THE BLOG
01/16/2014 04:43 pm ET | Updated Mar 18, 2014

A Big Brand With the Opportunity to Lead on an Increasingly Complex Problem: Climate

Last weekend I enjoyed the opening festivities for a spectacular new building on the Yale campus, designed by Norman Foster to house the Yale School of Management.

YSOM is the "different" business school. From its founding in 1976, it has attracted individuals drawn to complex problems and to a world where business "leans in" to the big issues of our day. Under the rubric, "Business + Society: Leadership in an Increasingly Complex World" and with break-out sessions under provocative titles like "Preparing Leaders for a Flatter World," the conversation spanned big problems where business has a big footprint -- from climate change to inequality.

I imagine it was a heady experience for the current students in attendance. Alumni, in the sessions I attended, demonstrated a willingness to look at complex issues from multiple perspectives, the hallmark of the schools' innovative curriculum.

Just how complex these issues can get was visible in the last session.

The panel was titled "Finance in Society: Markets and Behavior." Two of the featured speakers, Jane Mendillo, CEO of Harvard Management Company, and David Swensen, Mendillo's counterpart at Yale, oversee the largest university endowments on the planet. Their comments illustrate the complexity behind a very hot topic -- amassing financial power to address a real financial risk: climate change.

Mendillo, a Yalie who manages money for the country's "oldest corporation," talked about the kind of stewardship that will allow the Harvard endowment to last another 400 years. She acknowledged students are "excited" about the climate issue--but her job is to maximize returns for Harvard so that other parts of the university--including scientists and policy specialists--might continue to look for answers.

David Swensen, the highly regarded manager of Yale's endowment, said the real answer was obvious: get a price on carbon. However, that challenge, Mr. Swensen believes, resides with government. Once there is a price--albeit in the distant future given the excruciatingly slow pace of the political process--then he will need to offload coal.

Yale Professor Bob Shiller, who was recently granted the Nobel Prize in Economics, weighed in to acknowledge the yawning gap between the power of global institutions and sticky problems like this one. No one institution has the mandate and reach to get the job done.

Dear Leaders of an Increasingly Complex World: I see a great opportunity. The system is perfectly designed for the results we have now. What might we do to change the game?

The two fund managers have managed through remarkably turbulent times. Their success is widely admired--even, envied. From the perspective of Harvard and Yale, they are doing the job they are hired to do exceedingly well. Yet, if the time horizon is really 400 years, what questions should current managers, directors, and beneficiaries of a combined $50 Billion be asking?

The answers require out-of-the-box thinking--and that means the finance faculty need to join forces with their colleagues in strategy and environment. Speakers at an earlier session, "The Path to Resilient Prosperity," could help brainstorm ways for endowments to pick up the pace of change--from engaging in dialogue with carbon laden equity holdings, to asking analysts to take a more serious look at the long term risks associated with business as usual, to requiring outside asset managers to disclose how they are paid--is it quarterly stock price, or something more?

The session ended on a high note: the belief that education can elevate our most enlightened values and ethics--but on the ground we have a classic disconnect. For the current consumers of education, continuing to act as if climate risk is someone else's problem is an issue of morality, not just markets. The student campaigners are already at the door.

Dean Ted Snyder, in his closing remarks, used a sports analogy to talk about the potential to raise our game. In thanking the village of donors, designers, workers and colleagues who worked tirelessly to bring the new campus on line--he described what it feels like when you reach a different, higher level of performance on the field. You can think you were lucky that everything went well, or you can decide this IS your new level of play.

The Dean has set a high bar for his school, whose graduates aspire to influence and lead the world's most important institutions, both public and private. With its peers, the university has unparalleled convening power to move money management to a new level of consciousness about the impact of investment on environment.

The fabulous new building is as green as it gets; how about the actions of its graduates? What game should we--the extremely fortunate consumers of an extraordinary education--play now?