It’s time to think full circle when setting sustainability goals

Business Impact: It’s time to think full circle when setting sustainability goals

We need to start thinking in a more circular and less linear way when it comes to the world’s precious resources, and take a phased approach to meeting climate targets, says Keith Charlton, COO at retail solutions firm, Mainetti

The targets set at COP26 [the 2021 United Nations Climate Change Conference] were ambitious and, for many, daunting. Some industries and countries were fearful of agreeing to targets they felt were too ambitious to meet, but surely the biggest failure is not to act at all. 

Climate change and sustainability is on corporate agendas, as governmental, investor and consumer focus on these issues intensifies. It is crucial that businesses from all sectors increase their sustainability efforts. The best way to tackle climate change remains a source of debate, with various factors to consider, such as changing people’s behaviour and attitude, questioning current practices, and enhancing technological innovation. In the drive to address climate change and sustainability, no single entity will have all the answers and be able to develop all the appropriate solutions. Collaboration will be fundamental to combining resources and expertise to combat climate change. As such, innovation will yield practical solutions that will make a real difference in shaping a greener future. But above all, we need to start thinking in a more circular and less linear way when it comes to the world’s precious resources.

For a company to not only survive but thrive, sustainability must be at the forefront. Companies of all shapes and sizes are finding ways to reduce waste to help protect the planet. Reducing the use of virgin plastic and embracing renewable energy are just two of the big changes we have made, and we are seeing real progress.

The plastic problem

The introduction of the plastics tax across Europe, coupled with calls for more recycled packaging from today’s consumers, has led to a far greater demand for recycled plastics materials.

Plastic bags and wrappers make up a quarter of all the packaging in the UK and yet only 6% is recycled, according to climate action NGO, WRAP. In most countries, recycling facilities are woeful and the amount of plastic heading for incineration is troubling due to the emissions it produces. Collaboration between policymakers, businesses and consumers alike needs to happen to improve infrastructure, introduce smarter policies and we all need a laser focus on recycled, composted, or reused plastic. Ultimately, we need proper recycling mechanisms to reach targets and change habits to reduce waste going into landfill.

The increased demand for recycled plastic poses its own challenges as supply struggles to keep pace with demand, resulting in soaring prices and good quality recycled plastics costing almost as much as virgin plastic. One way of solving the issue of the limited supply of recycled plastic is to invest in your own facility or technology. Last year, for example, Mainetti launched a global initiative that allows retailers to implement a closed-loop clear polythene recycling system called ‘Polyloop’.

Of course, there will always be the question of responsibility and ultimately, that belongs to us all, but governments should take the lead – as has been the case in Denmark. Denmark’s approach to waste is to view it as a valuable resource and by 2019, 92% of all plastic bottles and cans were recycled.

Taking a positive, more circular approach to recycling plastic can be a catalyst for innovation that results in less plastic waste. For example, the world’s largest toy maker LEGO (who also happen to be Danish) last year unveiled a prototype of its iconic plastic brick made from recycled drinks bottles. 

Renewable energy – the time is now

When it comes to decarbonisation targets, we must keep our eyes on the prize as there has never been a better time to adopt renewable energy. With current events in Ukraine, energy prices are rocketing with increasing uncertainty about supply. These pressures are not just a huge challenge, however, they also represent a massive opportunity. 

One country that has embraced renewable energy and set ambitious net zero targets to deliver great economic success is Iceland. Iceland has already realised a full energy transition in domestic heating and electricity generation. Today, 100% of local electricity and district-heating needs in Iceland are met from renewable resources. For over a century, they have sustainably harnessed both hydro and geothermal power which proved instrumental in transforming the country into one of the most advanced societies in the world. Of course, Iceland’s natural resources have played their part, but it was a commitment from the very top that made this happen.

Iceland has been taking a phased approach to meeting its own targets and, for any business just starting a sustainability programme, it is the measurable way to build momentum. It already boasts the second-highest share of clean cars in total sales in the world after Norway and the next phase will focus on other forms of transportation including sea and air.

At Mainetti, we too have taken a phased approach to decarbonising our business by using as little energy sourced from non-renewable fossil fuels as possible. We’ve been reducing the carbon footprint associated with our operations since 2012 by increasing energy efficiency, switching to onsite or grid-sourced renewable electricity where possible, and using Energy Attribute Certificates and then offsetting the remaining balance of our carbon footprint. Currently 61% of the energy used by the group is renewable with the aim of increasing this to 80% by 2025 and 100% by 2030.

If we want to tackle climate change and reduce our environmental impact, we must place more value on the goods we produce, buy and use. We live in a world of finite materials and it’s time to protect them before it’s too late by adopting a circular way of thinking. There are many examples we can learn from that are further along in their sustainability journeys who are willing to share insights and resources. Learning from them can empower countries and businesses that are waking up to the need to lower emissions and adapt more sustainable practices across sectors. What goes around must come around.

Keith Charlton is Chief Operations Officer at retail solutions firm, Mainetti

Leading a career that puts sustainability first: six things to look for

Business Impact: Leading a career that puts sustainability first

How can you look past today’s skewed outlook on sustainability and build a career that really acknowledges our limited resources? David Ko and Richard Busellato, authors of The Unsustainable Truth, offer six things to look for when considering your path

There is a lot of misunderstanding about what sustainability is really about. However, the simple fact is that to recognise there is a sustainability problem, we must first accept that resources are limited.

A skewed outlook

Today, we have a skewed outlook on sustainability, convinced that it is about finding a way to continue to produce what we can without damaging the world and its people. This is a business perspective where the objective is to meet targets on financial returns. The approach aims to persuade people that sustainability can be achieved either by perpetually reusing what we already have, or that technology will help find new resources.

Today’s business owners, the driving force behind this pursuit, are pension and savings institutions who operate on behalf of ordinary people – the same ones who are calling for a sustainable world. The wish of business owners is to look after the prospects of our future. It is all done with good intentions, but the truth is, when too much money is involved, good intentions become harmful. That is why no matter what we do, as long as we rely on money from our investments to provide for our futures, we cannot be sustainable.

Here are some basic facts that will help explain. In 2020, the pensions and savings from ordinary people worldwide already totalled over $100 trillion USD, and required more than a 10% return on that figure. It is even higher today. The 10% number is what pensions need to achieve so its members can avoid living in poverty when they retire. In practice, this means returning over $11 trillion USD a year, more than the value of all economic activities of Germany, France, the UK, and Italy combined.

This money exists on top of what we already need each year to pay wages and taxes, to spend on business’s developments, and of course, to top up our pensions and savings.

Growing by 10% means doubling output every seven years. At this pace, we cannot recycle enough to support a circular economy. If a clothing company produces one million items today and aims to make two million items in seven years, there will not be enough recycled materials to make the extra one million items. New materials will be required. So, if we grow by more than about 1%, then our need for new materials will exceed our planet’s ability to provide.

What to look for from companies

1. Double-check a company’s growth targets

If you are a graduate looking to make a genuine step towards sustainability, look at the policies of the companies you are interested in and ask, ‘is it targeting annual growth of more than 1%’? Beyond that, you can be pretty sure its policies are free-riding off someone behaving badly.

2. Be wary of ‘recycled materials’

Take for example, a company we like, Patagonia. They have a very sensible policy to move to using only recycled materials. However, if it is only able to recycle the extra million items because another company has produced them from new materials first, then what have we actually achieved? Sustainability needs us to look at the whole planet, what everyone else is doing. It is easy for us to claim that what we do is good. But in a world with limited resources, we have to ask, are we simply becoming free-riders?

Worse still, one person’s recycling can become the justification for others to use up new resources. When we build our business based on not wasting other people’s wastes, we actually end up encouraging more waste to be produced.

3. Try to challenge traditional takes on productivity

In the late 1920s, Henry Ford improved production to the extent that, at his more advanced plants, a new Model-T car rolled off the assembly line once every 10 seconds. Today, we are producing three cars every second, 24 hours a day, every day, including holidays. We are also burning more than a thousand barrels of oil per second to facilitate all of this. All of this is promoted by an efficiency focused on how many units can be produced per unit of input, and a marketing philosophy of ‘build it and they will come’.

This constant cycle of production is fed by outdated ideas of productivity and efficiency. In a truly sustainable world, we need to rethink all these choices.

4. Understand that real sustainability work adapts to people, not vice versa

Sustainability is ultimately about protecting people’s dignity and purpose for living even when life is hard and difficult. So, how can we keep working in a purposeful and rewarding way into old age without relying on money from investments? To do this, people should not adapt to work, instead we need a diversity of work to fit our different abilities. It is about experimenting with rewilding our human economy just as we are learning to ‘re-wild’ our natural environments.

5. Be prepared to challenge norms

Graduates today that are seriously interested in sustainability will have to address some real challenges. How can businesses collaborate so that we can have a natural means of preventing too many activities from happening? How can we move from a responsibility of looking good, to one of accepting that it is hard for ourselves and others to do things. This is so alien to what our schools and education teach us, emphasising that we must treat resources as precious, not a means for greater output.

6. Look for a business’s purpose before profit

For a young person entering into a company and hoping to influence it for the better, the biggest challenge is to be practical. Sustainability is about the survival of a company. How can it thrive when there is no volume growth? This requires a focus on the company’s real work – what is its natural niche so that it can rein back the financial, operational and climate leverages, and the implicit reliance on others doing more? It is about thinking beyond the gimmicks of doing good to focus on what is necessary, so that in the face of rising costs and hardship, the business will still have a niche and something to make it stand out.

David Ko (left) and Richard Busellato are Co-Founders of Rethinking Choices and authors of The Unsustainable Truth (2021). They are experienced investment managers turned sustainability advocates, having left the finance industry in recognition of the damage that expecting constant returns on investment causes to people and the planet. 

Zambian farmers fighting climate change

A business model that allows a product to be given away free of charge while harnessing hemp’s potential to enable polluting industries to offset their emissions. Peter Miles, CEO of eHempHouse, presents a case study of its work in Zambia

To fight climate change, Zambian farmers will soon be growing a crop that most of the world has long demonised. The crop removes 66 tonnes of CO2 per hectare per annum. That’s far more than trees or any other crop. Only mango swamps absorb more, so it has huge potential for the environment. Yet to grow the crop, they have to get a license from the government due to a misunderstanding that almost everyone has. The crop is hemp, which is not the same as cannabis or marijuana. Scientifically they belong to the same family; the legal difference is that hemp contains just 0.03% or less of THC (tetrahydrocannabinol). 

One of the many advantages of hemp is that it grows very quickly. It also has multiple uses, from clothing to food and fuel. It consequently gives Zambian famers a sustainable, profitable business. At eHempHouse, we’re helping these famers help themselves by offering them the SB™ system (a hemp-processing Smartbox) free so that they can successfully process organic hemp. The units are self-sustaining in off-grid communities as they use hemp oil for power. The power generated can then be used for other things to the benefit of the local community. 

An unusual business plan to help curb pollution levels

The business plan we’re using – which allows us to give the system away for free – is a slightly unusual one, but one that I hope will become increasingly common. In partnership with the farmers, we’re selling the carbon-offsetting that hemp provides, on the carbon markets. This off-setting allows polluting industries to mitigate some of that pollution. It means that next time you fly, you might be helping to finance the growing of hemp in Zambia.

There are voluntary carbon markets and some that deliver regulatory compliance. Most industries are now having to consider getting involved, whether or not they’re compelled to, as consumer pressure is increasing every year. It is, therefore, an important issue for all businesses to understand.

There is a danger that some polluting industries will believe that off-setting their emissions absolves them of all environmental responsibility. But of course, things are not that simple.  Pollution levels are currently nearly 420 parts CO2 per million in the atmosphere. Pre-industrialisation, it was 280 parts CO2 per million. And pollution levels will continue to rise for some time as emissions from countries, such as China, are still increasing.  

To fight the climate crisis, industries have to take a threefold approach:

  • Remove CO2 
  • Replace polluting products 
  • Develop mitigations for being able to live with the changed climate 

Our business model addresses all three action points: hemp removes carbon at higher levels than almost anything else, the products are far more environmentally friendly than the more commonly used competitor products and eHempHouse is making it possible for polluting industries to offset their emissions.

Promoting hemp’s potential and working to repair an undeserved reputation

The battle we have is to persuade the world of the huge potential of the crop. I’m very proud to say that we already have a lot of support from influential people, and we’ll be featured at COP26 (the UN climate change conference) at the end of October.

Why is it a battle? Why was such a fantastic crop demonised? The most obvious answer is because of its association with recreational drugs. However, you also have to look at who gains from that misunderstanding. We now know that the cotton industry is bad for the environment, yet how many hemp clothes do you have in your wardrobe compared to cotton ones? We know that much of the food industry is destroying the environment and that this is true even for vegan food products. Yet, how often have you eaten hemp products? Do you even know how you can eat hemp? 

There are numerous industries who gained from the destruction of the reputation of such a fast growing and cheap crop. And in business reputation is everything. Contrary to the popular rhyme, words can harm people, industries and even the planet. We’re working hard to put right that wrong.

Peter Miles is the CEO of eHempHouse.

Adding drops to the ocean of change

Hands cupping the earth that is shaped like a giant water droplet. Adding drops to the ocean of change.

Business Schools can enhance understanding of climate change and inspire action, say representatives of the University of Stellenbosch, Lagos Business School, CENTRUM PUCP, and HEC Montréal

In the third decade of the 21st century, raising awareness of climate change – its causes and its effects – is still a central concern for society, and it is an area in which Business Schools can lead.

Oreva Atanya, Manager of the Lagos Business School Sustainability Centre at Pan-Atlantic University, sent out some words of caution for Business Schools in a session at the AMBA & BGA Global Conference 2021. ‘Even with our multiple programme streams, including the executive MBA and the full-time MBA’, Schools are only directly influencing a limited number of people,’ she said, adding that these people will come up against different perceptions and interpretations of the problem, and varying priorities.   

Awareness and agents of social change

‘People have other problems,’ agreed Julianna Paola Ramírez Lozano, Director of Sustainability at CENTRUM PUCP. ‘With social issues, corruption, and all the other problems, climate change is on another level.’

Ramírez Lozano told attendees that her dream is for everyone in the world to read Bill Gates’ book How to Avoid a Climate Disaster, because the key is to understand the problem. Business Schools must seize their opportunity to raise awareness, she argued, not least because ‘the media and a lot of government organisations don’t speak about this problem’. MBA students can then have an impact in their communities. ‘I believe that our students are agents of the social change,’ she said.

Awareness is also one of four ‘virtues’ that should be prioritised for the future (alongside empathy, prudence and courage), according to Jako Volschenk, Head of MBA Programmes at the University of Stellenbosch Business School. ‘MBA programmes must raise the awareness of students. I think the number one problem is that people aren’t aware of what climate change is, who’s causing it, and so on,’ he said. 

Talking of empathy, he added that ‘most of us in Business Schools are, by world standards, super rich, but we have to take on the role as stewards of society’. Prudence relates to ‘the idea that you know when you have enough, you stop. There’s not enough for everyone to live an extremely wealthy life’. And emphasising courage, he said: ‘We have to teach students to take on leadership and say, “we can do something and we want to do something”.’

Consistency with values in Business School operations

Meanwhile, Louis Hébert, Director of MBA and EMBA programmes at HEC Montréal, highlighted the importance of looking at a Business School’s operations as well as its programmes and teaching. Not only does this increase awareness but it also adds credibility to a School’s other outputs in this area.

‘We felt that it was also essential for us to be an example if we really wanted to have an impact in our society and communicate the importance of climate change,’ he said.

‘We needed to run the Business School in a way that was consistent with our belief in the urgency of climate change, so that has led us to introduce a variety of initiatives addressing those issues in the way that we manage the Business School.’ He added that the School has since been able to cut its carbon footprint by half.

In one example, Hébert described how a relationship with a local NGO had enabled 250 out of the 300 computers discarded each year to be given to primary and secondary schools, at home and overseas. ‘We were reducing the amount of waste but also helping other educational institutions,’ he said.

Voices of change emanating from the world’s Business Schools can have a significant impact, in terms of enhancing people’s understanding of global issues and inspiring people to take action. Atanya concluded: ‘There’s something we say in Africa: little drops of water make a mighty ocean.’

Speakers
Orevaoghene Irene Atanya; Manager, Lagos Business School Sustainability Centre, Pan-Atlantic University, Nigeria
Louis Hébert; Director of MBA and EMBA programmes, HEC Montréal, Canada
Julianna Paola Ramírez Lozano; Director of Sustainability, CENTRUM PUCP, Peru
Jako Volschenk; Head of MBA Programmes, University of Stellenbosch Business School, South Africa

This article is adapted from a feature that originally appeared in Ambition – the magazine of the Association of MBAs.

Team green: how to engage employees in company sustainability

The trees in the sky with a giant outline of a puzzle shape gap in the middle reveals the sunny blue sky. This is symbolic to sustainability.

The key to getting employees engaged in sustainability is to relate it back to something that is important to them, says Head of Sustainability at Sandvik, Mats Lundberg, in this guide to securing company-wide co-operation

Companies which generate value from their sustainability programmes also have a significantly higher incorporation of sustainability in their corporate culture and training, according to the results of a 2021 McKinsey survey. With that in mind, this article considers how can companies can use their greatest asset, people, to reach sustainability goals.

While moral responsibility drives sustainability goals, an increasing number of companies are becoming aware that these targets also generate business value. The majority of sustainable changes made by companies, such as reducing waste, simultaneously benefit the planet and the business’ bottom line.

In addition, companies which are making efforts to become more sustainable are better perceived by their stakeholders. Being an environmentally responsible company can attract more investors and appeal to potential employees. Plus, more and more customers select brands and products based on their sustainability credentials. In fact, a 2021 survey by Deloitte found that 28% of consumers have stopped buying certain products due to ethical or environmental concerns.

Company-wide co-operation

However, progressing towards sustainable targets successfully and realising the associated business benefits requires company-wide participation. It’s important that employees from all levels get involved, as everyone has a responsibility to contribute towards sustainability, and small achievements over time create great change.

While each organisational change makes a difference, progressing towards sustainability also requires an adjustment in company ethos and mentality. The company I work for – the global engineering group, Sandvik – therefore refers to progressing towards its sustainability goals as ‘making the sustainability shift’ to represent the change in mindset and routine required.

The key to getting employees engaged in sustainability is to relate it back to something that is important to them, such as how it will benefit their work and relationship with customers. For example, managers can explain to sales engineers that, if they create more sustainable products, they will be more attractive to customers and generate greater sales. In fact, a 2020 HSBC report found that more than three quarters of firms expect sales to grow because of an increased focus on sustainability.

It’s important that employees are not just told what to do, with no involvement or reasoning. Getting employees interested in sustainability also means engaging them in developing proposed changes, policies and solutions. Collaboration is important, as well as taking the time to listen to employees’ ideas and providing the relevant training.

A dedicated platform for engagement with sustainability

This year, Sandvik has launched a platform designed to allow employees to access, exchange and evolve ideas that boost sustainable business. The Ideas Hub aims to democratise business sustainability by providing each employee with the equal opportunity to initiate the sustainable projects of tomorrow.

Using it is much like using a social media platform, and provides options for employees to engage and make comments on others’ ideas, as well as to submit their own. Employees also have the opportunity to ask questions or set up challenges. The most creative ideas can be tracked using a digital scoreboard and there are prizes for the best ideas, with one employee awarded an e-bike for developing an idea to use solar collectors to reduce the use of district heating.

The platform has already led to one implemented change of swapping individual waste bins for a centrally located recycling system to create more sustainable waste management.

It’s true what they say – employees are a company’s greatest asset. This is especially true when progressing towards business sustainability, where the innovative solutions needed can often be found within the company’s own workforce.

Mats W Lundberg is Head of Sustainability at global engineering group, Sandvik.

Why the pandemic should drive sustainable business

A person is peeling the sky like a chapter from a book, from dark, gloomy clouds to bright sunshine; symbolic to revealing positive change to sustainability. Business Impact article on Why the pandemic should drive sustainable business.

The fallout from Covid-19 gives governments a degree of leverage over corporations. They should use it to impose the sustainability agenda, says Rotterdam School of Management’s Frank Wijen

With the ongoing rollout of vaccination campaigns, governments are now in a significantly better position to plan for our economic recovery, and hopefully a new and better future. 

There is no doubt that the spread of Covid-19 will continue to cause distress and chaos globally – in addition to the immediate impact on human health, the future continuity of millions of firms is on the line, threatening massive unemployment. Yet, although there are redundancies looming and the pandemic continues to cause havoc – amplified by constraining government measures – the fallout from Covid-19 has actually created an exceptional opportunity to change the world for the good. 

Many governments have provided massive levels of support to affected firms and their workers to stave off a tsunami of bankruptcies and job losses. This is truly laudable, since we have learned from the crisis of the 1930s that non-intervention will entail a vicious circle of further economic sliding. 

Halting economic decline is an important, yet insufficient, public policy objective on its own, because an upcoming economic crisis is likely to be followed by an even larger environmental crisis, with disastrous effects dwarfing those triggered by Covid-19. 

While many environmental issues threaten continued economic prosperity, the cost of inadequate efforts to curb climate change will be huge and will undermine future economic activities – as has been outlined by noted economist, Nicholas Stern, whose 2006 Stern Review on the economics of climate change covers the intertemporal costs and benefits of (in)action. Therefore, to best protect our economic futures, governments need to kill at least two birds with the huge stone they are throwing into the economy. 

Rethinking and reinventing

In my opinion, firms with sizeable carbon footprints should be required to vastly reduce their emissions in return for state support. In other words, governments should demand a quid pro quo, in that recipients of state aid promise to clean up their act, literally.

Energy company, Shell, for example, should be told that it will receive help for hydro, solar, and offshore wind projects, but not for traditional oil exploration, production, refining, and distribution. Similarly, airlines should only be rescued if they cease short-haul flights for which public transport alternatives are feasible, invest in highly energy-efficient aircraft, and accept substantial carbon taxes on all flights.

Farming is another sector that needs to rethink its environmental attitude. We need food, of course, but not at any cost. European farmers have been generously subsidised for decades but continue to burden society with the environmental costs from intensive farming practices, such as huge freshwater withdrawal and nitrogen oxide emissions. Construction is also a highly conservative sector in need of reinventing itself. We need homes to live in, but wooden-framed houses can be just as solid and robust as those erected from brick and concrete while involving much lower levels of carbon emissions. 

Some governments have understood the necessity to make their financial support to distressed firms contingent on environmental measures, while others keep on delaying as the ice melts. Two months after France decided to grant €7 billion EUR to airline, Air France, the Netherlands came to the rescue of KLM with €3.4 billion EUR in state aid. The French government attached green strings to its support of Air France, but the Dutch government still seemed to consider the sky the limit and asked only for symbolic environmental measures. 

Lack of leadership

The importance of attaching sustainability criteria to financial support needs to be interpreted against the backdrop of a lack of business leadership in making sustainability transitions that adversely affect their vested interests. While businesses are great at implementing practices that stimulate both environmental and financial gains (the ‘win-win’ opportunities, such as serving environmental consumers), they shy away from those that adversely affect their ongoing business. And they often focus on the short term. 

For instance, companies owning huge unexploited oil and gas fields will not voluntarily abandon these assets. Shell beats the sustainability drum, and its investments in renewables have recently taken off, but the amounts involved still dwarf those it dedicates to new fossil fuel projects.

History teaches us that huge reductions in greenhouse gas emissions have never resulted from climate change policies alone. They have often been a by-product of public policy decisions or political events, including the UK’s closure of unprofitable coal mines and privatisation of the electricity sector (with the related transition to less-carbon-intensive gas, known as the ‘dash for gas’), German reunification (and the related investments in more energy-efficient factories in Eastern Germany), and – indirectly – the German safety-driven phasing out of nuclear energy after the Fukushima disaster (and the ensuing scaling up of renewable energy, whose plummeting production costs in solar and wind power fuelled a global demand for renewables). 

Environmental strides

Since the corporate world is unlikely to adopt game-changing environmental improvements of its own accord, governments must take the lead and impose the sustainability agenda as they rescue firms damaged by the pandemic. 

Necessity is the mother of invention and change, and business will only walk its sustainability talk when forced to do so by ineluctable government requirements. The sustainability transition will only materialise, therefore, through targeted government support, in which economic and environmental recovery operate in lockstep. 

Since governments virtually always prioritise economic stakes over environmental interests, the sustainability agenda will need to piggyback on economic interventions. The exceptionally large amounts of public funding that are about to be poured into the economy provide a unique opportunity to make significant environmental strides while also propping up the economy. In this context, the EU is showing leadership by publicly pledging 30% of its €750 billion EUR post-coronavirus restructuring emergency fund will be financed by the issuance of sustainable bonds. 

Governments can save work, without necessarily saving existing jobs. A significant number of positions will almost certainly cease to exist over the next few years and others that we cannot yet even imagine will emerge. For example, new jobs in developing circular business and managing smart grids. 

One of the key challenges for sustainable growth is to help people and firms adjust to this series of dramatic changes. Business Schools and universities will become vitally important in ensuring a smooth transition here. 

A major threat is that governments will take short-term measures as they give in to powerful business lobbies and eschew measures that might displease their electorates. Unfortunately, unconditional business support is a short-term remedy that fills one hole by deepening another one. The failure to address major environmental problems head-on could well drive the next global disruption, such as a climate crisis of an even larger magnitude. The actions of governments in the next few months will clearly have important implications for the long run. As the French dictum goes: ‘To govern is to anticipate’. Governments with foresight must therefore ensure they attach solid environmental strings when pouring public money into distressed businesses.

What can Business Schools do?

Senior Business School leaders need to recognise the impact climate change will have on businesses and their personal lives, and should work together with their students and the wider business community to help find solutions. 

Companies can provide a powerful incentive for greater Business School focus on sustainability. When executive education directors and careers service directors see this is a serious issue for business clients, action will follow.

Business Schools are training the leaders of tomorrow and have to take responsibility for that. Systemic thinking is about considering the wider and indirect effects of business actions, beyond the direct cause-effects we are used to. These effects are not just financial, and we need to teach good metrics that comprehensively capture socio-environmental outcomes.  Business actions need to go beyond the upcoming quarterly earnings, implying that the mindsets of students need to be adjusted to consider the longer-term implications as well. 

Furthermore, Business Schools with course materials that are predominantly based on North American and European ideas and practices need to develop the openness of mind to understand and support other managerial styles. This includes appreciating that eastern and southern businesses may be run differently while working towards the same sustainability goals. Finally, corporate responsibility needs to be duly incorporated into existing mainstream courses, rather than relegated to standalone ethics courses. In short, Business Schools will need to embrace a much more integrative approach, in which students develop the mindset and skills of systemic, longer-term, and open-minded thinking, acting, and measuring. 

Frank Wijen is an Associate Professor at the Department of Strategic Management and Entrepreneurship, Rotterdam School of Management (RSM), Erasmus University, Netherlands. 

This article was originally published in Ambition (the magazine of BGA’s sister organisation, AMBA).

The importance of purpose-led behaviour in tackling climate change

A business professional in deep thought. Business Impact article on the importance of purpose-led behaviour in tackling climate change.

Archaic perceptions of climate change are dwindling and now is the time for leaders to role model purpose-led behaviour and lift the curtain on bad practices, says Chris Bowden, HBS graduate and Founder of a B2B marketplace for clean energy

For c-suite executives, environmental, social and governance (ESG) issues have traditionally played second fiddle. Some have been hamstrung by board members and shareholders, who can often be blinkered by the lure of short-term results or bound to the archaic belief that companies which focus on ESG issues experience a drag on value creation. Concerningly, PwC’s 2020 Annual Corporate Directors Survey found that only 38% of board members think ESG issues have a financial impact on a company.

This negative perception of the climate agenda has resulted in many c-suite executives making unrealistic, unconsidered, and empty pledges; pledges that will still need to be met long after they have left the company. However, creating a poisoned chalice for future leaders is neither helpful nor ethical.

CEOs see opportunity in the ESG agenda

Fortunately, refusing to accept the greatest challenge of our time, climate change, has shrunk considerably among c-suite executives and sustainability is now firmly on the boardroom agenda.

While some businesses spent the past decade committing minimum resources to token programmes, curating outlandish claims of commitment, and for a questionable few, thinking they could buy their way to a greener world, a handful of clever companies already had the wheels in motion. It was these companies who had stopped experimenting and instead prioritised the development of much needed sustainable products.

At the turn of the millennium, the idea of an electric-only carmaker seemed like an eccentric fallacy, not just to consumers but to every other auto-manufacturer too. Tesla, however, was smart and, most importantly, it understood that the transition to a low-carbon economy was inescapable. Tesla understood that although EVs look the same as petrol cars from the outside and perform a similar function for consumers, they are completely different on the inside and require the fusion of software, electronics and manufacturing. They developed a product to meet the needs of social expectations, regulatory demands, investment and technology trends, while other industry titans put on their blinkers, kept their heads down and plugged on, business as usual. It was a dangerous strategy and one that’s left an entire industry desperately playing catch-up.

In more recent years, CEOs across all industry sectors have awoken to the power of ESG strategies in building resilience and securing commercial success. By way of example, a recent PwC survey showed that more than 50% of UK CEOs plan to increase their investment in sustainability and, according to a new report called Taking Stock: A global assessment of net zero targets, at least one fifth (21%) of the world’s 2,000 largest public companies have committed to meet net zero targets. Together, these companies represent sales of nearly $14 trillion USD. This is a victory of many years in the making.

So, what is the catalyst behind this shift? Study upon study has noted that today’s consumers will spend their money with brands that align with their moral beliefs and have no hesitation in snubbing companies which they believe are not pulling their weight. As I type this, Spotify tells me it has collaborated with O2 to launch the first sustainable audio campaign as part of the mobile operator’s commitment to be net zero by 2025. Spotify and O2 are to invest together in nature-based solutions to offset all carbon emissions from O2’s audio activity on its platform for the next 12 months. It’s a welcome reminder that change is afoot.

Employees have an important hand at the table, too; pushing the companies they work for to follow a moral imperative and punishing those which fail to speak out by taking their talent elsewhere.

The reality is that if you have waited for someone to tell you to prepare for climate change, you’re putting your business at risk. This is not only evident in the growing maturity of the ESG movement in capital markets and financial services but also with the improvement in the returns on stock for companies with higher ESG ratings. There is much potential in climate risk mitigation, but it requires a shift in perspective from being triggered by fear to planning for opportunity, and that is no mean feat.

The CEO as the role model for purpose-led behaviours

In the UK, a flood of government legislation has provided more certainty, more focus and more precedent. Sustainability professionals have long banged the drum for climate change with little audience. But there is no time left to explain the need to act to the naysayers, and no amount of peer-reviewed research will help either. Business leaders have been called up to join the cavalry and it is down to the CEO to lead the charge. They need to not only make it a priority, but then need to make it the norm.

Purpose-led behaviours are key to this transition and the unique position of the CEO can make this happen. It is this individual who can raise the ambition of its employees, reflect honestly on challenges and shortfalls, as well as to set a definition of responsible leadership. These purpose-led behaviours will then trickle down through middle management. After all, these are not only the people who split budget, develop products, and lead teams, but they are also our future leaders who will carry this weight of responsibility far beyond our days.

Disruptor brands have already proven the return on initiating such leadership. Scottish brewery, BrewDog, and New Zealand-American footwear company, Allbirds, for example, were cited as inspiring organisations that have used product and services to create a deeper and meaningful connection to the planet and communities, in a recent report by media company, edie, in association with UK energy supplier, Centrica.

Perhaps the biggest challenge facing CEOs is the need to dig deep to unearth bad practices, seek clarity on myths and ensure any claims they make are indeed true to what they say they are. Only when the CEO holds up a mirror to see its true reflection will this important practice become the norm in all levels of a business.

Unfortunately, bad practices are not uncommon in the supply chain and that includes the renewable energy market. Some suppliers in the UK, for example, source energy from fossil fuels and then buy REGOS (Renewable Energy Guarantees of Origin) or even worse, European GOs (Guarantees of Origin) and then package this up as ‘renewable energy’ for their clients. Imagine claiming that your company has committed to green energy, publicised this to your employees and customers in the media, only to find that you’re buying fossil fuel energy. This is just one of the many bad practices we need to lift the curtain on.

Decades of tiptoeing around, ignoring the unequivocal science and embracing the type of box-ticking culture that encourages only standardised ESG issues has left everyone scrambling to avoid the irreversible impact of climate change.

Unless green-thinking, purpose-led behaviours and action runs through the veins of businesses, we will fail to prevent the catastrophic impact of climate change. This is not the time to experiment, this is the time to act. Titans of business may exist as a small collective, but remember, positive change has always been driven by the movement of the minority.

Chris Bowden is the Founder of Squeaky, a B2B marketplace for clean energy. He holds an MBA from Harvard Business School and has also attended Singularity University, the Business School at City, University of London, and the University of Manchester.

Management education’s approach to sustainability is broken – here’s how to fix it

Bamboo bridge over a river in a hot tropical jungle. Business Impact article image for management education's approach to sustainability is broken- here's how to fix it.

The true meaning of sustainability has been distorted and Business Schools are as much to blame as big business. Lars Moratis and Frans Melissen offer a three-pronged path towards a better approach for those in management education 

Over the past decades, Business Schools have been heavily criticised for neglecting their societal role – both from within the institution and by outside stakeholders. Often-heard critiques have targeted Business Schools as pursuing a too narrow and rigid scientific model of management, teaching capitalism as the only form of organisation to their students, and surrendering to rankings and the market. 

Others have accused Business Schools of being complicit in the wave of corporate fraud scandals that took place around the tum of the century and have pointed at their role in the 2007-2011 financial crisis. One 2009 research paper from Temple University’s Robert Giacalone [now at John Carroll University] and Donald Wargo even posited that Business Schools were at the roots of the global financial crisis because they promulgated theories, such as profit maximisation and materialism, that made it easy for business managers to eschew ethical behaviour in favour of short-term profits. 

Dubbed ‘academies of the apocalypse’, Business Schools suffered an existential crisis and were urged to reflect on their societal role. An important outcome of the resulting soul-searching efforts was that Business Schools across the board increased their attention to business ethics, CSR, and sustainable business. Their efforts to integrate these topics into management education have ranged from offering electives and mandatory standalone modules to making these topics part and parcel of foundational strategy, marketing, and management courses. 

The next crisis: conveying the wrong message

Now, Business Schools do not seem to be critics’ target of choice when looking for the causes of, and culprit behind, the Covid-19 pandemic – perhaps because the pandemic has manifested itself primarily as a health crisis and, by implication, it has been governments’ handling of the spreading virus that has been the news of the day since March 2020. While, at first, it may appear that all this has little to do with educating managers and business leaders, in reality it does – albeit not so much in terms of rapidly switching to online modes of delivering management education. 

This becomes clear when reviewing Business School faculty’s discipline-oriented interpretations of the business consequences of Covid-19, or the way they are overhauling curricula by emphasising the importance of risk management and changing their business models to demonstrate their relevance. In fact, the Covid-19 pandemic has catapulted Business Schools into an existential crisis yet again, and the silence about it is deafening, both by critics and Business Schools themselves. Moreover, sustainability is not part of the solution for this crisis – it is part of the problem.

The problem with management education’s provision of sustainability is that it has tended to convey the wrong message to students. For one, management students have been taught that corporate responsibility for sustainability is supra-legal, implying that what is not against the law, is neither unsustainable nor unethical behaviour. In addition, students are being taught that being profitable is a social responsibility in itself, if not the primary responsibility of business. 

Pandemic parasitism

It may hence come as no surprise that online reservation platform, Booking.com, which has boasted billions in profits over the past few years and has brought back some $4.5 billion USD in stock in 2019, requested and received financial support from the Dutch government as part of the latter’s Covid-19 emergency stimulus package. In a similar vein, large companies in the fashion sector decided to cancel their summer collections, all in line with the contracts they have with factories in low-income countries that produce them, burdening the latter with the costs of massive numbers of unsold products. Within such narrow interpretations of responsible and sustainable corporate conduct, not behaving irresponsibly quickly becomes outright pandemic parasitism.

A second example can be found with Amazon. While launching a US$2 billion USD Climate Pledge Fund in June 2020, Amazon apparently failed to provide for adequate protective measures for its warehouse employees to ensure safe and sanitary working conditions during the pandemic. In the same period, according to a Financial Times report, the company boasted over US$400 billion USD in additional market cap and hired some 175,000 new employees to keep up with spiking online shopping. 

For reputational reasons, companies may be keen to jump on board the climate bandwagon in order to prevent being labelled a laggard on today’s most challenging societal issue, but a healthy workforce and good employee relations (the ‘inner’ side of sustainability) are part of the same course – even though this may be far less visible to the public and not nearly
as mediagenic.

A more nuanced instance of pandemic parasitism is the online campaign that Unilever ran for its beauty brand, Dove, over the past months. The company used iconic images of worn-out nurses and doctors, marked by the protective equipment they had worn for hours and hours while treating Covid-19 patients – arguably intended to demonstrate that the company cares for these healthcare workers and to support the message that they provided free products for the pandemic’s heroes. Whereas this could easily qualify as opportunistic corporate behaviour and one could question why such an engagement would need to manifest itself as a brand campaign, management students are familiarised with such behaviour under the sustainable guise of cause-related marketing.

Teaching all too shallow conceptions of the roles and responsibilities of companies with regards to sustainability implies that Business Schools should share in taking the blame for such examples of corporate behaviour in times of social upheaval.

A deeper crisis: a culture of institutionalised exploitation

The existential crisis for Business Schools that the Covid-19 pandemic reveals runs considerably deeper than these examples, though. This becomes clear when Covid-19 is seen for what it is: a symptom of a systemic crisis. Essentially, the pandemic boils down to a deeply disturbed and unsustainable relationship between humans and nature that is fuelled by an obsession with growth and short-term economic gain, firmly rooted in a neoliberal worldview. 

Central to this worldview is colonising nature, depleting natural resources, seeing human beings as production factors, reducing animals to raw materials, and seeing society as serving corporate interests. It is a worldview that propagates a culture of institutionalised exploitation. Privatising profits and socialising costs are the name of the game. Societal challenges are, first and foremost, business opportunities. Climate change, biodiversity loss, and poverty are inevitable collateral damage. This worldview has become so normalised and pervasive in contemporary business culture – and reproduced by Business Schools – that it has distorted the true meaning of sustainability: ‘sustainability’ is no longer a form of social criticism or a notion that exemplifies the importance of building an ecologically sound and equitable society for current and future generations alike, but is framed within a political ideology that essentially runs counter to it. 

No wonder that this has led Business Schools to adopt and create a language of popular sustainability newspeak that includes concepts such as ‘environmental profit and loss accounts’, ‘true pricing’, ‘ecosystem services’, ‘the business case for sustainability’, and ‘nature-positive economic recovery’. In fact, sustainability only seems to be acceptable when it has a business case, hence protecting the regime’s vested interests, be they: reducing operational costs; the ability to attract and retain talent; developing new markets; and/or building or restoring corporate reputation. This has given rise to an obsession with the concept of ‘green growth’ in business, government and NGO circles – a fallacy which revolves around ever-growing economies without fundamentally changing business models and economic models.

However, as Professor Steve Keen of University College of London’s Institute for Strategy, Resilience and Security has recently argued, the neoclassical economics of climate change are appallingly bad, with economists being overly optimistic about the economic damage from climate change. As he writes in a 2020 paper in Globalizations: ‘If climate change does lead to the catastrophic outcomes that some scientists now openly contemplate, then these neoclassical economists will be complicit in causing the greatest crisis, not merely in the history of capitalism, but potentially in the history of life on Earth’. Speaking about catastrophic outcomes, the 2020 report, Fatal calculations: How economics has underestimated climate damage and encouraged inaction, concluded that ‘the economic damages by not acting may be so large as to be unquantifiable’. When that is the situation, why worry about building a business case? Additionally, despite policy rhetoric, there is no empirical evidence on resource use and carbon emissions that supports green growth theory.

How Business Schools can step away from current approaches to sustainability

With Business Schools being part and parcel of the factors that have caused the systemic crisis producing the Covid-19 pandemic and some of the pernicious corporate behaviour that emerged amid it, management education needs to take a radical step away from the dominant way it approaches sustainability. There are three courses of action in this direction that Business Schools should take:

1. Management education should make ‘critical studies’ a central part of its curricula

Through critical studies, students can scrutinise the assumptions that underpin what is considered to be ‘normal’ corporate conduct, successful business models, and contemporary business and society relationships. Critical scrutiny of these assumptions will also strengthen students’ understanding of existing power structures in economy and society and the political nature of sustainable development. 

This may include studying degrowth – defined by economic anthropologist, Jason Hickel, in the book Less Is More – as a socioeconomic approach towards restoring the balance between the global economy and the living world in a way that reduces inequality and improves human wellbeing. Engaging in critical studies would also include a thorough reflection on the roles and responsibilities of Business Schools, the worldviews that govern their knowledge production and dissemination activities, and what direct and indirect impacts Business Schools have on society.

2. Management educators should stimulate their students’ moral imagination in order to envision new ways to address moral problems and find solutions for our world’s grand challenges

Moral imagination challenges us to build empathy and solidarity with those who might not be considered parts of our community – for instance, precarious workers, future generations, and natural ecosystems. This resonates with what philosopher, Mark Johnson, writes in his book, Moral Imagination, that we, ‘must be able to imagine new dimensions for our character, new directions for our relationships with others, and even new forms of social organisation’. 

To develop this ability, creating and experimenting with new narratives about the role of business and society to ignite novel courses of action is crucial. Management educators should neither refrain from confronting their students with controversial opinions and stances, including those from other scientific disciplines, nor from initiating debate. Art can play an important role here, as it possesses the capacity to create meaning and stimulates us, ‘to see more, to hear more and to feel more of what is going on within us and around us. Art is shocking, provoking and inspiring’, as former MIT Sloan management professor, Edgar Schein wrote. Based on such insights, Slovenia’s IEDC-Bled School of Management has set out to integrate the arts into management research and teaching, exploring an arts-based pedagogy and artistic business learning inspired by poets, philosophers, architects, and dancers.

3. Business Schools should engage in systemic activism

Systemic activism, as opposed to issue-based activism, recognises the complex and interconnected nature of modem problems and assumes that change is necessary on many levels. The way the Covid-19 pandemic has unfolded, touching virtually all realms of life, is a vivid illustration of this. As is the climate crisis, which has impacts on poverty, which affects gender equality, which affects education, which affects decent work, and so on. Moreover, research shows that the global north has contributed 92% of CO2 emissions in excess of planetary boundaries, while the global south, that will experience the worst consequences of climate breakdown, has only contributed 8%.

Systemic problems eschew single-issue solutions – they require a rethinking of economic, political, social, judicial, and cultural systems. Business Schools should embrace the moral and political agenda that underpins the transition to a sustainable economic model and make campaigning for furthering that agenda their priority.

A deeply moral question

Of course, one could argue that Business Schools should take a neutral position towards challenges of a moral and political nature as ‘independent’ institutions that produce and convey management knowledge. It should be recognised, however, that taking a neutral position is also enacting a political agenda, particularly in the face of the rampant ecological and social breakdown, in which business plays an important role. 

Sustainability is not a concurrent perspective on corporate strategy, but a deeply moral and political question about how we want to live. In any case, who would say that teaching and research are value-free? Discussions about the hidden agenda of management education should sound all too familiar to anyone working in a Business School. Here, too, silence is violence. Business Schools should push themselves to identify the leverage points for societal change – and given the fact that they are the proverbial spiders in the web when it comes to understanding the impacts of the role of business in, and on, society, this should not be too difficult. Management educators, in turn, should recognise the potential of activism as a source of rich learning experiences.

Business Schools should acknowledge that because, as Indian novelist, Arundhati Roy wrote in 2020: ‘Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next.’ We should enter the new reality as soon as possible. That cannot be done in silence. The post-pandemic Business School is activist.

Lars Moratis and Frans Melissen are holders of the Chair in Management Education for Sustainability, a joint initiative of Antwerp Management School and Breda University of Applied Sciences. They are also co-creators of the concept of ‘sustainability intelligence’.  

This article was published in 2020 in Th&ma Hoger Onderwijs and was adjusted for publication in Ambition (the magazine of BGA’s sister organisation, AMBA) before its appearance here.

In search of the new sustainability trailblazers

Programme leaders are best placed to integrate the myriad of issues around sustainability into Business School content, say ESSEC Business School’s Carina Hopper and Johanna Wagner

Chances are that you have been hearing talk of sustainability and the need for Business Schools to do more to bring forth a new generation of business leaders that are more environmentally and socially inclined than their predecessors. In the broader context of society, we might ask who is responsible for driving this change. While there are many factors at play, we would be doing a disservice to Business Schools to deny their unique influence on the minds they help form. Once set to work these minds can influence society through diverse channels as business leaders and informed citizens in positions of power. 

An initial exploration of the topic of sustainability content in management education raises many questions. What change are we looking for? Which strategy will create the greater impact – offering a specialised sustainability diploma to a minority of students, or introducing sustainability fundamentals to the majority? Is the main objective to impart knowledge, or to convince students to care? Who, within the institution, should be responsible for taking the lead on sustainability education? In this article, we propose answers to these questions in an effort to accelerate change.

The changing landscape of business and society

Among other things, Business Schools teach their students to become reliable problem solvers. They give them the techniques and the confidence to approach challenging business situations with a strategic mindset, ideally one that drives innovation and a sense of progress for the company.

These challenging situations have traditionally been about the bottom line and increasing shareholder value through return on investment. Today, however, not only is the concept of shareholder primacy under question, but also the shareholders themselves are increasingly supporting more sustainable business practices. This is due to developments in the regulatory environment at national and supranational levels as well as a search for purpose both from employees and customers. 

In turn, these transformations are creating greater demand for new skills and competencies to move organisations forward in a context of growing uncertainty and constraints. While recruiters are seeking candidates who are ready to navigate and help shape this evolving business ecosystem, millennials are breaking with previous generations by expressing an openness to accepting lower pay to work for organisations whose values align with theirs.

Introducing sustainability in management education

In reaction to these signals, the exploration of sustainability in Business Schools is currently two-dimensional. The first dimension is operational and relates to the way Business Schools are run, in terms of facilities and services as well as governance and recruitment. The second dimension, and the focus of this article, is the introduction of sustainability content, mostly emerging as dedicated electives, diplomas and chairs, or one-off activities with specialised partners.

The first issue when discussing academic content is the current practice of siloing sustainability, in which learning is restricted to a limited, interest-driven audience. In this model, a small minority is trained while the large majority remains distant from discussions on topics that are now affecting every field, industry and manager.

The second issue is related to the gap between the supply created by these specialised diplomas and corporate demand. On the one hand, master’s programmes in sustainable business train specialised managers whose profiles are very attractive for only a limited number of organisations. Elsewhere, their profiles may even frighten recruiters or managers whose organisations have not yet made a strong commitment to sustainability. 

On the other hand, organisations could use more managers who, while not specialised in sustainability, are well equipped to contribute to sustainable innovation and change. This is especially relevant when working with engineers, scientists and technicians who are themselves specialised in sustainable practices.

It is interesting to note how this siloing of sustainability mirrors corporate trends. There, the development of dedicated CSR departments have, in many cases, proven to be an imperfect answer to lingering issues with a lot at stake. For this reason, Unilever, to name just one example, dismantled its CSR department in 2016 for the purpose of embedding sustainability throughout all of its activities, an approach called for by other CSR professionals across industries.

Towards actual integration

In academia, a comparable de-siloing dynamic is needed. In our proposed model, programme leaders are given the necessary resources and support to integrate sustainability effectively throughout their programmes’ current courses. This involves empowering them to embed a cohesive sustainability message into their existing curricula, organise relevant training for their faculty, and engage with prospective students on the topic.

Programme leaders are in the best position to initiate and foster this paradigm shift. Their proximity with all programme stakeholders bears the potential to accelerate decision making and customise action, which in turn impacts the success of their programmes in rankings, which is one important measure of their performance.

On this trailblazing route to sustainability integration, programme leaders may face obstacles that mirror the experience of visionary business leaders: 

+ In the midst of conflicting interests and ideological debates, you should anticipate a battle for resource allocation.

+ As in any process of change, you will find reluctance among your teams (including faculty and staff), who will need to be brought on board using the appropriate support and training mechanisms.

+ You will have to find ways of implementing your ideas even though they may not tick existing boxes in terms of administrative planning and reporting.

+ You will have to define the specific terms of stakeholder engagement adapted to your programmes and region.

+ In a constantly evolving context, there will be few impact measurement tools available at the onset of your work (BGA’s Continuous Impact Model is one) and there will be limited recognition by rankings. It’s important therefore to keep in mind that you are contributing to the development of both, by generating data and providing feedback.

Conclusions on the current state of affairs

As both MBA alumni and postgraduate management programme lecturers, we believe programme leaders hold pivotal responsibility for the integration of sustainability in business education. 

This is because they are strategically positioned at a crossroads between companies and the individuals who will one day manage them. Not only will these individuals impact communities through their businesses’ operations, but they will also send signals that, in turn, influence public policy and, more generally, public opinion. 

More than just becoming reliable problem solvers, students should be taught to become accountable solution designers. 

Higher education should empower students with knowledge on a wide range of systemic reactions to help them make enlightened decisions on what to care about and how to prioritise, thus arming them with the capacity to act responsibly before a full range of stakeholders. 

Judging from the current state of affairs, it seems that too many management students are graduating without that capacity.

Carina Hopper teaches sustainable business and entrepreneurship at Business Schools including ESSEC Business School, SKEMA Business School and ESMOD Fashion Business School. 

Johanna Wagner is a hospitality finance and asset management expert. She teaches in leading European hospitality management master’s programmes. 

Hopper and Wagner are Co-Founders of La Belle EDuC, which offers training for institutions on the path to sustainability integration with the goal of empowering students in their choice of studies.

This article was originally published in Ambition, the magazine of the Association of MBAs (AMBA).

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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