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Integrating sustainability into business education: part II

The second part of Business Impact‘s synopsis of a panel event, co-hosted by BGA earlier this year, on how sustainability can be better integrated into the DNA of higher education. By Daniel Kirkland and Ellen Buchan

Following the topics covered in the first part of this account (which you can read here) the panel proceeded to discuss the limits of desirability and possibility, in terms of embedding sustainability effectively across a range of courses and where its focus might lie as a business concern over the next three to four years. 

SDA Bocconi’s Pogutz explained that there are two possible paths that could be taken to embed sustainability in organisations. One is to appoint a technical professional – the chief sustainability officer – and the other is developing leaders with sustainability mindsets through MBA programmes. 

‘The big challenge is that organisational structures are still not metabolising that, so they go back and ask for a very vertical style of competence. So the integration would be mandatory, but not for becoming a sustainability manager. That’s even more complex as a challenge, at least for us in Italy,’ Pogutz said. 

St.Gallen’s Walls added: ‘I would push that concept even further. At Business Schools we have a responsibility and an obligation to teach students not only about sustainability, but also about values-based management in general. 

‘How we’re going to implement that is going to be a different question, but I feel that we’ve done a disservice to our students; we’ve created this kind of MBA person that goes out and focuses on certain things when they go out into the business and, as a result, we’re now facing some global challenges, like climate change, social unrest, and all kinds of biodiversity loss. 

‘Business are not able to cope with these challenges right now. I think we need to take a deep and critical look at ourselves as Business Schools and ask what is it that we should be providing to students. [Sustainability] has to be the oil for everything, it can’t just be one cog. Otherwise we won’t solve the problem.’ 

Understanding ourselves as Business Schools

Zollo responded to this challenge, adding: ‘The entire challenge can be framed in terms of understanding ourselves as Business Schools. We’re having the same type of challenge that we’re asking businesses to face. 

‘They have to rethink their purpose, in terms of creating value for stakeholders and giving up on the idea of privacy to monetise stakeholders and shareholders. We also have to rethink. 

‘First of all, content-wise, there is no logic in adding one more course, or one more module. There is no question about that once we have decided that we want to be part of the solution – to contribute and shift the world towards a sustainable society. 

‘Then the question is [how to go about] redesigning all the programmes, including the MBA, starting from those assumptions – i.e. this is the theory of the firm that we’re going to teach, and every single course, whether it’s finance, marketing, strategy, organisation, is going to be taught on the basis of that theory of the firm, which says “your role as managers is to create that value for stakeholders, period”. There is no choice anymore.’

Taticchi responded by outlining his own belief that it is impossible to teach different modules without integrating sustainability within them.  

‘I think it’s very important to create the right narrative,’ he said. ‘Sustainability should not be a separate module, otherwise it is perceived as something different from “real” business. 

‘Sustainability is about smart business; it’s about exploring opportunities; and it’s about exploring management risks. I think it’s important that students realise this at the beginning of their business education so that when they study strategy or operations they have the right mindset for that.’

The purpose of the MBA

Crane outlined a pressing challenge: the way Business Schools market an MBA is often on salary uplift and the Financial Times ranks programmes based on this criteria, so a rethink into how Business School programmes are marketed and evaluated is needed. 

‘We need to transform the way that we think about the purpose of an MBA programme before that happens,’ he said. ‘That will only happen if the whole ranking changes, if the way we market programmes changes, and if the business model of Business Schools changes.’  

Crane went on to describe a ‘sense of isolation’ in Business Schools, and the difficulty in encouraging business students to go outside a Business School and talk to people in other fields, such as environmental science, sociology, and developmental studies. 

‘They don’t want to know,’ he said. ‘They want to talk about finance, they want to talk about marketing in the safe cocoon of the Business School because they are there to get an increase in their salary. The challenge we have is breaking out of our own silo. 

‘We have a structural problem; we are pulling up the drawbridge not putting it down. You need to create an open institution. As Business Schools have emerged, they aren’t the model that we need in order to tackle the problems that we want to solve.’

The role of accreditation bodies

With that in mind, do accreditation organisations also have a role in pushing for more of a focus on sustainability? 

‘If you want Schools to focus on things such as stakeholder capitalism or the climate emergency, you can ask them to do so, but ultimately you have to require them to do it, to get the kind of change necessary,’ said Crane.  

‘That’s where accreditation comes in,’ he added. BGA and others are starting to push quite strongly at this and it is a requirement to some extent for accreditation that’s getting stronger all the time, but [in terms of transformation], I don’t think we are there yet in the accreditation system.’  

Robert outlined her views that it’s useful for Business Schools to have rules to follow that help them know what to do: ‘Not all Business Schools are accredited but the top ones are. Accreditation has a really huge impact because Business Schools which aren’t accredited follow the ones that are – and the students know this as well. We want to have the accreditation bodies take sustainability into consideration more and more. The accreditation has to take this big chance in order to make a difference.’  

Walls agreed with this sentiment: ‘You need the student body to push and you need the accreditation bodies to pull. I think that something which is even more crucial is how Business Schools stay relevant. Not only relevant to business and the global challenges we face but also relevant to new students coming in and for future students who are now high schoolers and will be entering university questioning why they would they go to a Business School if there is nothing there about sustainability or ethics. 

‘It’s about Business Schools looking at their long-term survival strategy, in the same way that businesses do. The external environment is changing, we can see that. Business Schools need to respond if they want to be there.’

Taticchi was keen to reiterate what the role of an accreditation body is: ‘It’s not just about setting requirements and making sure that Business Schools meet those requirements.

‘It’s also about creating a best practice and helping Schools improve on what they do. There is an advisory board with accreditation bodies which is extremely important. That’s why sustainability should be part of the conversation for accreditation bodies.’  

Iliev closed this part of the debate by adding: ‘Accreditation is a consultancy process. We have created an inventory of the key terms that need to be implemented across all the programmes, including sustainability terms. An accreditation, such as BGA, can provide the template for Schools that don’t have the expertise in sustainability.’ 

The role of Business School rankings

Having discussed the role of accreditation in taking the sustainability agenda forward, the panel moved on to discuss ratings and rankings – which they were challenged to consider in terms of a help or hindrance to Business Schools when recruiting students. 

‘I think that there is a difference between ratings and rankings’ said Robert. ‘We talk a lot about rankings and not so much about ratings,’ she continued. ‘For the rankings, obviously it’s a major thing for Business Schools. Everyone wants to be ranked number one but that is only one place, so they at least want to be well ranked.  That’s what Schools use to make sure that students are going to pick them, and that the activities in the Business School will fit what they need to move up the rankings ladder, which is an incentive. But we feel, as students, it is also good to have another tool which can be used, because once you are ‘ranked’ you either celebrate or you are disappointed. The ratings system has another purpose because you can do something about it.’ She explained that this was why oikos International launched a positive impact rating, which is about evaluating and assessing the positive impact Business Schools have on society and students. 

Robert said: ‘In the positive impact rating we have different dimensions, like educating and engaging as well as governance, culture, programmes, learning methods, student engagement, the institution as a role model, and public engagement. Students are enabled to rate their Schools in terms of positive impact and, from there, the Schools have the data to know what the students think of their institution’s positive impact.

‘The goal is to encourage stakeholder engagement and everyone to work together to bring the Schools to another level, in terms of positive impact. There were no Business Schools in this first edition [of the rating] that reached the top level in terms of learning methods, in terms of institutions as role models, and in terms of engagement. 

‘We believe in Business Schools and we want them to move on and have positive impact. I think it’s important that the rankings take into consideration the positive impact of Business Schools, because in some ways this is where we need to go and in this sector we are trying to move ratings and rankings in that direction.’

Other panellists were keen to discuss rankings and what could be improved in their methodologies to support sustainability.

Crane was pulling no punches. ‘I think rankings like that of the Financial Times have had the most negative, pernicious influence on the greater development of Business Schools as you can imagine, in terms of dealing with this issue,’ he said. ‘It focuses on all the wrong things. I would say that in terms of getting Schools to focus on sustainability, responsible business and positive impact, its finally got a bit of sustainability in it, like 2%. But the whole salary uplift thing overwhelms this so that the overall effect is minimal.’  

But he added that the biggest problem with rankings are how Business Schools respond to them: ‘Schools are very good at managing the rankings,’ he said. ‘The trouble is that rankings are [often] based on students’ responses. The way that Schools react to that is to try and influence the student responses, not influence what they do in their Business School. 

‘So rather than focusing on their educational responsibilities, they will be much better at promoting what they are doing to the student body and they will be much better at connecting with their alumni and telling lots of positive stories and getting them to say lots of positive things about them.

‘For a relatively small School, the idea that you could be the top of a sustainability ranking is like gold dust. Your dean will listen to you if you can say we can get you from number 20, to number one if you do X, Y and Z. You might never get to the top of the Financial Times ranking, but you can become number one in another ranking.’

Imperial’s Zollo agreed, stating: ‘I think it might be the time to really think about perspectives in creating the rankings. So far rankings have taken the perspective of the student: what do they want? 

‘It’s about time that we took the perspective of “what kind of MBA does society need?” and “what kind of MBA elements do we need to forge?”

‘That should be the overarching criteria to create the various metrics on which Business Schools have to compete.’  

St.Gallen’s Walls put forward her fear that Schools might, in fact, dismiss ‘smaller’ rankings because they will be perceived as ‘less important’ in time-pressured and political university environments.  

‘This is why it would be great if the larger rankings bodies focused on sustainability, because not everyone pays attention to specialist rankings,’ Walls said.   

Stakeholder relations

Building on this, Pogutz explained that one point missing in the sustainability agenda is the relationships that Business Schools have with their various stakeholder groups when it comes to prioritising their competencies. 

‘Climate change is urgent,’ Pogutz said, ‘and we may not have time to repeal the effect of it. It will take a lot more time [than the nine to 10 years we have]’ before pointing out that sustainability is multidisciplinary. 

‘How many of us have ever heard of anyone from natural sciences speaking about climate change? If you take all of the social dimensions of it [into consideration], such as human rights – who are the experts in human rights in Business Schools and how can we build pathways in Business Schools in this type of topic? 

‘We have pressure because the agenda is there and we have a long way to go. There is a huge cultural transformation.’  

Inspiring cultural change

As the debate drew to a close, the panellists agreed that while issues around rankings and course design were looming hurdles in developing a sustainability agenda across Business Schools, accreditations and research – such as those offered by BGA – would support Schools in embedding sustainability in business education. 

The biggest challenge identified, however, was implementing a shift in the culture and internal politics of Business Schools and the wider universities of which they are a part – and measuring the impact they are having in terms of this culture shift, and the wider sustainability and climate change emergency. 

The panel agreed that the first step would be collaborating to prioritise this pressing issue and communicate it to students, employers, and external and internal stakeholders before it’s too late. 

Held in partnership between AMBA & BGA and Imperial College Business School, ‘Integrating sustainability into business education’ took place at the London institution’s campus in February 2020. 

The panel for the event consisted of: Andrew Crane, Director of the Centre for Business, Organisations and Society, University of Bath; Clémentine Robert, President, Oikos International; George Iliev, Director of Strategic Projects and Innovation; Accreditation and China Director, AMBA & BGA; Judith Walls, Chair for Sustainability Management, University of St.Gallen; Maurizio Zollo, Head of the Department of Management, Imperial College Business School; Paolo Taticchi, Director of the Weekend MBA and Global Online MBA, Imperial College Business School; Stefano Pogutz, Tenured Faculty of Management, Department of Management and Technology, SDA Bocconi. The panel moderator was Andrew Jack, Global Education Editor, Financial Times.

This article was originally published in Business Impact magazine, issue #4 (June 2020).

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Integrating sustainability into business education: part I

Earlier this year, BGA brought together a panel of Business School leaders to debate how sustainability could be integrated into the DNA of higher education effectively, to prepare business and society to address the challenge. Daniel Kirkland and Ellen Buchan report

Sustainability is one of the key issues facing society today, and garners increasing attention from governments, the media, academics and industry.

In response, BGA partnered with Imperial College Business School earlier this year to host an event focused on integrating sustainability into business education, which included a lively panel discussion among sustainability experts who delved into various aspects of the sustainability agenda, including the economic, the environmental and social perspectives. Business Impact attended the session and picked out some highlights and key takeaways from the debate.

Andrew Jack, Global Education Editor at the Financial Times (FT) kicked off the discussion in his role as moderator: ‘The Financial Times does deep coverage on business and business education, and we do a number of rankings’, he said. ‘But the FT itself has a new agenda which is about balancing profits with people, planet and purpose, so this area of sustainability, corporate responsibility and social impact is something that’s deeply important to us and is part of the reflection that we’re undertaking around the review of our rankings.’

He added: ‘I think a lot of people in this room share an understanding of the importance of sustainability, but of course given the historical culture of business, I wouldn’t say that the driving force behind the demand [for sustainability] has come from employers, or the majority of students, necessarily,’ before asking participants what the level of demand coming from employers and students really is for Schools to take sustainability more seriously and to integrate it into their teaching.  

Demand for sustainability

Paolo Taticchi, Director of the Weekend MBA and Global Online MBA at Imperial College Business School, took forward the conversation around the demand for sustainability: ‘In terms of the percentage of students demonstrating an interest for sustainability, I’ve seen this growing in the past six years,‘ he said.  

‘If you look at the number of electives that we offer in the sustainability space, all of them are doing well. We recently launched a module called ‘the future of cities’ where we look at the future of sustainability. Immediately we see there is demand for that. 

‘We are also seeing a growing number of students becoming interested in activities relating to sustainability, including workshops, conferences, and networking events which are organised by our students around investing in responsible business, diversity, or inclusive business.’

Judith Walls, Chair for Sustainability Management at the University of St.Gallen, added: ‘We have seen a strong student interest [in sustainability] for more than 30 years. If I look at master’s programmes, there is very high interest and demand in sustainability and people self-select into certain courses but I had the experience, recently, at the MBA level where we were offering a course and there wasn’t enough interest in sustainability. We didn’t have enough MBA students signing up and we cancelled the course. We’re now reviewing how we sell sustainability to MBA students. ‘At the university itself we have more than 10 student groups that are dedicated to
social and environmental sustainability,‘ Walls added. ‘So there are a lot of bottom-up initiatives from the students themselves.’

Clémentine Robert, President of oikos International, a student organisation that seeks to strengthen sustainability-oriented entrepreneurship, said that there was a higher demand every year for sustainability from students.

But she moved to address the apparent lack of interest in sustainability from the employer perspective, saying: ‘Basically, sustainability – at its core – is not necessarily there. It’s not what [employers] look for when recruiting a student for an internship or job. They want an ethical mindset and that is central to the recruitment process. Previously employers were not really looking for that in the recruitment process, so I would say that this has evolved. But there is still a lot to do, so we’ll keep working.’

The international business education arena

Maurizio Zollo, Head of Imperial College Business School’s Department of Management and Entrepreneurship has previously held roles at SDA Bocconi in Milan previously, and as a Visiting Professor at MIT in Boston, so he was keen to discuss the different approaches to sustainability between Italy, the UK and the US. 

‘In the European context there is a lot of growth and there is a lot more ease in both promoting and integrating sustainability content in programmes,’ he said. ‘The employer side, is still slowly progressing. 

‘Progress on the other side of the pond – in the US – is mixed. Some Schools seem to be able to find the appropriate way of doing this. It is typically Schools that are small, Yale [School of Management] for instance, that are able to rethink and redefine the whole MBA, starting from simple assumptions [based on] stakeholder organisation. We only have one planet, not two and a half. You know, that type of obvious assumption for those of us that are converted [to championing sustainability].’

Critical mass

Stefano Pogutz, Tenured Faculty of Management at SDA Bocconi said he was seeing ‘critical mass’ in terms of students seeking sustainability courses: ‘I see a lot of movement and attention at the undergraduate and the post-graduate level. The numbers are growing to the point that we are in trouble because now there are too many people and this type of active education cannot extend to 120 people in a class. 

‘The MBA has been a bit more resistant, so at Bocconi we’ve slightly changed the first year of the programme… Let’s see how it will be at the end of this year. I have mixed feelings right now. I think [the MBA programme is] where you have a little more resistance; it’s a common theme.’ Pogutz’s comments were followed by those of Andrew Crane, Director of the Centre for Business, Organisation and Society at the University of Bath who agreed that there had been a definite increase in sustainability on Business School programmes during his career: ‘We’ve got more students interested, we’ve got more faculty interested, and we’ve got more courses on sustainability, which is the good news story,’ he said. ‘The bad news story is it can only go so far. I don’t think there is a level of student interest or demand to really pull it deep into the curriculum. I’ve worked for the past 20 years in at least three of the top Schools for integrating sustainability into the core of the curriculum. If you want the percentage of students that are actually demanding more sustainability content, it is 1%. I get an MBA programme of 100 students. Within that, you’ve got one or two students who are the activists. 

‘And those are the programmes that are already doing pretty well. They’ve already got a core course dealing with sustainability, and an elective on sustainability. The challenge is getting students to think that they need more. They’re saying, “we already did sustainability, what else do I need to know?” 

‘So the challenge is, if we want greater student demand, how do we get students to ask for more than we’re currently giving?’

International examples 

George Iliev, Director of Strategic Projects and Innovation; Accreditation and China Director at AMBA & BGA, explained that, at the time of the event, BGA accredits five Schools globally and that, as part of this recently launched accreditation process, each institution’s sustainability credentials are examined. 

He explained: ‘One [BGA-accredited] School is in China and the programme that integrates sustainability the most in its curriculum is a joint management and engineering undergraduate programme. ‘I’ve never seen employers speaking so positively about the graduates of this programme. Granted, it is probably not the sustainability that is driving this, it’s the mix of engineering, management and electronics at the university.’ Iliev went on to discuss a School in Finland, which has been running a master’s in corporate environmental management since the 1990s, remarking that its students are very successful in finding jobs. 

This article was originally published in Business Impact magazine, issue #4 (June 2020)

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Understanding the drivers and challenges of sustainable business

Sustainability in business has become a vital selling point, but companies remain value-maximising entities, writes Audencia Business School’s Iordanis Kalaitzoglou

In response to spiralling scientific evidence for climate change, increasing numbers of countries are introducing environmental legislation. Global political will in this area appears higher than ever, as evidenced by the 2015 UN Climate Change Conference (COP21), 2016’s Article 173 of the French Energy Transition Law, and the European Commission’s action plan on sustainable finance. There has also been 2019’s election of Ursula von der Leyen, who put environmental action high on her agenda as President of the European Commission and successor to Jean-Claude Juncker.

However, empirical evidence suggests that much environmental legislation is either overly ambitious or inadequate, meaning that the vast majority of countries do not meet their environmental targets. The usual explanation for this is that environmental action is not cost effective. Yet this is inconsistent with the fact that, over the long term, energy generation from renewable sources will become stable and economically viable. For example, around 75% of coal production in the US is now more costly in generating energy than solar panels and wind turbines, according to a study for Energy Innovation, a San Francisco-based firm that analyses clean energy and climate policies. 

Wish lists rather than concrete plans

Unfortunately, the political will to disengage from fossil fuels does not seem to be strong in the US, while other countries, such as Brazil and Turkey, prioritise economic objectives over environmental goals. 

This leaves global energy summits seeming more like an exercise in creating wish lists than opportunities to formulate concrete action plans. In fact, evidence shows that very few countries address their environmental impact adequately, with the result that global greenhouse gas emissions are reaching ever-increasing heights. Several reports stress that we are the last generation that can act on preventing climate change. They also suggest that unless significant action is taken now, the ensuing crisis will lead to worldwide social, political and financial turmoil on a level not seen since the Second World War. Even so, the setting of high targets while carrying on with ‘business as usual’ seems to be rooted in some strong macroeconomic trends.

Environmental corporate incentives

The warning signs are already here. July 2019 was the hottest month ever recorded on Earth. Even if we put this fact aside and look at the issue from a simple business standpoint, the growing sense of urgency around climate change is creating a strong demand for more ethical entrepreneurship and for products that address environmental concerns. In other words, sustainability has become a selling point as well as being necessary for human survival. Companies therefore have a strong incentive to show that they are in line with their stakeholders’ environmental concerns. 

A significant number of companies are beginning to cater more overtly to the ever-increasing demands of their stakeholders, to present a greener profile to their customers and suppliers, and to society in general. This shift in public demand means environmentally friendly activities have become commercially valuable. An environmentally friendly social profile has become so popular that there are now agencies that evaluate firms’ environmental performance and financial entities that focus exclusively on green firms. 

But if environmental friendliness is so high on so many companies’ agendas, why are so many companies, and countries as a whole, still not aligned with officially recommended environmental targets? Are these companies’ actions simply inefficient, or are there other factors holding things back? 

Most likely, it is both.

Financial corporate incentives

Companies are value-maximising entities. The primary objective of management is to increase the wealth of shareholders because they are hired by, and answerable, to them. Over the past few decades, it has become generally understood that value maximisation is an holistic approach that doesn’t just include financial objectives, but encompasses anything that can affect the profile of a company. In that spirit, companies are inclined to offer what their stakeholders request in the best possible way. If an environmental profile is in demand, it is advantageous for a company to adopt it. 

Yet, sacrificing consumption power in favour of the environment does not resonate unconditionally with consumers. As the ‘gilets jaunes’ protests in France, or US coal and oil protectionism measures designed to save jobs, have shown, this tends to influence government actions. 

A sharp shift towards a zero-carbon economy would require a drastic shift in consumption habits. For example, energy generation from renewable sources, although abundant at times, is not stable and might result in periods of low energy generation. This might require electricity consumption (industrial and retail) to be adjusted, but current demand for electricity is completely inflexible at a global level. 

Similarly, green products might require higher production costs, which would make them more expensive. Energy-intensive industries and price-sensitive consumers are then more likely to prioritise financial needs over environmental ones. 

Companies therefore often face a trade-off between being environmentally friendly and price competitive. These two things are not necessarily aligned, so companies choose to optimise, rather than specialise. The criterion they optimise is their value-maximisation objective. This is somewhat sensible from an economic point of view, since it is more realistic to adopt new measures gradually, rather than to induce a shock. It is also the spirit of EU policies, in which promoted incentives focus on becoming smarter rather than better. This equates to a period of transition, during which individual firms and national economies are expected to move gradually towards a zero-carbon state. 

Companies’ incremental adjustments are looking to find the right balance between environmental friendliness and value maximisation. This is why their current actions might seem inefficient: the macroeconomic trends driving these actions do not yet support a full environmental engagement.

Window dressing vs. lobbying 

The economics of energy transition create both financial and environmental incentives, so different firms should be expected to pursue different strategies, according to their energy profiles. 

For example, it would be much more difficult for an energy-intensive firm, or a fossil fuel company, to change its business model drastically in order to be more environmentally friendly, because this would involve significant investment and cost. 

However, since a company’s profile is often improved if it makes this change, or at least gives the impression that it is doing so, businesses might take less conventional actions to preserve or increase their value in this way. There are two types of corporate activity that are observed frequently in this arena: ‘window dressing’ and lobbying.  

The private sector is well known for trying to bend political will towards its financial incentives by lobbying decision makers. But, when it comes to environmentally sensitive issues, these actions are often met with firm public opposition. The consumer base, especially in mature economies, is becoming more environmentally sensitive and lobbying activities that are perceived to have a negative environmental impact can also have a negative impact on the companies involved. 

Companies have been very active in trying to improve their public profile with respect to their environmental impact, but most continue to lobby at the same rate. 

In some cases, as in the examples of the big five fossil fuel companies (BP, Shell, ExxonMobil, Chevron and Total), PR campaigns are designed to show that attempts to reduce environmental impact are being made, while spending continues out of the public eye on current – and not so environmentally friendly – activities and/or lobbying. 

Again, a drastic shift in stakeholders’ consumer behaviour would help reduce the impact of lobbying, either by supplying a financial objective for these firms, or through changes to the political agenda and reforms to the relevant legislation. 

Is it all that bad?

Greater environmental awareness and a demand for more sustainable products create the foundations for a potential shift in corporate actions.

Although the demand for environmental friendliness among stakeholders may be best described as ‘lukewarm’, with an electoral base that leads governments to pursue a very slow shift of resources and priorities towards environmental policies, there is significant progress that partially mitigates the impact of the rigid demand for energy. 

The most encouraging progress has perhaps come with the realisation, among stakeholders, that to promote more environmentally responsible policies, they must mobilise the aggregated demand towards more responsible consumption. This can be done by quantifying their arguments so that people can understand and compare the relative costs – while also making use of social media platforms to nudge people to amend their spending habits.

Shifts in aggregated demand would force companies to innovate and offer
more environmentally friendly products, with the support of governments. While current levels of change are insufficient, there have been notable developments. In the finance industry, for example, terms such as ‘climate change risk’, ‘social cost of carbon’, and ‘carbon price’ have entered the vocabulary, and green financial products have emerged. As little as 10 years ago, this would have sounded far-fetched. 

The public and private sectors both serve a social purpose and are supposed to meet the needs of their stakeholders in the best possible way. Consequently, if the social groups they serve amend their attitudes at an aggregated level, it is in the best interests of both the public and private sectors to follow. In other words, if everyone played the same game, everyone would win. However, considering the demographic composition of the electoral basis, this should not be expected to happen any time soon.

Iordanis Kalaitzoglou is a Finance Professor at Audencia Business School, France. 

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Preparing tomorrow’s leadership for climate change

Schools must help tomorrow’s leaders take decisions together, with those from several areas of expertise, while understanding how these decisions will affect different groups in different ways across the world, say the University of Gothenburg’s Thomas Sterner and Åsa Löfgren.

Global changes are so significant that geoscientists speak of Earth entering a new geological era, the ‘Anthropocene’, during which many crucial variables for the planet are controlled by man, and our activities and consumption patterns risk exceeding the planetary boundaries. This leads to a changed climate, acidification of the oceans, loss of biodiversity and many other global environmental problems. These problems are global, long term and uncertain. They are also interconnected and must be analysed together in order to find solutions that provide synergies and avoid those that solve one problem but worsen others.

For example, it is not sustainable to aggravate problems related to a loss of biodiversity, or vital water/nutrient cycles, when you are trying to solve the climate problem through a poorly conceived forest policy.

Biologists, physicists and other natural scientists document and analyse many of the changes mentioned above, and are usually the ones who write about planetary boundaries and the Anthropocene. Social scientists, meanwhile, are experts on how society and the economy work. Both of these areas of expertise are indispensable when analysing social causes and proposing solutions that are effective and politically feasible. Therefore, collaboration between economists, social scientists and natural scientists is urgently needed to discuss solutions.

An interdisciplinary approach

Business Schools have the important task of preparing students to become tomorrow’s leaders in business and other organisations. It is vital that these aspiring leaders are given tools to understand our current and future predicament since it will be decisive for future success and, indeed, survival. One of the prerequisites for a sound future education is an interdisciplinary approach to problems where this is necessary. When it comes to sustainability, we need expertise that understands both natural and social sciences. 

When training tomorrow’s leaders, standards must be high in all areas. We need interdisciplinary understanding of environmental challenges and opportunities, high ethical standards, and a capability to
work with leaders from other countries, cultures and disciplines. 

The School of Business, Economics and Law at the University of Gothenburg (the School) has taken on this challenge in several ways. Most importantly, it is a strategic mission of the School to integrate sustainability into all education: ‘To develop knowledge, educate and foster independent thinking for the advancement of organisations, policy and a sustainable world’.

Over the the past decade, the School has turned its mission into practice by integrating sustainability-related learning outcomes for all undergraduate programmes and strengthening the progression of sustainability concepts between courses. This allows programme coordinators and lecturers to develop curricula in the knowledge that these learning goals must be met.

Sustainability days

Another important activity is the School’s compulsory sustainability days. The concept was introduced in 2013 and was implemented fully in all undergraduate programmes in 2016. It consists of three full days of focus on sustainability from various perspectives. The overall aim is to complement the sustainability content of courses by raising awareness and providing knowledge around three themes: challenges, responsibility, and solutions. During this time, students from different programmes meet and learn to work with, and respect, those from a variety of backgrounds.

At an international level, and in collaboration with Gothenburg’s Chalmers University of Technology, there is the School’s Environment for Development unit. With support from the Swedish International Development Cooperation Agency, the Environment for Development has trained PhDs from emerging markets in environmental economics for decades and helped build centres in more than 12 countries in the
Global South. 

In the future, the unit’s plan is to co-teach master’s courses with students in several countries simultaneously. In a pilot course run at Chalmers this year, students in Asia, Africa and the US solved problems related to fairness in climate negotiations simultaneously. In a second step, students held discussions with real climate negotiators to develop their negotiating and leadership skills. A capability to work with leaders from other countries,
and understand the positions of other groups or countries, is key to addressing global environmental problems such as
climate change. 

More specifically, while it is important to find effective solutions, it is also important to educate students about the income distributional effects of policy measures and their perceived fairness. These effects are vital determinants of political feasibility and aspects that must be considered carefully when policy instruments are selected and designed. The task is complex since policies need not only be feasible in Europe or the US, but globally. 

There are ways that global environmental problems can be addressed. But the solution relies on there being leaders who are responsible, knowledgeable and understand the importance of, and are open to, collaboration with those who possess skills from other disciplines. Business Schools have a responsibility and an important role to play in the education of such leaders.

Thomas Sterner is Professor of Environmental Economics and Åsa Löfgren is an Associate Professor in the Department of Economics, part of the School of Business, Economics and Law at the University of Gothenburg.

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Business Schools for business and society

Business Schools must understand how they can contribute to the wellbeing of society, adopting an active stance, writes Loïck Roche, Director and Dean at Grenoble École de Management

On 11 December 2017, the then French Minister of Environmental Transitions and Solidarity, Nicolas Hulot, announced in a speech, at the Medef Employer Federation in Paris: ‘We [the French Government] are going to help companies evolve in terms of their social objectives, which can no longer be limited to earning profits without regard for working women and men, and without consideration for environmental consequences.’ 

His proposed French Pacte Law (action plan for business growth and transformation) was put forward, with the goal of helping to ‘reintegrate morality in capitalism’. 

To ensure financial objectives better support the greater good, the law will re-write two 200-year-old articles in the French Civil Code (articles 1832 and 1833, see box overleaf). 

The articles redefine a company’s role as simply  creating profit for shareholders. The proposed modifications will integrate social and environmental considerations. At the time of AMBITION going to press, the law was to be voted on in autumn 2018 and its primary actions could come into effect as early as 2019.

But, taking this news out of the context of the French arena, and into the wider global economy, could this development suggest that the era of the Chicago School and one of its most noted economists Milton Friedman – who coined the phrase ‘money matters’ – is over? 

A reason for existence

The step change outlined above looks set to take business thought back to 19th and 20th century business magnate Henry Ford’s fundamental advice: ‘Business must be run at a profit, else it will die. But when anyone tries to run a business solely for profit, then also the business must die, for it no longer has a reason for existence.’

This gives us, as Business School leaders, the opportunity to position social responsibility as the foundation for business. 

The perspective that a company can no longer exist within a silo, but instead must be part of the whole, builds on the stakeholder theory developed by R Edward Freeman, an American philosopher and Professor at the University of Virginia’s Darden School of Business.

His theory suggests companies should not only consider their own interests but also the interests of all concerned parties (employees, customers, stakeholders, leaders, and so on). This helps to improve the wellbeing of society. Corporate social responsibility is an example that was born from the concrete application of this approach.

To implement these changes, and to ensure companies accept that they must go beyond their mission (to manufacture products or deliver services) and participate in a larger responsibility, Business Schools have a primary role to play as they train future managers and leaders and offer continuing education for working professionals who are ready to question their practices.

Beyond the ‘usual goals’ of the Business School

The first step in taking on this new role, is to go beyond a Business School’s usual goals (for example ‘training the leaders of tomorrow’ or ‘ranking in the top 10, 20 or 30’) in order to ask: ‘why train the leaders of tomorrow?’, ‘what do the leaders of tomorrow need to be able to do?’, and ‘why attempt to be in the top 10, 20 or 30 Business Schools?’

The second step is a result of this exploration: in addition to working through these questions with students, professionals and employers, Business Schools have to consider the bigger picture. 

Much like what is expected of companies, Business Schools have to understand how they can contribute to the wellbeing of society. As a result, Schools are preparing and implementing a process of change to become ‘schools for business for society’. 

It is a positive sign to see that what was once the perspective of a few has become a generally shared vision. While not all Business Schools are currently working in this way, they are all headed in the same direction and that’s a great result.

It might not seem like much, but there is an important difference between saying ‘we want to train the leaders of tomorrow,’ and ‘we want to train the leaders of tomorrow to do something special’. 

It’s vital to understand that this concept of doing ‘first, for society’ is, in fact, quite complicated to implement because it’s a reversal of traditional values. For Business Schools,  it means that if we only carry out our mission to offer training and support research we will miss our fundamental objective. And, if we miss this fundamental objective, we will still be doing something positive – but the current stakes are so much higher.

In addition to working with students and companies, Business Schools have to offer a vision and solutions for major global challenges (issues surrounding end of life, climate change, energy transition, immigration crises, terrorism, epidemics, corruption, child exploitation, human rights, women’s rights, cybersecurity and artificial intelligence).

The challenge for Business Schools

The mission is for Business Schools, and higher education in general, to continue working in their particular fields of expertise, while contributing to solving the world’s larger challenges. They have to go beyond their comfort zone; in other words, move beyond their limited focus on business, in order to understand and explore the complexities of the world. 

It’s a change that will enable them to provide support in overcoming the major hurdles faced by society.

When Business Schools take the step to work on major societal problems, they open the door to risks and are forced to take sides. By this, I mean that Business Schools do not currently think (and this is a simple fact, not provocation). Their researchers and professors think, but the Schools themselves do not. They ‘describe’ and often they do so after the fact. This was illustrated by the 2008 financial crisis – no Business School anywhere in the world predicted or anticipated this crisis. In other words: Schools do not think, they do not take sides, they do not act.

For example, what does Harvard Business School think about problems impacting on society? Does Harvard voice an opinion, not on immigration, but on what we should do in concrete terms about immigration and immigrants? Going further, if a School’s opinion supports immigrants, does the School work actively to welcome them?

Another example that might offer better perspective is the case of US President Donald Trump. The researchers and professors at Harvard voiced many negative opinions before and after the election of Trump. But in concrete terms, what has Harvard done about it? Nothing. 

If the School had an editorial policy, if it truly wanted to change the world, then Harvard wouldn’t simply denounce policy or take sides. The School would act in concrete terms. How? For example, by setting up locations in the US where people voted overwhelmingly for Trump. 

That would be going beyond its comfort zone in Cambridge, Massachussets, and entering the playground where things are taking place. To understand societal changes, events and facts, it’s important for Business Schools to be ‘external’ and to maintain a certain impartiality. But if you want to change things – and to have an impact – you have to be where the action is. While Business Schools have been limited to describing and explaining, they now also have to (and I do mean ‘also’, not  ‘instead’), state their aims, choose sides, communicate and convince. 

They have to act, which is at the heart of being engaged and inciting change within the world. In this way, Schools can help federate the business world and public institutions in order to work together on important human values and the goal of companies: to perform and create profit for all concerned parties, thereby improving our shared social fabric and contributing to the common good.

Loïck Roche is Director and Dean at Grenoble École de Management (Grenoble Business School). Coming from a corporate background, he worked for 10 years in France and internationally as a consultant in the field of human resources.