Sustainability at the Core

Corporate social responsibility isn’t just for tree-huggers anymore. Mainstream business schools are integrating issues of sustainability throughout their programs and teaching the concepts as part of a basic business education.
Sustainability at the Core

Business students at the University of Calgary in Alberta can sign up for a weeklong leadership course that puts them in a rustic dorm in the heart of the Canadian Rockies. While they learn about organizational leadership and sustainable development, they also participate in fire rituals and council ceremonies led by a native elder from a local tribe. The goal is to help students understand the consequences of business development in untouched wilderness areas—for corporations, for the environment, and for the indigenous people who live there.

Not your typical b-school course, perhaps, but someday soon it might not be so unusual. The Haskayne School of Business at Calgary is just one of many mainstream business schools determined to make environmental and sustainable issues key parts of the curriculum. Corporate social responsibility (CSR) might still be a fringe discipline at the majority of business schools worldwide, but it is slowly, surely gaining ground.

At some, it’s already front and center. Since the mid- 1990s, Haskayne—located deep in the heart of Canada’s natural resource country—has offered MBA and Ph.D. programs focusing on the environmental effects of business. More recently, the emphasis has shifted to international and societal interactions, a change reflected in the 2002 launch of the Global Energy Management and Sustainable Development (GEMS) specialization. Haskayne has developed similar programs in Quito, Ecuador; Beijing, China; and Tehran, Iran.

Because sustainable development has become one of the pillars of learning at the University of Calgary, the topic has truly become incorporated into Haskayne’s curriculum. “Even if a course doesn’t have ‘sustainability’ as part of its title, it’s become so infused in the program that sustainability is in everything,” says Harrie Vredenburg, professor of strategic management and holder of the Suncor Energy Chair in Competitive Strategy and Sustainable Development.

Another Canadian school, York University in Toronto, has a similar goal of making CSR a key part of the regular curriculum. All of York’s MBA and EMBA students are exposed to corporate responsibility issues in their earliest courses, which introduce them to sustainability, ethics, stakeholder concerns, and not-for-profit issues.

“We seek to explain that the world is changing,” says David Wheeler, Erivan K. Haub Professor of Business and Sustainability at York’s Schulich School of Business. “Graduates will need to take a broader view, build relationships, acquire new skills—not because of some ideological stand, but because that is what successful businesses do. All businesses are going to have to take a sustainability perspective, whether or not they call it that. All of them will have to respond to questions of social and environmental change. They’re going to have to go to market in parts of the world that aren’t very stable. Our approach is very much to appeal to everybody, as we teach them what it means to be a businessperson in a complex world.”

Wheeler isn’t aiming to reach the zealots. Using “normal business language” and targeting the program at “ordinary business students,” Wheeler wants to put sustainability into the mainstream. He says, “We want to appeal to people who go into jobs in marketing, finance, accounting, and human resources, but who are very interested in how these ideas contribute to a successful business.”

Welcome to the new attitude among mainstream schools: CSR issues are here to stay. They’re part of the curriculum. And they’re simply some of the many factors corporate leaders need to consider when they’re doing business. While there is still a small, passionate group of students who are going to seek positions that revolve entirely around sustainable development issues, the majority of business graduates will take more traditional jobs. Some educators feel that those students are the ones who need to understand why sustainability is important—and how to integrate it into everyday corporate life.

Into the Mainstream

Ordinary business students are exactly those targeted by Kellie McElhaney, executive director and adjunct assistant professor at the Center for Responsible Business at the University of California, Berkeley. Her goal is for all Haas School of Business graduates to integrate CSR principles into their daily jobs. McElhaney notes that a recent survey of applicants found that 25 percent were arriving at Berkeley with an interest in corporate social responsibility. “I want to figure out how to reach the other 75 percent,” she says.

Admittedly, some schools are going to be more predisposed toward CSR than others. McElhaney points out that social responsibility is “in the DNA” atHaas. “My first month here a finance professor suggested we do some joint research on whether a company that engages in socially responsible business behavior actually adds points to its share price,” she says. “At other schools, I’d gotten the feeling from finance professors that corporate social responsibility doesn’t belong in the business school.”

But it does belong at schools like Haas—and schools like the University of Calgary, whose stakeholders are mostly drawn from the oil, gas, mining, and forestry industries. Those companies have been “practically brought to their knees by environmentalists,” says Vredenburg. “They know that if they are going to maintain a social license to operate, they are going to have to do business in a very responsible manner.” Schools that cater to these businesses must produce graduates who understand both sustainability issues and basic business principles.

Schools with a commitment to international business also find themselves focusing on CSR concepts, especially if their graduates are going to become executives at companies expanding into Third World countries. “Some companies might say, ‘Our business isn’t community development,’” says Vredenburg. “But when you operate in a place like Nigeria or Ecuador, where the government doesn’t supply services and local people are upset because you have wealth and they have nothing, it’s in your own self-interest to get involved.”

Making the Business Case for CSR

In fact, it’s possible that every kind of business—and every kind of business school—eventually could find reasons to incorporate CSR concepts into its core strategies. “This will happen particularly as the business case for corporate responsibility is developing. It almost becomes a no-brainer,” says Peter Lacy, executive director of the European Academy of Business in Society (EABIS), located in Brussels, Belgium.

Some educators, like Vredenburg, already teach sustainable development in terms of competitive advantage. He says, “It’s complex to figure out what all the stakeholders want— the communities, the native people, the environmental groups, the governments in developing countries. But if you get these things right, you get an inimitable advantage over competitors who are not doing these things. It takes a lot for a competitor to copy you.”

Business leaders who consider CSR to be a “fluffy” concept rethink that idea pretty quickly when sustainability issues are reframed in terms of risk management, Vredenburg adds. “That’s really what we’re talking about. Risk of climate change, risk of your business being shut down. If you don’t learn how to manage the various stakeholders representing societal views, you could well be out of business.”

And it’s not just oil and mining companies who are now being forced to confront social and environmental dilemmas. These days, a whole host of other industries are starting to consider CSR when they map out their business strategies. In the finance sector, banks are starting to realize that their lending policies could have “social and environmental implications,” says Wheeler. In the information and communications technology field, says Lacy, major players are trying to close the digital divide between people with and without technology.

Kai Hockerts, program manager of the Centre for the Management of Environmental and Social Responsibility (CMER) at INSEAD in Fontainebleau, France, sees environmental progress being made in industries such as waste management and pollution prevention. At the same time, social progress—in terms of rights for children and other workers— is occurring in the textile sector. He adds, “Sustainable development is still very much a moving target, and most firms are still too reactive. Instead of taking public concern seriously early on, they often wait too long. This results eventually in higher costs when they get forced to act.”

“When you operate in a place like Nigeria or Ecuador, where the government doesn’t supply services and local people are upset because you have wealth and they have nothing, it’s in your own self-interest to get involved.” —Harrie Vredenburg, University of Calgary

Hockerts is also a little uneasy because he thinks topics of sustainable development, CSR, and ethics are garnering too much attention at the moment, and interest might soon die down. He says, “As with all sudden waves, there is the risk of waning interest once the peak has been reached. Actually, I would argue that we have already passed that peak.” Similar waves of interest and uninterest broke in the early ’80s and early ’90s, he says. “The bigger the bubble, the bigger the disillusion. At this point, our focus needs to be on how firms can integrate sustainable development into their management systems in a way that guarantees they continue the initiatives even when public attention wanes.”

Educating Executives

Even with all the attention currently on social responsibility, not all businesses are taking up the cause—or investing much in it when they do. Lacy of EABIS believes that school administrators need to start pushing for more of a commitment from the companies that do espouse sustainable business.

“If the educational community prods business leaders to think this through all the way to their human resources policies, this could have a significant effect on the supply side of the market,” says Lacy. “Schools need to say, ‘If you are serious about corporate responsibility, then be serious about it in your human resource policies at a couple of levels, one of which is executive education. To what extent are you integrating this into your executive education?’ The answer, at least in Europe is, ‘Not very much.’”

Some schools are making it easy for companies to train executives in CSR. For instance, York University runs the Sustainable Enterprise Academy specifically to imbue executives with notions of corporate social responsibility. York also has worked with Northwestern University’s Kellogg School at the EMBA level to offer classes in sustainability.

“The questions remain: Will this activity and engagement lead to performance? Will we see the reduction in greenhouse gases, toxic waste, and social deprivation? Frankly, the jury’s out on that.” —David Wheeler, York University, Toronto

“Not only can schools make money on executive education, but if they cover sustainability topics in executive education, they can really reach business leaders who are not currently pursuing their MBAs,” says Wheeler. “If a school offers executive education programs or weeklong seminars to executives, it can pique their interest and help them understand about sustainability as a way to think about business.”

Subtle Shifts in Attitude

Sustainability isn’t just a way to think about business— it’s a way to think about society, and proponents of corporate responsibility have begun to put more and more emphasis on that word. While environmental issues are still important, what matters now is the societal impact.

For instance, INSEAD launched CMER in 1992 to conduct research and develop curriculum materials in the area of sustainability. While originally developed as a center promoting stewardship of the environment, the center more recently began focusing on sustainability—particularly on how the social environment relates to the physical environment. CMER director H. Landis Gabel expects the future agenda to focus even more on globalization and how it affects labor, the environment, governance, and management integrity—a broad spectrum of issues that will also require a great deal of interdisciplinary research.

York University launched its Business and Environment program in the early ’90s, but retitled the program a few years later. The new Business and Sustainability program “reflects broader economic, social, and environmental issues,” says Wheeler. Not only did the rebranding help keep the school contemporary with changing attitudes, but it took some of the focus off all the things that go wrong in business. “Sustainability is a very success-based paradigm,” says Wheeler. “We want to explore what works, especially when that gives a competitive advantage to business.”

Another change is that more schools are creating centers devoted to CSR issues as a way to give them more weight and impact. For instance, Haas’s Center for Responsible Business, launched two years ago, brought many existing but disparate CSR programs together under one umbrella. The center now focuses on four functional areas: teaching, research, experiential learning, and outreach. Most visibly, the center has added 11 new courses to the curriculum, on topics ranging from emerging markets to human rights and business.

In addition, the center provides a focal point for the school’s research initiatives, which include a working paper series on social responsibility and a social performance metrics conference. The center also sponsors a speaker series and lectures that are open to the public. “Our mission statement is to expose every Haas constituent to the complexities of corporate responsibility,” says McElhaney. “I think in terms of three concentric circles. The inner circle is students, the second is the corporate world, and the third is the academic community.”

INSEAD’s CMER also organizes academic seminars and large conferences, conducts research on sustainability, and works with INSEAD faculty to generate books and cases on topics such as corporate social responsibility, ethics, and governance. In addition, INSEAD’s partnerships with industry leaders have led to joint research projects with companies such as Unilever, Shell, IBM, and Microsoft.

“We also have a roundtable for INSEAD alumni, so four times a year that brings together senior executives on topics relating to CMER,” says Hockerts. “So far we have had seven roundtables on topics such as carbon trading, green venture capital, corporate philanthropy, and interacting with NGOs.”

The Student Factor

It might take some time before graduates move into corporate positions that enable them to speak forcefully on CSR topics, Hockerts points out, but students remain a powerful force behind CSR initiatives in many schools. At INSEAD, master’s and doctoral candidates can join the student group INDEVOR, which seeks to create awareness of international development needs within the INSEAD community, create work opportunities, and influence the school’s curriculum. Hockerts estimates that ten to 20 percent of INSEAD students join the organization.

Lacy also believes students can generate enormous energy in support of CSR, and he cites an International Faculty Development Program in corporate responsibility developed by IESE Business School in Barcelona, Spain. “Not only does it look at how faculty can develop other faculty on this issue, but how students can develop faculty and how faculty can develop students,” he says. Because many of the students have five to ten years’ working experience, they can bring some of their real-world knowledge into the classrooms, he adds.

Students at Haas get a chance to step outside of the classroom and apply some of their new knowledge in real-world situations. As part of a capstone strategy course, students run projects for companies trying to implement their own CSR strategies. The projects are wide-ranging and have the potential to make a real impact in their markets.

Says McElhaney, “For instance, we’re running a project with The Gap. It’s focused on developing a coherent social responsibility strategy that’s linked both with their core competency, which is apparel, and their core business objective, which is to sell more apparel. That’s a rare project, because it’s dead-on with what I teach.”

In another project, students worked with the Detroit Lions to develop a strategy for their community development and philanthropy. “We helped the Lions think more like a business,” she says. “We said, ‘What are your core competencies and what is your target audience?’ We decided to focus on youth and the inner city issues that Detroit is facing and lopped off almost everything else.”

Such projects, essentially cost-benefit analyses, can be really uncomfortable for the parties being analyzed, she says. “The prevailing thought around philanthropy is that you shouldn’t get good at it in a business sense. But you should, because if you’re not getting a return from your philanthropic ventures, they’re going to be discontinued when the economy goes down. Instead, you need to attach philanthropy to your business goals. HP wants to begin selling products in Uganda. So by going in and doing responsible programs in Uganda, it’s opening up a new market for itself.”

It doesn’t matter whether companies work in computers, retail, or sports, says McElhaney. By creating responsible programs, they not only strengthen their ties to the community, they also create a new customer service base for their products.

Eye on the Future

Programs that focus on sustainability, centers that are devoted to corporate responsibility, and students working on philanthropic projects—all represent encouraging signs about the great strides that businesses and business schools are making on the issue of sustainability. But there is still worry in the ranks.

Says Wheeler, “The questions remain: Will this activity and engagement lead to performance? Will we see the reduction in greenhouse gases, toxic waste, and social deprivation? Frankly, the jury’s out on that. I believe most of the engagement is genuine, but there are still a lot of messes being created, socially and environmentally. Therefore, there’s still everything left to play for.”

As Wheeler contemplates the future for York’s program, he’s looking outside the campus borders. The Schulich School is in the process of developing a strategic alliance with the business school at the University of Dar es Salaam in Tanzania, planning to create a center of excellence while engaging in student and academic exchanges. “We would hope to learn as much from our counterparts in Africa as they learn from us,” says Wheeler. Schulich is also creating partnerships with schools in India and researching the role of the private sector in developing worlds.

Vredenburg thinks that, in upcoming years, interest in CSR will filter through all the functional disciplines. Although these days it is often a “subcommunity of strategy,” he says, “more and more people are coming from traditional disciplines who have sustainability as their research and teaching interest.”

This will make it easier to find faculty to teach CSR classes in the future—as will the rising number of Ph.D.s graduating from programs such as Haskayne’s. “Ten years ago, there were very few people in this field, and I could name them all,” Vredenburg says. Now Haskayne alone has two, soon to be three, endowed chairs who focus on sustainable or environmental business. “You can’t just go on the market and hire for these spots as you would for a finance or marketing professor, but there are increasing numbers of people who are specializing in this area,” he says.

When McElhaney looks to the future, she sees more interaction with corporate partners. She already has a small but committed advisory board, and she’s preparing to launch a Corporate Partners program from the center. Twenty companies will pay a membership fee, have a chance to work with a student intern or student analyst, and get an early look at working papers. She also will use funds from The Gap to launch the Gap Fellows program for students who commit to focusing at least part of their MBAs on corporate social responsibility.

Eventually, she hopes that CSR becomes recognized as a legitimate discipline of its own. “We now teach marketing as if finance exists, and we teach finance as if accounting exists,” she says. “My goal is for marketing, finance, and accounting to simply teach their respective disciplines as if corporate responsibility exists.”

That goal looks more attainable as increasing numbers of business schools develop concentrations, programs, and centers devoted to sustainable business. If corporations and universities agree that sustainability is a crucial component in the complex business equation, corporate social responsibility someday could become just another core course in management education.