The added value of the MBA in promoting sustainability

July 5, 2010


-Lindsey Nefesh-Clarke is the founder of Women’s Worldwide Web – an online charitable organisation designed to help empower women with access to micro-finance loans, education, mentoring and networking. The opinions expressed are her own.-

“To reach a tipping point towards a new era of sustainability”: this is the urgent goal of the business, government and civil society leaders who convened in New York City for the recent U.N. Global Compact Leaders Summit.

In its effort to mobilize the global corporate community around the values and best practices of corporate responsibility, this gathering could not have been more timely.

The world is still suffering the fallout of the worst financial crisis since the Great Depression.  In addition to wreaking far-reaching damage in high-income countries, the financial crisis has had an egregious effect on child and maternal health, gender equality, access to clean water, disease control, and hunger levels worldwide.

The World Bank estimates that there will be 53 million more people in extreme poverty in 2015 than there would have been had the financial crisis not occurred.

Meanwhile, the U.S. is battling the worst environmental disaster in its history.  In the wake of BP’s Deepwater Horizon rig explosion in the Gulf of Mexico, U.N. Secretary General Ban Ki Moon managed to strike an upbeat chord in his summit address, observing that “the business community is coming to understand that principles and profits are two sides of the same coin”.

The summit also saw the unveiling of a joint UNGC-Accenture survey of 1,000 CEOs (“the largest such study of CEOs ever conducted on the topic of sustainability”), which reports a “sea change” in attitudes.

Sustainability has evolved from being (as recently as 2007) a “peripheral” issue in business, to being “truly top- of-mind for CEOs around the world”.

The consensus is that business is on the cusp of a new era in which its primary objectives will be value creation (in terms of environment, governance and society) and profit optimization (rather than profit “maximization”).

The UNGC-Accenture report chimes with the optimism of business pundits who regard the financial crisis as a painful but salutary wake-up call, catalyzing the shift to a new paradigm of sustainability.

Out with “CSR-lite”, CSR as a philanthropic gesture.  In with ESG (environmental, social and governance) factors, comprehensively embedded in fresh business models and risk/reward structures.

In this new landscape, the leading global companies will be those offering a sustainable edge, providing goods and services and reaching new customers in ways that simultaneously address the world’s major challenges – including poverty, climate change, resource depletion, globalization and demographic shifts.

But will this mega-trend towards sustainability be sustained?

Since the BP oil spill began, the company, once lauded for its CSR, has seen a drop in its stock price of over 50 percent, been delisted from the Dow Jones Sustainability Index, and required to pay $20 billion in compensation and the company has undergone a customer rebranding—from Beyond Petroleum to “Big Polluter”.

Arguably, the current BP crisis, a disaster for all its stakeholders, could undermine the credibility of CSR by confirming “greenwash” sceptics’ criticisms of the disjuncture between the CSR industry and real-world business operations.

Or the catastrophe could, on the contrary, hammer home the increasing non-negotiability of CSR: in our information-driven society of digital media, companies face increasing demands of responsibility, transparency and accountability on all sides, from investors, employees, government agencies and prosumers who demand values-driven brands and will take companies to task if they default on their responsibilities.
The drive to push sustainability up the corporate agenda is real. A plethora of initiatives, at government, business and civil society levels, aims at fostering a culture of sustainability and translating policy and strategy into concrete practice. And these initiatives are not new. The Global Reporting Initiative’s sustainability reporting guidelines, for example, date back to 2000; since then, despite the global economic downturn, CSR reporting in accordance with the GRI framework has increased significantly.
But, while sustainability may be “top-of-mind” among CEOs, the real challenge is to push from strategy to implementation.  The UNGC-Accenture survey reports “a significant performance gap between what CEOs believe companies should be doing, and what they report on their own company’s performance.”

The report examines the internal and external challenges that companies face, including consumer attitudes, how to measure a new concept of value within organizations, and how to align market valuation of companies with sustainable business practices by engaging with investors on new terms.

“Business schools should be nervous…”

A propos of “performance gaps” and “new terms”, the UNGC-Accenture report highlights the need for a new generation of business leaders and business education. Official UNGC Summit bloggers commenting on the UN PRME (Principles of Responsible Management Education)  assert, however, that “business schools are still largely operating within an agency-, efficient markets- and shareholder value-framework.”

In an article entitled “Business Schools Should Be Nervous,” they warn that business may look for other sources of education if business schools fail to respond to the changing imperatives of business.  CSR and sustainable leadership principles are not adequately integrated across the curriculum: “This applies certainly to many of the top North American and European schools. And … this thinking is still dominating our research by and large – and today’s research is the teaching material ten years from now ».

Fortunately, business schools are in the process of reorienting themselves and further incorporate issues of sustainability and corporate citizenship into business management education. “Responsible Management in a World of Transition” was the theme of this year’s International Deans and Directors conference in Berlin, organized by AMBA (the Association of MBAs, which accredits MBAs). Academics and business practitioners came together from around the world to exchange ideas about how to ensure the relevance of business education in light of both current and imminent socioeconomic, environmental and demographic challenges.

Business education can decisively influence the global business landscape in coming years. It must not only adapt to the changing world of business, but rather take the lead in helping businesses and investors to transition to a culture of responsibility and sustainability.

Business school curricula can bring in real world cases or, better still, venture out into the real world and help businesses to adopt a broader stakeholder perspective.  Business schools can communicate the value of CSR, its tangible risks and tangible opportunities.

They can help companies integrate systems that measure CSR impact (qualitatively and quantitatively) and help implement performance metrics that go beyond earnings per share to include environmental and social factors.  Business education can help businesses to go beyond damage control and compliance in internalizing externalities, seizing sustainable business as a business opportunity.

It can help to bridge communication gaps both within companies and between companies and their investors, allowing sustainability activity to be incorporated into valuations by investors and analysts.

In February this year the World Business Council for Sustainable Development issued its report “VISION 2050: the new agenda for business” stating that the report’s “highest value may be in its narrative of the gap between Vision 2050 and a business-as-usual world…”.

The report urgently insists that a sustainable future will require smarter systems, smarter people, smarter designs and smarter businesses.

Business schools must rise to this challenge.  They are, or should be, uniquely positioned to help the business world, and the rest of us, to walk the sustainable talk.

Photo Credit: Sarah Tegtmeier, with Tri-State Bird Rescue & Research, lifts a sheet to show the assembled media a brown pelican covered with oil sheen at the Pensacola Oiled Wildlife Rehabilitation Facility in Pensacola, Florida, June 29, 2010. REUTERS/Lyle W. Ratliff

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