PubU
You are the Dean of a large public university in the Midwest. Your tenure has focused on raising the profile of the university through various initiatives. Recently, the Board of Regents has requested …
You are the Dean of a large public university in the Midwest. Your tenure has focused on raising the profile of the university through various initiatives. Recently, the Board of Regents has requested a plan that outlines the university's environmental footprint and a goal to reach net-zero waste by 2040. As a former business executive, you are familiar with principles of ESG, but need to understand what the major drivers of environmental impact at PubU are.
Thanks. Before analyzing, I'd like to clarify a few key questions...
Good question. Let me provide some background information...
Based on this, I suggest analyzing from these dimensions...
Solid Waste
- Sources
- Dining halls
- Dormitories
- Laboratories
- University buildings
- Possible strategies
- Reduction
- Recycling
- Elimination
Energy
- Electricity
- Add renewable generation
- Negotiate with local utilities
- Reduce usage
- University transit
- Bus fleet (diesel)
Water
- Landscaping
- Plumbing and other uses
- Athletic facilities, including golf courses and athletic fields
- Fountains throughout campus
Other Considerations
- State funding available for waste-reduction efforts
- Use / reallocate existing operating budget
- Positive impact on university recruiting (students and faculty)
- Leverage existing faculty know-how to develop recommendations
A good framework hypothesizes the sources of waste and makes preliminary estimates of their relative size. A great framework goes further to hypothesize possible solutions and the considerations a public university must weigh when evaluating these projects — particularly impact on reputation/rankings and ability to fund initiatives.
Recommendation: The case is designed as a “either decision can be justified” close — PubU should proceed with the electric bus conversion, provided leadership treats the current negative 5-year ROI as an acceptable cost of the transition rather than a stand-alone financial win.
Supporting rationale:
- The diesel fleet costs PubU $6.8M/year ($6.3M fuel + $0.5M maintenance) and emits 21M lbs of CO2/year
- Switching to electric costs $25M upfront (25 buses x $1M) and reduces annual operating cost to $2.2M/year ($2.1M electricity + $0.1M maintenance), an annual savings of $4.6M
- Over 5 years this produces a raw ROI of roughly -8% (five years of $4.6M savings = $23M against a $25M investment), turning cash-flow-positive only in year 6
- Emissions do not improve in the near term (electric buses still generate ~21M lbs CO2/year from the current grid mix), but the local utility’s move to 100% carbon-free power by 2030 means the same fleet becomes zero-emission on that timeline with no further capex
- Non-financial upside is significant: reduced noise and fumes, improved student wellness and public safety, and reputational/recruiting benefits with students and faculty — all relevant given the Board’s ESG mandate
Key risks:
- First-adopter risk
- Electric bus technology is still maturing; unknowns in reliability, battery life, and cold-weather performance have yet to be identified
- Infrastructure and transition risk
- Requires building out charging infrastructure and retraining maintenance staff, which is not included in the $25M bus cost
- Technology cost-curve risk
- Battery/EV bus costs are likely to keep falling, so waiting could improve the economics — but delay also pushes back the emissions benefit
Next steps:
- Prepare bid documentation and proceed with the electric bus procurement if the Board is willing to accept a 6-year payback in exchange for the ESG and reputational benefits
- If the Board declines on ROI grounds, explore alternative levers that cut cost and emissions together (e.g., route consolidation, renewable electricity contracts) rather than shelving the net-zero effort
- Quantify and fold in the excluded infrastructure/training costs before finalizing the business case
- Track the local grid’s carbon-free transition (targeted for 2030) since it materially changes the electrification payoff
This McKinsey Round 2 energy case puts the candidate in the role of a public university Dean who has been asked by the Board of Regents to map PubU’s environmental footprint and chart a path to net-zero waste by 2040. The candidate must first structure the university’s major sources of environmental impact (solid waste, energy, water) and hypothesize where the largest lever sits, then pivot into a focused evaluation of converting the diesel campus bus fleet to electric. It tests the ability to build a MECE framework for an unfamiliar, non-corporate setting, execute multi-step quantitative analysis (fuel, cost, and emissions math from an exhibit), weigh financial returns against strategic and stakeholder considerations, and deliver a defensible recommendation under a mandate where the “right” answer is a judgment call rather than a number.
Key Insights:
- The largest environmental lever is not solid waste but the energy/transit stream — specifically the diesel bus fleet — so a strong candidate sizes the waste streams before committing to where to focus effort.
- Electrification does not deliver an immediate emissions win: because the current grid still produces carbon, the electric fleet emits roughly the same CO2 in the near term, and the real payoff only arrives once the local utility reaches 100% carbon-free power (targeted for 2030).
- The five-year business case is financially negative (about -8% ROI): a $25M upfront investment against roughly $4.6M in annual operating savings does not turn cash-flow-positive until year six, so the decision must be framed as an ESG/strategic investment rather than a standalone financial return.
- The non-financial benefits carry the recommendation — reduced noise and fumes, improved student wellness and safety, and reputational/recruiting gains — which is why evaluating impact across the university’s multiple stakeholders (students, faculty, community, government) separates good answers from great ones.
- Either recommendation can be justified; what is graded is a clear stance paired with honest treatment of the risks (first-adopter technology unknowns, uncosted charging infrastructure and retraining) and a concrete path forward.
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