These days, it’s nearly impossible to separate business and sustainability. Increasingly, companies are baking the buzzword into their business plan. From clothing companies to impact investing, green business is on the rise. And many top-shelf business schools are answering the call of interested MBAs by developing their own sustainability-focused initiatives and curriculum.
One of the first to hone in and dedicate big chunks of resources to the fostering of sustainable business was New York University’s Stern School of Business. Nearly two years ago, Stern launched its Center for Sustainable Business, the first of its kind among elite business schools. Last spring, after being established about a year, the Center introduced its first full-time MBA course, Sustainability for Competitive Advantage.
“Even if you’re not going to be working specifically in sustainability, businesses need to have employees who understand these issues, understand how to work with different stakeholders, and understand how sustainability can bring innovation and a competitive advantage,” says Tensie Whelan, director of the Center and instructor of the course.
The course, Whelan explains on a phone call with We See Genius, is designed to demonstrate to students that sustainability is no longer a compliance requirement — it’s an opportunity to innovate and design a competitive advantage into a company. The course was also created from a resounding response to a poll of Stern’s MBA population. During the fall of 2016, Whelan and the Center surveyed all current full-time and part-time MBAs attending Stern. The poll, which had a 20% response rate — more than 540 students — served as a guide for the course. According to the survey, about 90% of MBAs at Stern say sustainability is “very or moderately” important to them. Some 65% “feel that environmental and social responsibility helps business’ financial performance.” And more than 81% indicated they wanted to learn how sustainability can play a competitive advantage in business. And so the course was born.
“Due to a rapidly changing global ecosystem, businesses in the future will face fewer resources, greater demands for transparency, less available water, and a warmer climate,” the course’s syllabus reads. “At the risk management level, leaders need to understand how these changing factors can impact their businesses, much as they do for civil conflict, financial panics, and political upheavals.”
COURSE HAS BEEN OVERBOOKED BOTH TIMES IT HAS BEEN OFFERED
Taught as an elective, Whelan says the first iteration of the course was oversubscribed. This fall, the course is being offered to Stern undergrads and it was also oversubscribed. One of the first things Whelan learned in the MBA course last spring was that the students were looking for a very hands-on experience. “We felt it was incredibly valuable to give the MBA students real-life experiences and challenges and real-life experiential learning opportunities,” Sophie Rifkin, the senior associate director of the Center agrees.
Through a connection with a former alumni, Rifkin and Whelan were able to establish a relationship with Rabobank, a multinational Netherlands-based bank focused on sustainability efforts. Teams were formed within the class to help Rabobank solve real-life problems. Of the eight teams that were formed, projects ranged from advising Rabobank on how to continue to grow their sustainable development goals to making a financial business case for sustainability to researching what Rabobank’s competitors are doing in sustainability.
“Rabobank is an extremely important part of ensuring global food security,” says Max Krasilovsky, who took the course and graduated with his MBA from Stern last spring. “By financing everything from the next big innovation in food and agriculture to supporting farmers with working capital, Rabobank is doing its part to help support the food and agriculture industry. Additionally, Rabobank, through its commitment to sustainability helps to make sure that food and agriculture businesses are not just being successful, but they are also operating in a sustainable way.”
Krasilovsky’s team’s project was to research and provide ways to better communicate the “tangible and intangible benefits of sustainability to a wide-range of stakeholders,” Krasilovsky, 28, explains. The team researched how competitors were analyzing the benefits of sustainability and provided a methodology to better analyze and communicate the benefits of sustainability to Rabobank. “The methodology involves identifying the sustainable activity, the players who benefit, the exhaustive list of benefits and conduct data gathering, interviews, and financial modeling to assign quantitative financial benefits,” Krasilovsky says.
BUILDING A SUSTAINABLE SKILL SET
According to Nancy Schmicker Van Way, who also completed the course and earned her MBA last spring, a focus on being able to financially quantify, analyze, and communicate the benefits of sustainability to key stakeholders was an intricate part to the course from day one. Understanding current research on how strong environmental, social, and governance (ESG) performance can predict financial performance was an essential part of the course, Van Way explains.
“Even today, it seems like the majority of business people and business students think that sustainability is just done to feel good and doesn’t add value to operations,” Van Way, 34, says. “I have seen that this isn’t the case in my career, but it was great to learn how to quantify the impact of material sustainability efforts so that they can be measured and clearly communicated.”
Van Way says the course’s final, which involved evaluating the sustainability program of any company will be most helpful for her moving into her future career. “I am confident that I have a robust set of tools that would allow me to do that for any company in any industry,” says Van Way. “I think this will be increasingly valuable as companies are looking to sustainability as a way to manage risk, strengthen their brand, and increase resiliency to disruptive events.”
SUSTAINABILITY A NECESSITY FOR BUSINESS SUCCESS — AND BUSINESS EDUCATION
In Whelan’s opinion, not focusing on sustainability will increasingly be a disadvantage for businesses.
“Virtually every business is now recognizing that environmental, social, and governance issues are going to have an impact on them and they are going to have an impact on it. And they need to learn how to manage for those issues,” Whelan insists. “The smarter ones are saying that not only do they have to manage for them, but they have to use them for a source of innovation and competitive advantage.”
No matter an MBA’s role in a business, Whelan says, having a sustainability lens will be important. For example, Whelan explains, accounting majors will need to understand standards for environmental, sustainable, and governance issues. Same goes for finance-focused students. Marketing students will need to understand the rising millennial generation, which is generally looking to purchase with purpose. And supply chain management experts will increasingly need to look for materials that are sustainably sourced and easy on the environment and climate. The responsibility of training future leaders to meet those needs falls on the schools training them, Whelan believes.
“I think that if business schools want to prepare the next generation of leaders, which, indeed, those are our aspirations, we need to incorporate a focus on sustainability across the entire business school.”