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Fresh Coast Capital, made of students from Kellogg's Part-Time Program, won first place at the Morgan Stanley Sustainable Investing Challenge. From left, Nathen Holub '14, Nicole Chavas '15, Laura Brenner Kimes '15 and April Mendez '16.

Morgan Stanley Sustainable Investing Challenge winners

Greening brownfields

Kellogg Part-Time students win Morgan Stanley Sustainable Investing Challenge with environmental plan

By Paul Dailing

4/11/2014 - The depressed former steel town of Gary, Ind., might seem a world away from Morgan Stanley’s glitzy Manhattan headquarters, but a plan to save the former won big at the latter.

Fresh Coast Capital, a team of students from Kellogg’s Part-Time Program, took the top prize in the Morgan Stanley Sustainable Investing Challenge with a plan to turn former industrial sites into profitable – and environmentally sustainable – tree farms.

The win was the second in a row for a Kellogg team in this competition, formerly known as the International Impact Investing Challenge when Kellogg founded it in 2011. Morgan Stanley began sponsoring the competition this year.

At issue are brownfields, former industrial sites often contaminated with low concentrations of waste or pollution. As big an environmental problem as a social one, the blighted sites attract crime and lower property values.

“Even if you make a small impact on one brownfield, there are so many and they have such a huge economic impact for the community,” team member Nicole Chavas ’15 said.

A compelling model

Fresh Coast’s plan would plant farms of hybrid poplars on currently vacant brownfields. The poplars not only help remove certain contaminants from the soil, but offer a profitable product to lumber yards and biomass facilities.

“In order to have the most impact and still make a profit, that was a really, really compelling model,” team member Laura Brenner Kimes ’15 said. “It allowed a 10-, 20-, 30-year solution for places like the city of Gary, which gives them something to do while they’re rebuilding the community.”

Chavas, Kimes and teammates Nathen Holub ’14 and April Mendez ’16 came together in Professor David Chen’s course on impact investing, where Chavas offered brownfields as a social issue the group could tackle. The decision to enter the Morgan Stanley contest came after they realized they were onto a solution.

“Week seven, we came upon the tree farm,” Chavas said. “Week eight, we applied for the contest. So it was kind of a mad rush.”

Speaking for the trees

Finding which of the estimated 425,000 brownfields in the U.S. would make profitable tree farms is a trickier matter.

The group identified several requirements:
  • The soil should be of a type where poplars can grow.
  • The contaminants should be of a type the poplars can help remove: petroleum, solvents, metals and pesticides, for example, but not nuclear waste.
  • The site should be near a wood mill or biomass facility.
  • There should not be any redevelopment plans for the next eight to 16 years, so the trees have time to grow.
Odd hours

The four team members work full-time jobs in addition to their degree work at Kellogg. This means the extensive research the challenge required – including more than 30 interviews with industry experts – had to be done at odd hours between work and classes.

“I think the answer is a lot of lunch meetings about biomass,” Kimes said, laughing.

Kimes and Chavas said without Chen’s course, there would have been no win at Morgan Stanley.

“I just felt so grateful that at Kellogg we had a class on that topic,” Kimes said.

Read about more recent case competition wins: