In May, the University of Pennsylvania’s Wharton School of Business graduated its first class of MBA students with a new major in Environmental, Social and Governance. The program was created in response to the pressure that climate change is placing on businesses and industries to address related financial risks and profit from the transition to renewable energy.

In addition to the traditional subjects of the Master of Business Administration, such as marketing and finance, the 52 students also delved into topics such as water management, CO2 compensation and greenhouse gas emissions.

Environmental, Social and Governance, or ESG, refers to the way a company’s social and environmental impact is measured and assessed. In recent years, the term has been swept up in the culture wars, with many Republicans arguing that it is a tool to advance liberal policy goals, such as reducing greenhouse gas emissions, rather than maximizing shareholder returns. On the left, ESG has sometimes been criticized as enabling corporate greenwashing.

Wharton, one of the nation’s top business schools, launched the specialization in response to student demand, said Witold Henisz, vice dean and faculty director of the ESG Initiative. In its first year of graduate programs, the major was already the sixth most popular at the school of nearly 20. Today, two dozen faculty members from various departments contribute to the ESG Initiative by conducting academic research, developing industry partnerships and teaching.

While the professors’ backgrounds range from law to policy, make no mistake: “This is ESG for business,” Henisz said. “We’re not training people to be environmental scientists.”

The program is designed to teach students how to identify where and when ESG factors affect the bottom line, Henisz explained. About 80 percent of the school’s MBA students go on to careers in consulting or finance, where they increasingly must consider how rising temperatures, climate policy or environmental legal battles are threatening companies’ returns.

But it’s not all about risk. The climate crisis presents startups with ample growth opportunities, Henisz said. The Apples and Amazons of tomorrow could be green tech companies, and he hopes they’ll be staffed by Wharton graduates. “We don’t know for sure what they’re going to be, but it’s clearly going to require innovation,” he said. “Some people are going to get fabulously wealthy and make progress on climate transition.”

Where there’s innovation, there’s a need for capital. To achieve a fully carbon-free energy system by 2050, the world will need $215 trillion, according to a BloombergNEF analysis. The number of climate investment funds has exploded in recent years, with more than 70 percent of their total value coming from funds launched since 2020, according to data from investment research firm MSCI. It’s no surprise that careers in green investing are becoming increasingly exciting for MBA students, Henisz said.

Jyotika Chandhoke was one of the students who graduated in May with the MBA ESG major. The 27-year-old now works at Burnt Island Ventures, a fund that invests in water technology. When she first studied business as an undergraduate five years ago, careers in energy and climate were far less popular, she said. Today, she thinks investor interest, demand for staff and higher salaries have made the field a less risky path for new graduates.

“There is a general interest in the sector now because the economics are favorable,” she said.

William Lizzua, CEO of EnergeiaWorks, a recruitment agency, said the demand for people with an ESG background will continue: “There is no going back from the energy transition, so we need more people.”

The Biden administration’s Inflation Reduction Act has sparked a “clean energy boom” that could create jobs in the coming years. Investments generated by the IRA could create more than 9 million jobs over the next decade, according to an analysis by the Political Economy Research Institute at the University of Massachusetts Amherst.

Of course, not all of these jobs require an MBA, and many are highly technical. Lizzua noted that electricians and engineers are particularly sought after these days. However, every project needs finance teams, especially in the clean energy sector, where complex financing structures use debt, equity, and government subsidies.

Energy isn’t the only sector taking on ESG roles. Some MBA students are also choosing to pursue careers in corporate sustainability in industries like manufacturing or retail. When Lizzua founded EnergeiaWorks in 2010, it was rare for companies to have dedicated sustainability teams. Today, nearly all Fortune 1000 companies do, and they’re actively hiring, he said.

Caroline Haley spent the summer as a sustainability intern at ELF Beauty. She has a passion for vintage clothing and her family is in the recycling and packaging industry, but it wasn’t until recently that she considered bringing sustainability into her professional life.

“I wanted to give more purpose to what I was doing professionally, more focus on my mission,” she said. “I wanted to do something that would make the future more livable.”

The 27-year-old, who will begin her second year as an MBA student in August, only considered MBA programs with climate and sustainability tracks. She said she found Wharton’s focus on ESG attracted business students with a similar mindset. “It helped build a community” outside of the classroom, she said. “That’s where I got the most out of it.”

Across the country, more students are seeking paths from MBAs to sustainability jobs. At Duke’s Fuqua School of Business, Katie Kross coaches students seeking positions in renewable energy, climate engineering or sustainability. Kross, the director of Duke’s Center for Energy, Development and the Global Environment, said those industries are recruiting, but they still don’t have a solid pipeline for students.

“The climate crisis is here, it is urgent, and there is still a lot of interesting work to be done.”

Traditional MBA career paths like consulting and investment firms have a tried-and-true career ladder for new grads. While consulting firms begin recruiting Duke students nearly a year before they graduate, careers in the climate sector come with more risk and uncertainty, Kross said. It also requires more outreach, networking and initiative from students to find the right role. “A lot of the jobs that are being created are brand new,” Kross said. “So the students who pursue them are forging their own path.”

Some students might be tempted to take the traditional MBA route and put their interest in sustainability on the back burner. Each semester, she assures students that they don’t have to wait. “The climate crisis is here, it’s urgent, and there’s a lot of interesting work to be done,” she said.

The students she has advised have gone on to hold sustainability positions at Fortune 500 companies, climate tech startups that have raised millions in funding, and global renewable energy companies. “We need everyone if we are going to solve the climate crisis: We need finance, entrepreneurs, marketers, engineers, scientists, policymakers,” Kross added. “We need all the skills in all the disciplines.”

At some universities, students are encouraged to learn from departments outside the business school. MIT’s Sloan School of Management offers MBA students the opportunity to earn a certificate in sustainability by taking campus-wide electives ranging from policy to energy systems. In addition to electives and core courses, Sloan’s sustainability students are paired with companies as part of a hands-on “sustainability lab” course.

The program has grown steadily since its inception in 2010, said Jennifer Graham, senior associate director of the MIT Sloan Sustainability Initiative. Today, nearly 100 students earn their certificates each year. More bachelor’s degrees in sustainability have also been added in recent years, Graham said, allowing students to work in the field for a few years before earning their MBA.

“It’s one thing we look at as we strategize,” she said. “How do we accommodate students who are pivoting toward climate and sustainability, while also accommodating the needs of students who are having that experience.”