Ken Pucker, SM ’90

Ken Pucker, SM ’90, joins Christopher Reichert, MOT ’04, for a discussion about corporate sustainability efforts, climate change, and what he believes needs to be done to address these issues. Currently a senior lecturer at The Fletcher School at Tufts University, Ken shares how system dynamics and his time at MIT Sloan influenced his last decade of working at the intersection of climate and capitalism.

For more information on the topics discussed during the podcast, read these recently published articles authored by Ken:

Christopher Reichert: Welcome to Sloanies Talking with Sloanies, a candid conversation with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today.

So, what does it mean to be a Sloanie? Over the course of this podcast, you'll hear from guests who are making a difference in their community, including our own very important one here at MIT Sloan.

Hi, I'm your host, Christopher Reichert, and welcome to Sloanies Talking with Sloanies. My guest today is Ken Pucker, a 1990 graduate of Sloan. Welcome, Ken.

Ken Pucker: Thank you. Thank you for having me.

Christopher Reichert: Ken's had quite a career. He's an advisory director at Berkshire Partners, is a senior lecturer at the Fletcher School at Tufts University, where he teaches Sustainable Business Dynamics, which we're going to talk about a bit today. Ken is or has been a board member at various numbers of organizations, Rag & Bone, a clothing company, Commonwealth School here in Boston, Green City Force, a nonprofit focused on social, economic, and environmental justice, High Meadows Institute, a Boston-based think tank and policy institute focused on the role of business leadership and creating sustainable society.

You can probably hear a theme coming here. Nexite, Timbuk2, formerly Scumbags, which I love, a pioneer in the sustainable bag industry, and a lecturer at Boston University's Questrom School of Business, where he teaches a class, Leading Sustainable Enterprise, and was voted Favorite Elective Professor by the student body in 2020.

So, let's see, where to begin? Well, I should also mention that for seven years, Ken was the Chief Operating Officer at Timberland, a venerable organization as well. Where to begin? I think it's safe to say sustainability is a theme in your work, and have I missed anything that you want to bring up?

Ken Pucker: No, only that I did spend 15 years at Timberland, so pretty much the bulk of my career. The last seven were spent as chief operating officer.

Christopher Reichert: Yes. Sorry about that. Yes, absolutely.

Ken Pucker: No problem.

Christopher Reichert: So, you've spent the last decade working at the intersection of climate and capitalism. Should we start there, and sustainability?

Ken Pucker: I'm happy to. It turns out that I didn't become focused on that space until really about a decade ago. Post-graduation from Sloan, I spent time focused on manufacturing operations in a traditional context. I left Sloan, got a job at Bain, where I worked at the summer between years of business school. They had a practice area there called Bain Advanced Manufacturing. I joined after MIT, only to be released from my duties eight days into my tenure. Though it's often removed from the history books now, in 1990, Bain was going through a hard time, and they sold the company to Marsh McLennan, and the deal fell through and the banks got involved, and Mitt Romney came over from Bain Capital, who saved the firm. As part of that through some collateral damage. I was part of that collateral damage.

I was there for all of eight days, and I went to work after that at a traditional manufacturing firm that's based out of Palo Alto, called Varian Associates. They had a factory in Lexington, Massachusetts, and I worked as a production supervisor and got a basic lane operators degree at night at Wentworth Institute. I did that for a few years, and I really enjoyed it. I was turned on by Japanese just-in-time manufacturing and trying to transform a U.S. Manufacturer, but realized pretty quickly that absent an engineering degree to work at a firm like Varian was probably not the right fit, and therefore I ended up at Timberland in 1992, not because I'm fashion aware or concerned, but because Timberland was a manufacturer, and at the time, made 100% of its own footwear in the United States in three factories and one factory in Dominican Republic. The company was fast growing and seemed to have a strong set of values, and so I spent my career there really focused as a traditional executive, and it wasn't until after that time that I became committed to this intersection of commerce or capitalism and the climate.

Christopher Reichert: I love the story of how you went to one of the factories in Puerto Rico, where they were doing, I guess, the bottoming, right? Of the shoes. You had a tour with the CEO, you accompanied him there. Before you knew it, you were in charge of the factory. Tell us about that.

Ken Pucker: Yeah. I was I think 28 at the time, and I had been at Timberland probably a little bit less than a year. I'd traveled with the CEO at the time, who was the second member of the Swartz family to lead the company, Timberland is unique in that it was a publicly traded company on the New York stock exchange, but it was privately controlled. The family, the Swartz family had ten to one voting rights and B shares. Sidney, who was the second Swartz to lead the company, I accompanied him to the factory in Puerto Rico. We got there and it was pretty out of control, with inventory to the ceiling and lots of stuff coming in and not much going out. He was impulsive. He gambled away his tuition money second week of college, sophomore year at University of Maine, and came home and his father said, "You can have a broom."

So, Sidney was less educated than his son, Jeff, who was the third generation, but he was really intuitive and impulsive. He asked me, "Should we fire the general manager?" and I suggested that we spend the two days we had down there to learn what the problem might be. It could be that it was a scheduling problem, for example, from the feeding factory in Dominican Republic. It could be a host of things. It may not be his fault. He said, "You're right." He sent me then to the canteen to to pick up two tuna fish sandwiches, and the general manager of the factory was crying in his office, packing a cardboard box. So, I pulled Sidney into the hall and said, "What happened?" He said, "I apologize. I couldn't wait."

Christopher Reichert: That is impulsive.

Ken Pucker: The general manager left, and then he said to me, "Why don't you go sit in the chair?" I said, "I'm not going to sit in the chair." He said, "Yeah. Why don't you give it a try? See what you think." Probably about five weeks later, I had moved down to Isabela, Puerto Rico, in the Northwest corner, of running a factory of 1,000 people, and I was only the second person there who spoke English as a first language, and I didn't speak Spanish. But it was a great learning experience, and I actually loved my time in there.

Christopher Reichert: What was the dynamic like for the team to have you arrive, and then all of a sudden their boss leaves and you're sitting in his seat?

Ken Pucker: That's a fair question. I can't say that I was emotionally intelligent enough to answer it, in large part because I was probably culturally so distant from day-to-day there. Over time, we did build a really healthy working relationship, and the factory resumed stable operations, in large part to the team that was there. But I can't tell you day one with the reaction was.

Christopher Reichert: Fair enough. You had a job to do. I was thinking about the growth trajectory of Timberland, how it started out, very small business, and over the time before you, and then your time there and after, it has grown in so many different directions. I guess in the old days, I had this imagination that when you bought a pair of shoes, you pretty much went down to the local cobbler, the leather hide probably came from a cow not so far away, and you knew the person who made your shoes. So, you knew the whole sourcing cycle of that. Now, obviously that's very different now. It's one of the things that you talk about recently, is that this whole notion of corporate social responsibility, and the reporting initiative standards and sustainability underlying all of that is really hard to get a handle on because of that complex chain of sourcing materials worldwide that finally ends up on our feet.

Ken Pucker:  I think you raise a really interesting point. When Timberland was started, it was the first factory was in West Roxbury, Massachusetts. It then migrated to New Hampshire to a town called Newmarket. When the factory was in Newmarket, customers were actually seeing people making the shoes, and the tannery was around the corner, and the machine supplier was actually down in Brockton. The whole network was contained in 100 mile radius. If you fast forward today, Timberland operates around the globe, it owns only one factory now, which is in Dominican Republic, and it sources materials from literally hundreds of suppliers. It's got thousands of nodes in its supply chain, and production is really separated from consumption. So, we don't see what's behind the curtain. We do see the finished product, but we don't see what's behind the curtain. Perhaps more tellingly, most companies, Timberland included when I was there, don't really know the full extent of their own supply chain, which surprises lots of people.

Contractors often subcontract, sometimes illegally, the supply chain goes back multiple tiers, so a tier one supplier might be a finished goods supplier, but then a tier two supplier might be, let's say, a leather processor, or a tier three supplier might be a wet glue manufacturer, a tier four supplier could be a cattle rancher in the Brazilian Amazon, and not all companies can trace their supply chain through their multiple tiers. As a result, we really don't know, even today for most companies, what their emissions profile is. I was thinking one thing, emissions, because it's existential. Emissions are broken down into three different scopes. Scope one emissions are the emissions that a company is responsible for in their home headquarters or driving cars, things like that, scope two are purchase of electricity, and go scope three is everything else, upstream and downstream emissions.

As of today, for companies like Timberland, footwear apparel companies, about 95% of emissions are in scope three, and less than a quarter of the companies that are public companies that are reporting on their emissions can tell you what their scope three targets are. Less than half of companies can even tell you what their scope three emissions are, not what their goal is, what they are. That's the state of play today, 25 or 20 years after the corporate social responsibility reporting movement started. That's disappointing.

Christopher Reichert: Absolutely. I was thinking about the... well, I'm trying to unpack this various headed monster, in a way. One is Timberland, for example, not to pick on Timberland, but pick any company, their goal is to sell product, source it as inexpensively as possible, or at least maximize profit at some level for their shareholders, whether it's privately owned or publicly owned, and continue and to grow. I think growth is one of the drivers that I've seen pushing companies into areas where they're pushing in that direction so hard, it's hard to then bring up to speed all the other elements of the existential components, the existential crisis of climate change and sustainability. Would you agree that that's... if you do, how do we slow that down or divert energies or bring that up to speed?

Ken Pucker: I think you're right. Growth is a challenge. It's an existential challenge. We have a finite planet, and we have an exponentially growing population in consumption. At a certain point, then that doesn't work. Credit to Sloan, I think thinkers like John Sterman and systems dynamicists going back all the way to Jay Forrester have been pointing this out. 1972 book, Limits to Growth, which at the time was the number one selling environmental book of all time, was principally architected and authored by people at MIT. If you go back and look at what the projections were from that model, unfortunately they're more right than wrong. So, if you're operating in a system where the system rules and incentives and information flows and structure engender a certain kind of behavior, it's tough to ask those actors in the system to change their behavior.

More specifically, when you say about CEOs incentivized to grow or to grow EPS or EBITDA, whatever metric you talk about, and then you also say, "Well, could you also please try to focus on your emissions profile, or your water usage, or your code of conduct, or how many underage workers are working in your supply chain?" The answer increasingly is yes, I have to, because things are more transparent, and social media exists, et cetera, and there's an evolving set of standards, but it can't be a first priority, really. If my tenure's three-and-a-half years as an average CEO, and I report every 90 days, very few Wall Street analysts are asking me, "Can you go over your emissions profile once more?" But they are asking about your gross margin profile or your growth by region or your growth by product category, so they're doing what they're incentivized to do, which is to drive growth in a company. So, we have a problem where the system's not incentivizing the behavior we want.

You ask about solutions. Well, unfortunately I think things like corporate reporting or ESG investing today are more palliatives and opportunities to delay what's required than they are drivers of system change. Drivers of system change are things like rewriting the rules under which executives operate. So, for example, if there was a carbon tax or clean electricity standard, businesses would evolve to do what they're supposed to do, which is in this case, let's say, maximize EBITDA or something based on those new rules. But as for those rules asking for voluntary win-wins to carry the day, I think we've demonstrated it hasn't worked.

Christopher Reichert: Yeah. I was thinking about some things that you wrote, which is that what I gleaned from that is that not all companies are playing by the same rules of competition. So, if a CEO says yes, and maybe they believe in their heart and their board does as well, and their leadership, and for that matter, all the employees believe that adding that sustainability component to their mix is the right thing to do. But what about Nike versus Adidas, right? I mean, if Nike does and Adidas doesn't and they start profiting more, that's definitely going to be a pressure on the organization to stop doing that good thing and focus back on profits.

Ken Pucker: Well, I think here, we may have done a disservice to the overall sustainability movement in the early days. There were books that came out like Green to Gold, which made it seem that all initiatives that are focused on green or sustainability lead to gold, or a business case, in profit. That's not the case in the real world. Some do, but there are few and far between, honestly. I'll give you an example of one that does. Timberland, the third generation CEO is a guy named Jeff, who is Sidney's son, Tuck educated, Brown undergrad, different than his dad. He and I worked together when I was COO and he was CEO. He was committed to this notion of commerce and justice. Now, that's a big word for business, justice, especially in 2002 or 2003. Justice included three concrete components. One was environmental stewardship, one was global human rights, the other citizen service and Timberland did legitimate leadership things on each of them. So, for example, on citizen service, Timberland paid all of our employees, including weekend store employees and manufacturing employees, 40 hours of paid time to do community service. First public company in the world to do that. Timberland was the first company to report quarterly on CSR. Timberland did a lot of things in their leadership all attributable to Jeff. Yet, it's hard to say, if you asked me to point to, how did that pay off? The company's financial results were very good, but tell me exactly how the justice agenda led to better profits? I can't. I can tell you that I did support it, because I was values aligned with it, and I do believe it was good for the company principally on the basis of employee recruitment, loyalty and retention. We were able to recruit and retain a better caliber of employee than a $1.5 billion footwear apparel company had any right to recruit and retain.

I can only prove that by showing you where people now work on the basis of director level and above people that we hired. But I can't make a good empirical case for something that's that intangible. Things like, "Oh, buy don't your consumers love you more? Didn't Wall Street love you more?" The answer is I don't really think so. I think that consumers have very short time horizons to make decisions, and they can only keep certain things in their head about Timberland. If you were to ask, I don't know, 1,000 Timberland consumers even today, "What comes to mind when you think about the company?" They'll probably say outdoor, durable, or boots or yellow boots. They're not going to tell you commerce or justice.

Christopher Reichert: Right.

Ken Pucker: That's because brands become entrenched in people's minds for certain qualities and attributes, and it's really hard to bend those. So, if you ask me, did our justice agenda pay off? I'd say yes, but good luck to me to prove that.

Christopher Reichert: Right. That makes it hard to defend when there's a downturn in the economy or the quarterly results aren't as what it was expected. I can imagine that, yeah, those things get cut first. That reminds me of, I don't know if it's true or apocryphal, of a competitive McDonald's with their quarter pounder came out with their third pounder as a way of saying it's cheaper than the quarter pounder and better and all that sort of thing. Apparently, it did not fly in the marketplace because people visually saw three as a smaller number than four, and wondered why they were paying the same price for a third of a pound when they could get for a quarter pound something that in their mind was larger.

Ken Pucker:  I hope that's wrong, but I fear it's right.

Christopher Reichert: Yeah. What is the role of regulation to drive change? Particularly in our polarized climate of on the one hand, deregulate, deregulate, deregulate, get government out of business, out of our lives, whatever it might be on that side, and the need for the reality or the idea that market economies can go off the rails and need guidance to get back on the rails periodically.

Ken Pucker: We've lived through a period in the last, really, 50 years, where the overriding ethic in the U.S. And I think U.K. And other countries has been a neoliberal agenda of deregulation. Reagan's famous quote is, "The most dangerous nine words are, I'm here from the government and I'm here to help," or something.

Christopher Reichert: Right.

Ken Pucker: Or from the government and I'm here to help. And we I think have paid the price for over-correcting, perhaps.

Christopher Reichert: Into deregulation?

Ken Pucker: Yes. If you look prior to Reagan, the Republican party I think had some sanity. Even in 1970, when Nixon was president, was one of the principle eras of effective environmental regulation to include the creation of the EPA and the Clean Water Act and the Clean Air Act from which we have benefited.

Christopher Reichert: Right.

Ken Pucker: But now, you look at pollution levels worldwide, and the numbers of early deaths that are attributed to pollution, or you look at air quality, or you look at the bills coming due from climate change globally. We've just experienced the two warmest decades in human recorded history. The Arctic is melting, Siberia is burning, and it's not just far away places. The only good of that, I think, is that this notion that the climate is changing is becoming less controversial, perhaps, independent of your party. If your house burnt because it's warmer than it ever was and drier than it ever was, I think maybe you have a religious experience, and I'm more optimistic, obviously, based on this administration as opposed to the last, that there's a chance for regulation, like a clean electricity standard that could have a profound change. In fact, I think the administration came out just today and talked about an objective for solar or 45% of total primary energy generation I think by 2050, and it's 4% today. So, they're ambitious, and I think that's awesome. I think we're too late in the game a little bit, but better late than never, I guess.

Christopher Reichert: Yeah. I was thinking about the healthcare Affordable Care Act, and the naysayers point and say, "Well, healthcare's costs are still rising," and the opposing argument is, "Well, they're rising slower than before," which is maybe true, but not as compelling an argument as the costs have gone down. I think it's probably the same thing. My perception is it's the same thing for this climate change issue, which brings me to the Beer Game.

You talked about system dynamics and the Beer Game, and anyone who's ever been at Sloan knows that in the first week or so that you're there, you all sit down in a room in front of this very analog board with chips and four people to your left or right, or wherever you are, and you play the game of supply chain from farmer to people drinking beer. We all have various stories of how that goes awry pretty readily, with difficulty in understanding how and why. Tell us about how the experience of doing that helped you in becoming what you're doing today.

Ken Pucker: To be honest, it confused me more than anything. You know? I, like most, failed. I did not understand viscerally what delays and feedback loops were even after playing the game. I can tell you, even after taking a course focused on it, I think systems dynamics, at least for my small brain, takes a lot of time to seep through. I've read a book called Thinking in Systems by Donella Meadows literally 10 times, because I read it every time before I teach. I can tell you every time I read it, I learn something and I pick something up, so people like John [Sterman] are much smarter than I. So, I can't tell you it had a profound effect at that point. I think over time, I've come to appreciate it. I can tell you one thing from my Sloan experience that might be useful. I don't know if it's still done, but did have a profound experience.

I came to Sloan after a couple of years at Goldman Sachs in New York, and I was committed to a career in finance. Between the first and second years, there was a trip then to Japan and Korea to visit manufacturing facilities. For those younger than 50, they probably won't remember that Japan was the dominant ascendant manufacturing power in the world, not China at the time. That's why the trip was to Japan and Korea. You had to write an essay to get selected, and I did. I went with probably 15 or 20 classmates to Pusan Steel and to Samsung and to Toyota and to Sony and a bunch of other places over about a 10 day period. I was fascinated and blown away and committed then to working in manufacturing operations to try to transform U.S. capacity.

That's why I ended up at Bain, briefly, in the advanced manufacturing area, and ended up in a factory in Lexington and then at Timberland, because I wanted to demonstrate that these approaches that were being deployed in Japan, actually many of them were from Deming in the U.S., But they weren't deployed here, could be, and with great effect. I certainly didn't stem the tide in terms of manufacturing leaving the country, but that's certainly, for me, a seminal trip and experience that was brought to me by Sloan and MIT that really did change the arc of my career.

Christopher Reichert: I was thinking about you talked about the challenges of non-linear thinking, and I agree with you. System dynamics, I think one of the difficulties I had with it was that it seems like there's so much work that needs to go into building the initial model, and then continuously tweaking it to get it right to be able to throw a marble at the beginning of the game and have it come out in a predictable way at the end. So, I agree, and my hats off to Jay Forrester and the professors who are teaching that now, because it is very complex. But you talk about the-

Ken Pucker: One thing, Chris, I just wanted to mention that may help people related to systems, I had a classmate named Stuart Grief. Stuart tragically passed away of cancer probably maybe six, seven, eight years ago. He was a really talented, smart guy, executive at Fidelity and a number of other places in human resources. He put together a blog in his last couple of years, where he would share wisdom. He put one out on systems thinking that I think is excellent, and I had seen systems thinking in two or three pages. It doesn't require model building, but it requires, or actually asks people from a managerial perspective to continuously ask, "And then what would happen?" when thinking about potential decision-making, in order to think about second, third, fourth order impacts. It has always impacted me when I've thought about managerial choices, and he deserves to be remembered for a lot more than that, but that's one of the things I remember him for.

Christopher Reichert: That's interesting. Yeah. You gave the example of folding the envelope and the challenge... or was it a paper? I forget, printer paper, saying, how many folds would it take to get from the earth to the moon? And people invariably get it wrong. The one that shocked me was the difference between halfway and all the way there, which when you get the answer, which kind of reminds me of the Hitchhiker’s Guide to the Galaxy, but it becomes clear when you see it, but it's not clear when you're going through it. Do you see that is a microcosm of the challenge we face?

Ken Pucker: I see that as a microcosm of the challenge that we're linear thinkers in a nonlinear world. It's hard for our minds. This is one of the things John talked about, to think non-linearly. We can understand that if a rental car costs $30 for one day, then it's $60 for two and $90 for three and $120 for four pretty easily, but exponential thinking, the 2, 4, 16, 32, that's not natural, and so you're right. It takes 42 or 43 folds for a piece of paper to make it to the moon, which blows people away, is a good way to win a dollar in a bar, but then you're right. If you say, "What about halfway?" People should get that if we understood intuitively exponential thinking, but most people still don't get that. That's relevant given population growth, given consumption growth, given a finite planet, given a finite amount of non-renewable resources. When you look at non-renewable resources and you look at exponential growth, there's a bad meeting at the rotary, and so something needs to give. We're seeing right now the sad, painful, torturous, dangerous implications of overdoing it, and I'm hopeful that we will heed nature's signals.

Christopher Reichert: It almost sounds like, what was it? The S curve, right? Where an organization starts in one area and they have to make that leap to the new bottom of the next S up. It sounds like we are at the top of one S and we need to make that final leap again to the next S before it's too late.

Ken Pucker: Yeah. Leaping sounds to me like growth, so I worry about it, but you're right, I think we have to actually bend down about consumption, and that's not easy to do, especially when there's lots and lots of people coming out of poverty in places far away who want to live like we do. They look on the internet and see Americans driving SUV's and living in big houses, and who are we to tell them they shouldn't? Yet, if they consumed the same rate we do, we know we have bigger problems.

Christopher Reichert: Right. So, thinking back at your time at Sloan, obviously system dynamics seems to have impacted you greatly. Do you have any, thinking back, any favorite professor or a class that you were glad you took or wish you took?

Ken Pucker: Yeah. Two things. One is I didn't pay enough attention to HR, and I hope that students do, and I hope it's taught in a way that's more practical than it used to be, because when you become an executive or leader, a lot of the lessons that hopefully you learn at graduate school as it relates to HR would have been more useful. I was more concerned with quantitative things, but I think leadership has much more to do with both soft skills. Then to counter that, I loved a class on linear programming, which... I went to liberal arts school, so I'm not naturally inclined for that kind of work, and yet I thought it was fascinating you could solve problems analytically using linear programming.

Christopher Reichert: Interesting. You teach Sustainable Business Dynamics at Fletcher School. It seems like an interesting course to teach at Fletcher, which is known for its what, diplomacy, right?

Ken Pucker: Yeah. Fletcher has a business arm as well. So, yes, it's known for more international relations, but there's a business school within Fletcher, and it focuses more internationally than just domestically, and the student body is really engaged and has perspectives that teach me a lot. So, I really enjoy it.

Christopher Reichert: Tell me about the “Systems, Souls, and Science: The Operators Lessons in Solving for Climate Change.” How does that fit in with what you're doing, or does that fit in with what you're doing at Berkshire Partners, or how does that fit in with what you're doing generally?

Ken Pucker: Berkshire Partners is a Boston based private equity firm that's been around for about 30 plus years. Very strong culture, wonderful people, traditional private equity in that they're analytical and hard-charging and smart, but also really kind and philanthropic and humane and decent people. I served as CEO of one of their portfolio companies in Switzerland for an interim period, and got to know them that way, and since then have served as an Advisory Director. The first five years or so, I wasn't focused on the agenda you described. I was more focused on traditional consumer companies and retailers and doing diligence and governance around those companies/ But the last five plus years, I've been focused on ESG, which is what the business world called CSR or sustainability, just to confuse things. The investment world calls that ESG, which stands for environmental social governance. A lot of companies, investors now are being asked to think more sustainably and being asked questions about the carbon emissions in their portfolio or the water usage in their portfolio, and Berkshire allowed me to infuse the beginnings of that kind of thinking into the firm, and I continue to work on that.

Christopher Reichert: Man, you also talk about the challenges of that push. Earlier, we talked about how on analyst calls, the CEO is rarely asked to dive deeper into their sustainability metrics, whatever they might be, more about their financial outlook or results. You talked about how in, I don't know if it's a private equity, necessarily, but generally having this notion of the negative screen ESG fund, which can talk about things that it's not investing in, tobacco or firearms, but not necessarily talking about the things that it is investing in, which might not be as pretty sounding.

Ken Pucker: Yeah. I've just written a piece that appears in The Institutional Investor called “The Trillion Dollar Fantasy,” linking ESG investing to planetary impact. It gets at the questions you're raising. Reports are that more than one in $3 or $35 or $40 trillion is not invested in ESG assets. I think people get the false impression that that means that those dollars are working to secure improved social or environmental future, and they're not. So, it's way over sold. In fact, when you mentioned negative screen, more than half of those dollars are negative screen funds, which means the funds are just choosing not to invest in a specific category, that grew out of divestment in South Africa, but it could be firearms, it could be pornography, it could be fossil fuels, it could be gun manufacturers.

If a billion dollar fund is not investing in gun manufacturers, I'm not sure it's going to solve climate. In fact, I'm sure it's not. If you look at the next biggest category, which is ESG integration, which is over $10 trillion, that's just looking at companies through a lens that includes risk, things like risks in where your factories are located versus working and rain patterns. I mean, again, that's good investing, I think, perhaps, but that doesn't mean it's proactive investing to solve for climate. So, the asset management industry has figured out, with the help of academics, that you may not have to give up return to invest according to your values. May not, some say you actually gain return or alpha. I'd question that. You can also deliver impact. So, you have another one of these win-wins. You get alpha and impact by investing in ESG. Well, when you actually look deeply, you'll find that almost none of the asset managers are actually measuring impact, and that the composition of most ESG funds is very, very similar to the benchmarks that are non ESG funds. The largest holding, for example, in ESG funds is Google or Alphabet. The largest holdings in ESG funds are technology stocks. So, it to me is a oversold nip that that's going to deliver improved social environmental impact.

Christopher Reichert: Yeah. I was thinking about Bitcoin and its energy usages, just as an example, is hard to fathom how much energy is used to mine Bitcoin.

Ken Pucker: Yeah.

Christopher Reichert: It can't be good.

Ken Pucker: It's a separate but unrelated issue, but, yeah, I mean, I don't know what the exact data is, but there's server farms in Russia and lots of places mining Bitcoin.

Christopher Reichert: Do you think this is related to... I keep coming back to the idea of where regulation would fit in, and should the U.S., At a federal level, take the leadership position on that in the way that back in the seventies, the environmental EPA was set up and Clean Water Act and things like that-

Ken Pucker: So... oh, I'm sorry.

Christopher Reichert: .. or has the world economy been more fragmented with China as a major player and other economies having an impact that we can control, and also that ties into the notion of some companies aren't playing by the same rules as others that we talked about earlier? So, we can pass our rules, but then other nations will just undersell us when the time comes to get the deal.

Ken Pucker: The answers to your questions are yes and yes, meaning the U.S. Should have a leadership role. I believe a clean electricity standard is probably a more practical way to limit carbon than the carbon tax, just politically, and so I'm a big fan of that. But the U.S. Represents 14% of global emissions, because the sum of the U.S. and EU doesn't equal China today. So, absent action from China and India, really, we have a real problem. The good news is China is committed to a net zero profile by the year 2060. It's too far out, but at least they made a commitment. India, I don't know as much about, whether they're abiding by the Paris Climate Accord commitments, but commitments versus action turn out to be two different things. More than three quarters of the countries that made commitments at the Paris Climate Accord in 2015 are not delivering against their commitments now, and we're only six years out. The clock is ticking, and we know that these 10 years are hugely important. So, yes, the U.S. Should lead, and yes, it will require concerted global change to stem the tide.

Christopher Reichert: I talked earlier about not wanting to have doom and gloom permeate too far and leave people with that idea, but what can we as individuals do, do you think, from the work that you're doing, the teaching that you're doing and your experience, to move the needle?

Ken Pucker: I think that we have a role to play. I think the sustainability movement has long talked about different leverage points, in system speak, that include investors and include consumers and regulators. I'd rather think of us as citizens as opposed to consumers. We all have rights as part of being citizens, and that includes voting. In order to get the change that we are asking for, we have to vote in accord with our values and principles. So, activity around citizenship, Sunrise Movement,, Extension Rebellion or youthful organizations that attack the problem, but there's lots of them. In fact, Bill McKibben, who's the founder of is now starting a nonprofit focused on the over 60 crowd to get them more engaged, and I'm sad to say approaching his sweet spot. So, citizenship, I think, is an essential ingredient.

Christopher Reichert: Wow, so many thoughts came through my head as you were talking there. I was thinking about if you were advising companies, company leaders, whether it's Board of Directors or CEOs about what they can do to help break down, I guess, the cycle of fake reporting, I don't know how else to put it, or the smoke and mirrors that comes from the current way that these metrics are gathered and reported, what would you suggest to them?

Ken Pucker: I collaborated with a guy at BU named Andy King, who's terrific. We just wrote a piece that's being published in the Stanford Social Innovation Review about impact valuation. That's the next step in the reporting movement. Don't just tell us what your emissions are, but dollarize everything. We're pretty opposed to that. It's intellectually a good idea, but when you get from the concept to actually practice, philosophically, process-wise, practically, there's a lot of challenges. But at the end, when we're tasked with, "Okay, what do you recommend instead?" I can answer your question, which is I think companies need to be held to account with their lobbying power. So, it's the equivalent of consumer citizenship is corporate lobbying.

A good example is Microsoft, which is a leader when it comes to making pledges on climate. I think their CEO and President have been very articulate about the challenge and made really aggressive commitments, including remediating all their historical emissions, so real leadership stuff. But if you look at their political donations, more than half of them are going to Republicans who oppose the legislation that's required to solve for climate. So, what's more important? That Microsoft actually remediate its prior carbon emissions, or that we pass legislation in favor of electricity standard? The answer is it's not close. So, I would love to see more visibility and transparency and alignment when it comes to companies' lobbying efforts.

Christopher Reichert: What's your definition of success, whether it's for our planet, I suppose, or for yourself?

Ken Pucker: For myself, it's good trouble. John Lewis, who's a hero of mine, and he was very attached to Timberland as a company through a relationship to the CEO, we named our citizenship award the John Lewis Award, he talked about good trouble. I'm a believer in good trouble. Personally, I want to influence as much of the discussions I can, and that's one of the reasons I teach, is because generationally, I want the next generation to solve the problems that this generation caused, and I want to help bend the arc of their careers in that direction. Just like with Sloan, the arc of my career was bent differently. More broadly in terms of success, I want my kids to have a planet that they can enjoy and not feel threatened by.

Christopher Reichert: Yeah, it is a scary notion. Do you have any advice for prospective Sloanies, as they think about their business career or going to business school?

Ken Pucker: Yeah. I think that understanding the science of climate is important. I don't think business schools really teach that. When people say greenhouse gas emissions or the greenhouse effect or what causes warming or how's it connected to fossil fuels, or which fossil fuels are worse, that's not broadly understood, and it's not terribly complicated, because I understand that, but I think it's important to have a grounding in science if we're going to attack these problems. So, I'd love to see business schools, in general, spend more time on that. I'd also like to see business schools not separate out sustainability as a separate track. While I'm grateful, I think actually Sloan does a really good job of the sustainability certificate and the increasing interest in the field, but I wonder if it's better to have it integrated in the curriculum, because every function has a role to play, from finance, to HR, to sales, to product development, to manufacturing. This isn't just a supply chain challenge. So, I wonder if there's not an opportunity to better integrate this kind of 21st century leadership into a broader curriculum.

Christopher Reichert: That's excellent. Well, thank you very much for joining us today on Sloanies Talking with Sloanies. My guest has been Ken Pucker, a 1990 graduate of Sloan. Thanks very much for your time today.

Ken Pucker: Thanks for having me.

Christopher Reichert:    Sloanies Talking with Sloanies is produced by the Office of External Relations at MIT Sloan School of Management. You can subscribe to this podcast by visiting our website,, or wherever you find your favorite podcasts. Support for this podcast comes in part from the Sloan Annual Fund, which provides essential, flexible funding to ensure that our community can pursue excellence. Make your gift today by visiting To support this show, or if you have an idea for a topic or a guest you think we should feature, drop us a note at