and consider risk-adjusted returns. Such immersive setups simulate the complex tensions between profit, ethics, and long-term impact.
Informal incubators
The results can be seen beyond the classroom. Many studies have reported improved job prospects for students involved in such programmes. The ripple effects also move into industry and society. Student-run funds influence asset managers and even corporate boards as their visibility increases. Companies are increasingly aware that tomorrow's leaders — trained through these ESG initiatives — will demand higher transparency and responsibility. These funds also serve as informal incubators for innovative ESG strategies, which often find their way into mainstream investment frameworks.
The demonstrated success of student-run ESG funds shows that immersive learning can close the divide between theory and practice in powerful ways. But these programmes must scale — becoming more accessible across campuses and integrating interdisciplinary expertise from climate science to ethics — to truly prepare leaders for a decarbonising world. As ESG investing becomes more sophisticated, so too must the curricula that shape its stewards. The next frontier is clear: to empower every MBA student to understand sustainable finance and drive it forward with confidence, precision, and purpose.
The writer is Dean at Badruka School of Management (BSM), Hyderabad.