In business schools, as in companies, sustainability is the buzzword du jour. Not a week goes by or a top school announces a new chair, major, or department in the topic. But just like a chief sustainability officer cannot be effective if (s)he does not help define the company’s strategy, so business schools’ sustainability initiatives cannot be effective if they aren’t core to the school’s philosophy, structure, and curriculum. Business schools need a sustainability makeover.
When one of us, André, got his first job in the City in the 1980s, neoliberalism was having its heyday. “The market knows best”, was the mantra in London and other financial capitals of the world. Business school-trained executives ran their companies with a sole focus in mind: to increase their profits. And government needed to get out of the way to make room for a latter-day invisible hand. Jack Welch and Lee Lacocca nodded in agreement.
Looking back, it was naïve of us to think society’s problems were that simple – or that business school alumni of that era would solve them. In the decades of the unfettered market’s rise and domination, global biodiversity loss accelerated, and greenhouse gas emissions passed critical threshold levels. Meanwhile, inequality in many economies, including the U.S. and the U.K. reached century-old highs. Business leaders pled ignorance. Business schools looked the other way.
Why did this happen? In large part, because the leading doctrine in economics and business ignored the interdependencies between business, nature and society. It presented profits as First Grade math, and societal wellbeing as an afterthought. Fortunately, in recent years, that has started to change. Business leaders are now discovering and embracing stakeholder capitalism and the notion of natural and social capital. Business schools are offering sustainability courses.
But adding an ESG major to your MBA offering, setting up a Chair in stakeholder theory, or even providing 30 hours of sustainability classes in each undergrad degree is not enough. It is akin to setting up a sustainability team in your company, but leaving it out of strategic decision-making. What’s needed in both cases is a complete rethinking of the fundaments. In business schools, that should begin with reforming Econ 101 – and it could end with an overhaul of the entire institution.
Take first reforming Econ 101. As economists such as Kate Raworth have pointed out, some of the most basic economic concepts, such as homo economicus, or eternal growth, are unfounded in facts, yet deep-rooted in economic thought and education. Business schools should re-evaluate their core curriculum with that reality in mind. In the MBA of tomorrow, concepts such as “externalities”, “stakeholders”, “impact”, and “natural and social capital” should take centre stage.
In a second phase, schools could go a step further. To this day, everything from research to rankings to revenues at business schools holds deep roots in the short sightedness of a bygone era. Researchers are rewarded for entrenching themselves, rather than branching out. Rankings are tweaked and optimized. Cases are about revenues and costs, not about the broader social and natural impact. Career and alumni offices are focused on big names and salary bumps.
All of that should change. Business schools should rethink their role in society, and the impact they have. A materiality assessment could shine a light on where an overhaul is needed. In any case, researchers should practice their lateral vision. The departments they work at should encourage an interdisciplinary reflex. Deans should implement find KPIs beyond rankings and alumni salaries. Cases should include the stakeholder theory.
Some schools have already started this journey. The transformation of The Wharton School, for example, is noteworthy. It returned to the values of its founder, Joseph Wharton, and used them to rethink its undergrad and MBA curricula, with sustainability in mind. On a more personal note, André created the Hoffmann Global Institute for Business and Society at INSEAD, which aims to take the whole school – not individual programs or departments - to the next level of societal impact.
But a more structural and widespread sustainability overhaul is needed still. Leading economic and business doctrines often permeate all of society, whether directly or indirectly. Business schools that lead by example will have more of an effect on their students than those who ask their students to “do as I say, not as I do”. If these institutions want to retain their aura, they will need to change on a systemic scale. Incremental changes won’t do.