For decades, the Anglo-Saxon business world has followed a doctrine popularized by Milton Friedman, the late Nobel laureate, in his 1970 essay: that a company’s sole social responsibility is to produce profits for its shareholders.
That changed in 2019, the year that capitalism went cuddly. Companies and their chief executives lined up to voice a commitment to serve all stakeholders, not just shareholders. Many have since started to put purpose at the core of their business models, removing wrongdoing from their supply chains, offering staff mindfulness classes, and stepping up to governments on societal issues such as immigration, gun violence and climate change.
But this shift in corporate culture stems not just from a sense of altruism but a growing recognition that corporate social responsibility (CSR) can drive returns for shareholders; companies can do well by doing good.
“I see this as the opposite of cuddly; in the last few years, corporate leaders have come to understand that focusing on profits to the detriment of other stakeholders has led to negative impacts on shareholders in terms of increased operational, reputational and regulatory risk,” says Tensie Whelan, director of the NYU Stern Center for Sustainable Business.
“And in fact, there are revenue and cost efficiencies associated with improving diversity or reducing greenhouse gas emissions, for example,” she adds. Executive education courses that focus on sustainability and responsible business are growing in number and prominence. NYU Stern, in New York City, offers the Corporate Sustainability 14-week program.
Participants in the course benefit from gaining the skills and mindset needed to bring sustainability to their work, no matter what industry or position, and use that training and skillset to both move the sustainability agenda forward and help with their own career development.
Demand for ESG executive courses on the rise
The appetite for executive courses that focus on environmental, social and governance (ESG) issues is increasing. “There is a huge demand for executive education courses in sustainability, healthcare, and other areas of social responsibility, including DEI (diversity, equity and inclusion) and anti-racism training,” says Kavitha Bindra, assistant dean at Yale School of Management.
The school in Connecticut offers the course entitled “Corporate Sustainability Management: Risk, Profit and Purpose”. The program equips leaders with the skills and knowledge to implement a sustainability strategy that not only addresses societal challenges but also benefits the bottom line.
The challenge for business leaders is that, while they recognize the long-term significance of their involvement in tackling these issues, the immediate benefit to shareholders is not clear. That can serve as an impediment to real action. “Part of our role is to help leaders make more compelling arguments and tell better stories to their stakeholders to yield greater urgency and create more relevance around these issues,” says Bindra.
It’s difficult to define and describe these objectives in measurable terms and communicating these to customers, wider audiences, and stakeholders in a convincing way. “The commitment of business partners plays a key role, as reaching sustainability targets requires a joint effort [across] the whole value chain,” says Anna-Maija Ahonen, senior program manager at Aalto University Executive Education (Aalto EE) in Finland.
But it’s very tricky to look into the whole supply chain from sourcing to delivering services and products to end customers. However, Ahonen is clear that this is a moral as well as a business imperative. “Sustainability is ever more essential when companies are evaluated as employers, customers, partners, investment targets, and when a decision is made whether their services and products are purchased,” she says.
Rethinking business from the ground up
Aalto EE offers the “Strategic Sustainability for Business” course in partnership with Berkeley’s Haas School of Business in California. Participants develop an understanding of the key strategic themes of sustainability, and are able to build a clear vision and strategy for sustainable success in their organization.
Concepción Galdón, director of the IE Center for Social Innovation and Sustainability, compares this transition to changing the wings of a plane mid-flight. “Business leaders are responsible for adapting their companies to operate in a changing regulatory and social context,” says the professor at Spain’s IE Business School. “At the same time, they are accountable for the jobs of employees, for creating value for their clients and, in turn, for their shareholders and stakeholders.”
Solutions are offered on the school’s course called “Sustainability: Your Competitive Advantage”. It helps participants rethink their organization’s commitment to both the environment and society as a whole using ESG frameworks, while developing their soft and technical skills.
“Business leaders are beginning to understand that the transition to a sustainable economy is even more technically complex than the digital transition was. It’s here whether they understand it or not,” says Galdón.
But it is clear that real solutions to the major societal issues require collaboration between the public, private, and nonprofit sectors. “There is increasing alignment between the corporate sector and society, insofar as the economic drivers of the former are responding to changing demands of the latter,” says Richard Barker, professor of accounting and deputy dean at University of Oxford’s Saïd Business School.
Net-zero carbon is the obvious example, he says. “This is no longer a corporate nice-to-have, but is increasingly an element of license to operate.” He teaches on the Oxford Leading Sustainable Corporations Program, which takes participants beyond traditional views of measuring and reporting on performance, to integrating ESG management into business practice.
The key benefit is that all of these courses are designed for immediate, practical application. On the Circular Economy and Sustainability Strategies course at Cambridge Judge Business School in the UK, participants increase their awareness about sustainability strategies, and also learn about different business models that can be applied.
“Businesses need to apply innovative ideas to incorporating sustainability objectives and goals,” says Khaled Soufani, director of the Circular Economy Centre at Cambridge Judge.