During the first year of their MBA at the University of Pretoria’s Gordon Institute of Business Science (GIBS) in South Africa, students are required to work with local non-profit organisations on community projects that tackle social problems.
“In the past, our focus was on driving competitiveness. Now it’s about responsible management education,” says Morris Mthombeni, interim dean at the school. “The mining, manufacturing and financial services companies look to us to produce people with the language, aptitudes and trade-offs you have to make between the future and the present.”
In recent years, there has been a surge in attention in business schools about environmental, social and governance (ESG) issues. This has reflected shifting attitudes among students, faculty and employers who have moved beyond a traditional focus on maximising financial returns for shareholders towards benefiting a wider range of stakeholders.
GIBS, for example, is one of more than 800 schools to sign up to the Principles for Responsible Management Education (PRME). This initiative, supported by the UN, aims to promote the teaching of sustainability in business and management schools so that graduates have the skills to balance economic growth with wider objectives such as the Sustainable Development Goals (SDGs) and climate change.
But despite the increased attention, academic leaders face tough challenges including how to define and prioritise the disparate skills and values associated with ESG; how to integrate them into teaching, research and operations; and the extent to which a failure to do so will undermine the future of business education.
Responsible business is now a central concern for deans, according to Mette Morsing, head of PRME and a professor at Copenhagen Business School and the Stockholm School of Economics. “Twenty years ago, I was told it was just a fad that would go away. Today demand has gone from the periphery to the mainstream,” she says, adding that some more enthusiastic faculty members question why progress within business schools has been “so slow.”
ESG considerations have long been important for business schools in Scandinavia and the Netherlands, reflecting their egalitarian traditions and environmental priorities. But now, many business schools have launched electives, integrated ESG issues into their core courses, opened specialist research centres and even established standalone management masters’ programmes on topics such as sustainability and the circular economy.
Much of the current momentum has been driven by a questioning of capitalism linked to inequality and globalisation after the 2008 financial crisis, growing evidence of human-driven climate change and a reflection on purpose, highlighted by the Great Resignation during the Covid-19 pandemic.
Business schools are now beginning to take collective action. At the COP26 climate summit in Glasgow last November, eight of the leading — and normally fiercely competitive — European institutions joined forces to launch Business Schools for Climate Leadership. The aim is to promote more joint research on climate change, improve teaching and boost outreach to staff, students and alumni.
Networks of academics are also mobilising, for example establishing communities around responsible business research and impact investing and sustainable finance teaching. International accreditation frameworks including Equis, AACSB and AMBA have standards around the societal impact of business schools.
Students are also demanding change, and some question whether business schools are moving fast enough. “A majority of the schools still are lacking a lot of movement,” says Sophie Charrois, president of oikos International, a network of student groups seeking to transform economics and management teaching. “We need to incorporate sustainability in a more holistic way.”
Companies are also keen to see responsible business taught in executive education — if only so they can recruit this new generation of employees. Robert Strand, executive director of the Center for Responsible Business at Berkeley’s Haas business school, has observed growing calls by employers for skills such as analysis of ESG factors.
The problem, he adds, is that the “faculty at most American business schools . . . need to catch up.”
Business schools are trying to adapt and appeal to students’ and recruiters’ demands to embrace social values, argues Jaime Bettcher, programme manager for the Aspen Institute’s Business & Society Program. She cites a surge in applications for its annual “ideas worth teaching” awards as evidence of their efforts.
“The war for talent will be waged over which organisations can convey a real authentic commitment to addressing social challenges,” she says. “For business schools to remain relevant, they’ll need to redeploy their expertise on markets and organisations to address a multitude of objectives beyond just economic gain.”
Yet there is disagreement and confusion about what constitutes responsible business education. “The words ESG mean different things to different groups. We have to understand how to measure it and hold people accountable,” argues Professor Glenn Hubbard, former dean of Columbia Business School.
“I’d say it is the search for homo reciprocans: it’s about collaboration, co-creation, partnering, empathy and sharing,” says Prof Morsing. “That’s in sharp contrast to homo economicus, which is all about attacking, battles and competition.”
Colin Mayer, a professor of management who leads the British Academy’s Future of the Corporation inquiry, argues for more purposeful business that finds profitable solutions to the problems of people and planet.
But Aneel Karnani, professor of strategy at Michigan’s Ross School of Business who teaches a course on “business in society”, dismisses as “politically correct” the growing declarations by deans of the centrality of societal purpose in their curricula. “Business schools are not going to make the world a better place but should help business do better,” he says.
Even for those who are more favourable to the new focus on responsibility, there remains strong disagreement about how it is taught and what knowledge will be displaced — if only so that students can successfully find jobs in a world that, in places, remains ambivalent to ESG. Business schools have become a microcosm of the broader debate within companies about how to define ESG and how far it simply represents superficial “greenwashing”.
“The biggest issue is that we do not have a consistent and coherent framework that people can easily adapt to build sustainability into their operations strategy,” says Professor Ilian Mihov, dean of Insead. “We have failed in building these frameworks. There is not enough research, not enough tools.”
Nevertheless, he has integrated the topics into required courses and encouraged research to balance more traditional business school skills and the newer themes. “We have to do both: to figure out how to integrate the sustainability mindset into a curriculum while we teach net present value, your standard balance sheet items or supply and demand.”
Indeed, a pragmatic approach is the best way forward, argues Mthombeni of GIBS. “We believe firmly in the principles of competition, but responsible competition. You have to compete vigorously, honestly and responsibly for the best ideas to thrive or you are diminishing the benefits of innovation.”
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19 January | 9:00 GMT / 10:00 CET | #FTDigitalDialogues #FTEducation