Tom Vander Ark: For anyone who has read my work or listened to our podcast, it’s clear that I’m deeply passionate about sustainability. Growing up, I spent countless hours exploring nature and learning about the environment, sparking a lifelong fascination with how humans interact with and impact the planet. My first job was helping run an after-school program on environmental stewardship, and my early career revolved around creating curriculum connections between sustainability and economics.

This passion for sustainability has guided every decision I’ve made, from building learning models to advocate for green schools to working with organizations focused on the intersection of education and climate action. I’ve always believed that sustainability is not just a topic to teach—it’s a lens through which we can reimagine education and the future of work.

For these reasons, I’m thrilled to sit down with Dr. Julie Anderson, Director of the Master of Science in Sustainability Management at American University’s Kogod School of Business. A former leader at BlackRock and a champion of sustainability finance, Dr. Anderson has dedicated her career to embedding sustainability into business education and preparing future leaders to navigate this essential megatrend.

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In his annual 2018 letter to investors, BlackRock CEO Larry Fink made the case for sustainability finance. In his subsequent letters in 2021, 2022, and 2023, he made the case for ESG—environmental, social, and governance—as a framework for measuring a company’s performance in three key areas: its impact on the environment, its relationship with people, and society.

Fink defended that position against some pushback starting in 2022 and 2023 when Dr. Julie Anderson was leading sustainability at BlackRock. For the last two years, Dr. Anderson has been directing the Master of Science in Sustainability Management program at the American University Kogod School of Business. She has made the case that sustainability has emerged as a defining megatrend that is fundamentally reshaping how organizations operate, compete, and create value.

Despite an administration that’s leading a pushback to ESG and sustainability finance, Dr. Anderson is here to tell us why sustainability finance and the competencies associated with it ought to be central to business education.

So, is ESG dead? You argued in a recent piece that it’s not dead, that it is a megatrend and an important framework for how value is created on Earth.

Julie Anderson: Yes. I think potentially the term ESG may be dead or at least dying. It’s caused a lot of trouble as we try to define these non-financial factors that could affect a company and how it’s valued. It got tangled up in a lot of different things, as you alluded to, including politics. But the megatrend itself is here, and we’ve done a lot of research.

We’ve conducted a survey of businesses to determine how they’re thinking about sustainability and whether it still matters to their business. I’ve found that it used to be a discussion between values and value. An investor would have personal values about, as you mentioned, the environment or a social issue and want to invest accordingly.

Traditional investing is based on value—are we going to generate profits and a return on our investment? I would argue that now they have blended. So many people believe in climate change and the transition to a low-carbon economy that those beliefs are going to drive value. Values and value are becoming part of what investors should be looking at.

Tom Vander Ark: I think what Larry Fink did so importantly is say that stakeholder capitalism—this broader view of sustainability finance—makes sense as a long-term investor. A focus solely on short-term profits doesn’t take into account any of the costs or value created more broadly. He was arguing for a broader lens on what value creation means. I appreciate that he was early in pointing out the tremendous cost being racked up in the environment as a result of two things, I think. One, just a focus on profitability, and two, government subsidies for extractive industries. So, I think he did an enormous good in making this case. Even though, as you said, he has backed off a bit from using ESG, he’s still an advocate for stakeholder capitalism. Is that fair?

Julie Anderson: Yes, definitely. And I do think he was a visionary. I think one of his roles as the leader of the largest financial services firm in the world is to inform investors and clients—because he has so many of them globally—of these future trends that will affect their return on capital. What he was seeing and needed to say was that the secondary effects of burning fossil fuels have the potential to threaten life on Earth.

And if you’re going to threaten life on Earth, you’re going to threaten all of our investments. So, this is indeed a macro backdrop. We think about GDP growth or inflation as something that’s a macro effect on the returns on our investments and growth. But he was basically saying fossil fuels, if we don’t get our arms around reducing the effects, will massively affect every investment.

What started the conversation was really getting people talking. One of the things you do with our students is look at any major global energy company—Chevron, Shell—go to their website, and the first thing on the page is that they’re concerned with the transition away from fossil fuels and toward clean energy. These are brown energy companies, and they see the writing on the wall. They understand that this is something we need to slowly transition away from. Even they are trying to put their resources toward it. I think that speaks volumes for the transition we need to make.

Tom Vander Ark: I should do a quick disclosure that I was an employee of Amoco while earning my energy finance degree back in the ‘80s. So, I’m a product of brown energy, and I think I came to my understanding of the importance of sustainability finance much later in life than you.

Julie Anderson: All of us, quite frankly, of our age. The first 20 years of my career in finance were traditional finance. We needed to outperform a benchmark by investing in those companies, countries, or bonds that were going to outperform. I’ve witnessed the change where every major asset management firm that I’ve worked with has tried to say, “How can we now start to consider these non-financial variables that have the ability to have a financial impact?”

So, we’re on the leading edge of this megatrend.

The Importance of Sustainability in Business Education

Julie Anderson: I think, to bring it back to the point of our conversation today, that’s why it’s so important for education. We’re in the early phases of this, and the ramp-up and the sheer manpower and knowledge that we’re going to need in the workplace to transform every single industry is enormous. That’s one of the reasons I left BlackRock and came to the university—to start educating students so that they could be the future leaders of these companies and make these difficult and costly changes.

Tom Vander Ark: So, are you a lone voice on sustainability at American, or has this become the point of view of at least the business school?

Julie Anderson: I am not the lone voice. I am one of many voices, and one of the reasons I came to this university is because the master’s program that I’m now the director of—the Master’s in Sustainability Management—is one of the longest-running programs in the country. It’s been around for 12 years now.

American University has always put sustainability as part of its flagship programs, and it’s embedded throughout the curriculum. Even our MBA, which is a traditional MBA, has recently improved 70 ranking points with regard to sustainability, so it’s one of the most sustainable MBA programs. It’s embedded in the curriculum, and the master’s program that I run is focused on this entirely. Having the university and the business school firmly behind this is one of the greatest strengths. And, of course, our location in Washington, D.C., where all the policymaking goes on, is why the school was particularly attractive to me.

Tom Vander Ark: So, two points here. I guess one is there’s a framework for sustainability, and it sounds like that’s central to your program and, more broadly, business education at American. Number two, it suggests that employers really want sustainability smarts. Is that true? Maybe you alluded to it earlier—energy companies may need a sustainability manager that comes to you with sustainability expertise. So, do employers really want these competencies, and what are they?

Skills and Competencies for Sustainability

Julie Anderson: Yeah, so when I came here, I came with a business view, and I run the master’s program as a business. I always tell my students that they’re both my customer and my product, right? They’re coming to me, and I have to deliver to them an education because they’re paying me for that. And then I have to deliver them into the workplace—they need to be employed. That is the stamp of validation that the education we provided matters. So, when I came here, I really wanted to approach it from a research perspective. I started to look at the supply and demand of green skills. LinkedIn does a great annual report called the LinkedIn Green Skills Report.

They have been showing that there’s a gap—there are more companies out there seeking positions to be filled with green skills than there are candidates with green skills listed on their LinkedIn profiles. The gap is wide and widening. So, I knew there was a demand. And when I talked to LinkedIn, they were saying that they don’t have any more details on the artificial intelligence of their web platform. So, I decided to run a survey, and we ran the Sustainability Skills Survey last year. We’re getting ready to launch it again in the spring. The goal was to really find out what businesses needed help with—what they were looking for. We asked, I think, almost 40 questions, and it really did focus on skills and competencies.

So, I think the first thing is: What are skills, and what are competencies? Skills are what you know and are able to do—specific knowledge and abilities that are applied in day-to-day tasks. Competencies are how you behave and perform—behaviors that successful employees demonstrate on the job. From a master’s program perspective, it really is about the entire individual. Let’s start with those competencies, and this tells you the breadth and depth of what companies are looking for. The top three sustainability competencies that they want are change management, stakeholder engagement, and systems thinking. That is a hint as to how big this undertaking is and how much they need to transform their organizations.

Tom Vander Ark: What about accounting? Doesn’t sustainability finance require a new set of metrics, a new dashboard, a new way to model value creation? Is that on the list or not?

Julie Anderson: When we look at those skills, ESG risk management and reporting, in particular responding to regulatory requirements, were the number one skill that companies are looking for when hiring new employees. Also, carbon accounting and reporting—again, there are growing compliance demands, and they’ll have to do that now or in the future, so they need to prepare for that. Additionally, sustainability and climate finance were on the list. One of the big things with regard to the sustainability skills that came back was that if you looked at the bar chart of the skills we were surveying for, it was almost flat, which means that they need help with everything.

That was notable, but I will also call out—you mentioned finance. We could also slice and dice the data from these companies. We could look at C-suite level executives. The biggest area of concern was budgeting and cost—how are we going to pay for this? That was at the CEO level, the CFO level, and even in operations—how are we going to pay for the transition that needs to happen? I also run two more surveys because I really want to understand what the students who are coming to this program are looking for. So, I run an incoming student survey and an outgoing student survey.

The incoming student survey overwhelmingly says they want to do both management consulting and finance. There is a big need to blend the two—what’s going on in the environment, what do I need to do with regard to my energy or water usage, and how am I going to execute that from a financial perspective within the financial constraints of a business?

Tom Vander Ark: When I taught the capstone business class at the University of Denver, I taught a pretty traditional net present value and return on investment approach to our cases. Is there a new and better way to evaluate value creation of projects and enterprises?

Julie Anderson: It is a bit complicated as to how you take these non-financial variables and fold them into financial forecasts. I think the biggest thing to think about is where the risks lie. Risks are opportunities. You are either adjusting your financial model because your company in a particular industry is facing specific risks, or you’re managing those risks. What will happen if those risks materialize?

We go into a lot of depth about the source of climate-related risks. Some are regulatory, some are physical risks, and some are transition risks. We also talk about business strategies. Are you adapting to the potential climate risks that you’ll face as a company? Are you taking actions to mitigate your own carbon footprint? Those do need to be translated through to financial models, and that is done through the cost of capital and adjusting those, as well as probability scenarios. Risk and financial modeling are about looking into the future—it’s about having a crystal ball and trying to determine what’s going to happen.

One of the biggest challenges with climate change and these social and environmental issues is that we don’t have prior experiences to put into our models. Usually, you say, “Oh, in a recession, the stock market sells off by this much, and bonds rally by this much.” We don’t have a prior catastrophic climate event that we can say, “This is how the bond market or the stock market will react.” So, it’s very difficult. There are a lot of future unknowns. Trying to put numbers on that is very challenging, and that is why the focus is on risk.

Tom Vander Ark: What about the idea of a double or triple bottom line scorecard? I see education impact investors using a triple bottom line. Impact capital managers at Dan PCO stood up as a group of 80 investors, most of whom use a double or triple bottom line scorecard. Is that a part of the equation of using a broader set of metrics for measuring progress and value creation?

Julie Anderson: When I was at Invesco and we were taking the team of analysts and trying to figure out how they were going to do this—how they were going to add these new variables into their model—they had a one-through-five-point system for the financial side. The analyst would rate an investment one through five. Five was heavy overweight, strong outperform. Four was outperform overweight. Three was neutral. Two was underweight. One was do not own.

What they did was create the flip side of the same scoring system from an environmental, social, and governance risk perspective to say five is leader in the class, best in the industry. Neutral is there are no risks, and again, a one is do not own—there are significant risks. I would say that approach was early days. Now it is much more about the integration of these variables into the financial model, and that’s where it just gets into the details.

Another aspect of the megatrend and investing is the idea of fiduciary responsibility. You have a fiduciary responsibility to your clients, and that is that you won’t lose their money or take on undue risks. Part of how people have always done that is through stakeholder engagement or engaging with the companies they’re investing in. Increasingly, traditional investors who aren’t focused on a sustainability-related product or fund are also using those questions in their engagement with these companies.

To circle back to your original question, which I think is about data, I do stress a lot of times in my career—I started as an underwriter, but then I was a trader, an analyst, and a portfolio manager—if there is data, it will be traded upon. The fact that we have this whole new pool of data is almost like the most exciting thing that could happen to finance. We’ve been looking at the same GAAP accounting financial reports for decades, and now we have this whole new pool of data with which to hopefully glean an edge over our competitors and find out why this company might have superior returns than its competitors, and then go ahead and overweight that for our clients. It’s almost like a kid in a candy store, having students that understand it and can help with this data—reporting, aggregation, everything. And this is going to lead into a conversation about AI. Data is how investors get ahead and outperform an index. It helps them make decisions, and they’re definitely going to be looking at ESG data.

Tom Vander Ark: Jules, I want to underscore the three competencies that you said came out of a new study on the green skills gap. It’s change management, stakeholder engagement, and systems thinking. Those are really interesting. I wouldn’t have even put those in the top five if I thought about sustainability finance. They look surprisingly similar to what you would hope an education leader would have in their course of study because they’re critical for any public leadership role. Did you find that surprising? Are those skills and topics that you had to learn about in order to teach, or did you feel like you brought those competencies with you to American? Say a little bit more about those because they’re so interesting and I think transferable to many other public leadership roles.

Julie Anderson: I really want to emphasize the educational aspect of this and how holistic it is. Our survey did ask about skills and competencies across business skills, interpersonal skills, and sustainability skills, and how important each of those were. Business skills came out first, then interpersonal, and then sustainability. But I wanted to ask across all of those dimensions because I really do believe that when you’re educating students at a master’s level, you’re really transforming the value that they as individuals bring to the table. When you get to master’s-level thinking, you really have to go a lot deeper, and these skills are critical to that. I actually lived them. Now that I read them in black and white, I realize that when I moved up into the senior leadership ranks at companies, this is what I lived every day. I had stakeholders that I had to engage with throughout a multinational firm. I was working on a project between portfolio managers in Hong Kong, Toronto, and Atlanta. They all had a different vision, and I was asking them to change. I had to manage that change I was asking them to make. I had to engage with each of them and find out what their concerns and risks were. And then, from a systems perspective, I had to consider how this would ripple through the entire global organization.

So, you’re absolutely right. These are fundamental business concepts, but I think because sustainability is fundamentally changing the way we do business, these are the ones that are going to matter and help those companies that do it well become leaders. I guess the one other thing that I wanted to mention from the skills survey was how sustainability skills were being discussed and what we found. The big picture was that it has made a massive shift. Companies used to think about having sustainability reporting or a focus on this as a nice-to-have or a marketing initiative.

But what we learned in our skills survey was that now it’s a strategic business priority. Over 62% of the organizations said that sustainability skills are important or very important to the success of their company in the next three to five years. So, it’s definitely moved beyond a nice-to-have. As the survey showed, this is a systemic change, so you need to think about it more holistically.

AI’s Role in Sustainability

Tom Vander Ark: A few weeks ago, we talked to your colleague Casey Evans about AI’s impact on business education, and she’s leading some important work across the School of Business at American. I’d love to have you talk about what that means for you and your program and maybe if it has anything to do with those skills that we’ve been talking about—change management, stakeholder engagement, systems thinking. Do you see AI applications in any of those competency areas? Is AI potentially a new co-intelligence for our work in sustainability education?

Julie Anderson: I like to think that it doesn’t in that respect, which I think is good news. So, if I were to think of skills and competencies, I think AI is going to have the most impact on skills—the tasks, the things that you do day to day. Gathering data, analyzing data—those are more skills-based. Where I think competencies come in, that’s the human element. And I’m quite thankful for that—that AI is not going to take over everything. When you’re managing an organization, it really is about how you’re working with others and gathering and processing data, and that very much has a human side to it.

So, I do think that it has more to do with ESG data processing, risk assessment, and investment decisions. Think about ratings. The data is definitely transforming finance in particular. Then, when it comes to business operations, resource optimization, supply chain transparency, and product design, AI can be useful in all of these elements in a company. The interesting thing is, I would argue that AI and sustainability are similar in this way: they’re not discrete things that we can teach in isolation. This is not a master’s in mathematics or accounting. This is something that is pervasive throughout everything that we do, and that’s true for sustainability and AI.

So, when we think about how we’re going to make sure that we’re teaching future leaders and our students how to use AI, we’re teaching them about it as a tool, and it’s really important. They need to interact with AI critically, creatively, and ethically. Those would be the three things that I would like to stress, and I do stress. We stress that with our students. But how do you do that in the classroom?

I think, number one, is to get the students to recognize that there’s bias. Students have a tendency, when information is spit out and it’s written so well and has citations, to almost take it as truth. One of the things is to teach them to show them how that’s an algorithm and there’s bias, and they need to be able to spot the bias. The second one is to push AI. AI will give you the quickest, easiest answer that its algorithm can come up with. You need to really figure out how to move beyond simple prompts, apply creative constraints, counter arguments, and disrupt its default tendencies. And the third one is to apply critical reflection.

This is a big one for students. How much did this AI enhance their learning and retention of the information, or was it a shortcut? They will only be valued for what they’re bringing to the table. If they’re just bringing AI to the table, they won’t have a competitive advantage for getting that position versus any other student. So, right now, this is my opinion—it’s more about how students should consider using AI. They definitely should be using it. We’re using it in all of our classrooms, but they have to recognize exactly what the tool is, what it’s capable of, and its appropriate or ethical use.

Tom Vander Ark: Reid Hoffman talks about four different responses to AI, and he might argue that we’ve gone from a doomer administration to a zoomer administration. Zoomers typically believe we’re going to be able to invent our way out of the climate crisis—that AI will help solve many of the looming environmental catastrophes. Are you a zoomer on AI? How do you think AI-empowered invention is going to impact sustainability in the next 10 years?

Julie Anderson: That’s a really fascinating question. What America was founded on, essentially, is entrepreneurship. You didn’t come across the ocean not knowing where you were going, with no source of food or water, unless you were a risk-taker and willing to start from scratch and build things. I think that’s in all of our DNA. Everyone who has come to this country comes to take on risk and to try something new.

I’ve long argued that the recent pause—not only from this administration but from global administrations—the pause against regulatory requirements was a good one. I do think that if you push regulation or requirements too quickly, it becomes a data reporting exercise. It doesn’t have impact. If the pressure from the community for these companies to do better exists, you let the companies innovate. So, I do think that the solutions to the climate change problem are not in reporting carbon. I think it is in letting companies figure out, “Okay, I’m going to have to report carbon, and my clients are going to care. How can I improve upon that?” Letting the ingenuity and the entrepreneurship run.

But can AI do that? It’s a really interesting concept because AI is a program, an algorithm, code written by a person. The ability for it to identify future patterns or make connections that our brains can’t do would definitely be a help. So, in my vision of the future, if you’re using the tool appropriately and you can force it to take on complex thinking in a faster way than you can, and it can aid in that creative destruction and creative creation process, I think it’ll be a tremendous help.

Future of Sustainability and Education

Tom Vander Ark: This all makes me think that sustainability professionals, to some extent, have to be futurists. They have to think about these exponential curves, both in climate and in invention. They do have to have a point of view about the role that invention and discovery play in the future so they can weigh potential scenarios against each other. Do you agree that it’s becoming more challenging than ever to do long-term forecasting and place bets based on high levels of uncertainty?

Julie Anderson: Yes. I think the number one way to explain this phenomenon—I attended an industry conference on insurance when I first joined the university. It was at the law school here, and it was a bunch of insurance executives coming together to talk about the industry of insurance. What came away from that was they said that three degrees of warming, if it occurs, would make the world uninsurable. I was blown away by that. No amount of insurance could cover wind protection or flood protection, and massive areas would become uninsurable. There was no financial way they could cover the potential future costs of this.

I do think that it is about looking into the future and saying, “We don’t exactly have the models, but we know that if we had weather patterns like this and now they’re getting bigger and wider and more destructive…” It is that uncertainty that we’re facing, and it’s getting larger. So, that is why there is such a demand for these companies to have sustainability experts.

One thing that I would also highlight here is Kogod’s approach to this. It is important that a sustainability program is not in the College of Arts and Sciences—it is in a business school. Why is that the case? We believe strongly that future leaders will have to be able to have a respectful, informative, and engaging dialogue with the three stakeholders. What does that mean? You need climate scientists and environmentalists at the table—they’re the ones that understand the potential changes we’re going to face and how it’s going to disrupt agriculture. You also need policymakers—how is policy getting done? How can we influence policy? How can we ensure that policy is set up in a way that achieves the outcomes we want? None of this will happen unless you change the way capital is allocated and business is done.

So, that approach is critical if we’re going to solve this problem. It’s a huge uncertainty. We need informed individuals that can have a dialogue with all three of those participants at the same table, which in today’s day and age seems almost impossible, but it is what needs to happen.

Tom Vander Ark: All right, Jules, if you were on a portrait of a graduate committee for Montgomery County and they said, “As a finance professional, we’d like your advice on what we ought to teach in high school in economics and business and math,” what would your advice be? I’m curious how any of this translates into what high schools ought to be teaching.

Julie Anderson: Yeah. Math, I think, is outside of my realm. Math is a core competency, and computers are taking over, but you still need to understand it. I think that doesn’t change. Economics is an important one. I actually brought it up in my classroom last week. We were talking about some climate-related news, and it seemed much more about a polarizing topic between the two parties and what they were debating. I said, “Well, wait a minute. Let’s think about how this policy will affect economics.” I have my undergraduate and master’s degree in applied economics, so I’m an economist—a recovering economist at heart. I do believe that the way that economics dispassionately looks at the pros and cons, the supply and demand, and likely outcomes is a phenomenal tool and should be used when looking at climate solutions and climate policies.

Economics is big. I think business, sadly, is under-taught in high schools. What I find at the undergraduate level and at the master’s level is that very few people understand the basics of finance or business. They typically think when they’re young that business is an accounting class, and they really don’t understand the basics of what the purpose of a business is. I even explain at the master’s level that businesses have to be profitable—that is their number one goal. And why is that? So, I do think that having business and finance embedded in the high school level is critical.

Think of it this way too—if you’ve never even been introduced to business or finance, how on Earth is a young person, when faced with picking a major or a school, going to decide to major in finance or business when they really have no perspective of just how important it is? So, I would pull both of those deeper into the high school education.

Tom Vander Ark: Let’s try to summarize a couple of takeaways. One is that sustainability finance is a megatrend. It didn’t go away, and it’s not going away. We may think about it and talk about it in different ways, but it’s critical. It should be built into every pathway in both high school and college. It incorporates critical competencies, including change management, stakeholder engagement, and systems thinking—things that are critically important for sustainability in any sector. What else? Any other takeaways for education leaders?

Julie Anderson: The big focus in that summary, which I think was really well done, is that this is multidisciplinary and that we need to integrate it. The second thing I would stress, and we do here at the MSSM, is an experiential learning focus. A part of the feedback that we get from the business side and the student side is that students want more hands-on, real experiences—case studies, group work, internships. Companies need to see that students have the ability to translate what they learn in a classroom into a real-life situation. So, that should trickle down as well. I would argue that you could do more of that in high school.

Tom Vander Ark: Amen. My tagline is “taking on problems that matter to you and the world in diverse teams using smart tools.” I love to end on that thought of experiential learning and sustainability education. We’ve been talking to Julie Anderson from the Kogod School of Business at American University. For more on the cool things happening at American, check out our conversation with Casey Evans a couple of weeks ago. They’re also a leader in terms of integrating AI across the curriculum. Jules, thanks so much for being with us.

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Julie Anderson

Dr. Julie Anderson brings over 25 years of global asset management expertise to her role at American University’s Kogod School of Business, where she serves as Director of the Master of Science in Sustainability Management (MSSM) program. As a distinguished business strategist specializing in ESG and Sustainability, Dr. Anderson combines extensive industry leadership with academic rigor to prepare students for careers at the intersection of business and sustainability.

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