Abstract
In an era of catastrophic climate change, businesses that are sustainable will be more likely to survive and thrive. The same is true of business schools. This article discusses different business school approaches to this transformation, touching on both successes and ongoing challenges. While its focus is on Berkeley Haas, it also draws on a 2022 benchmarking survey of other business schools. Mainstreaming sustainability education into the business school curriculum is not without its challenges, yet considerable progress has been made.
Do we believe that life on the planet is under threat, perhaps even existential threat, from human activity in the Anthropocene? Do we believe that the Sustainable Development Goals are worthwhile? Do we believe that business organizations can help curtail, if not ameliorate, many of the problems we face today? Finally, do we think business scholars have a responsibility to educate their students and the public alike about our problems and fostering action, together consider how best to address them? If the answer to each of these questions is yes, then we need to act.–Professor James P. Walsh, University of Michigan
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In the summer of 2023, two friends were hiking in the Alps. They were Dean Ann Harrison from Haas School of Business and Michele de Nevers, the Executive Director of the Haas Office of Sustainability and Climate Change, former colleagues from their years working together at The World Bank. Harrison and de Nevers were looking forward to viewing the Mer de Glace (Sea of Ice), 2 the largest glacier in France, currently four and a third miles long and 600-feet deep. Yet it is receding at a rapid pace, shortening by 90 to 120 feet each year due to rising temperatures. Roped together with a guide and fellow hikers for safety, they fell silent as they witnessed the large expanse of darker rock that had appeared in the wake of the rapidly melting ice.
The glacier is a clear marker of how climate change is transforming our planet. The climate challenge provides not only unprecedented threats to business as usual, but massive opportunities. The x-factor that just may tip the balance in favor of success is the passion of young people who want to create a better future for themselves, their communities, and their planet. This article discusses several business school approaches to facilitating sustainability, touching on both successes and ongoing challenges.
Defining Sustainability
Last year was the hottest year on record. An escalating drumbeat of extreme weather is ushering in unprecedented and unwelcome new milestones in the physics of the atmosphere, the biosphere, and oceans. The warming planet proves that creating a sustainable economy is a matter of saving lives, not just building wealth.
The leaders of many top business schools believe that governments and the nonprofit sector cannot address the climate challenge alone. Despite three decades of international climate negotiations and two agreements, global greenhouse gas emissions continue to increase. The US federal government has yet to restrict or put a price on carbon emissions. However, business has made progress. Between 2012 and 2022, thanks largely to private-sector innovation, the cost of solar power dropped by 75%. 3
Business sustainability is a set of principles that encompasses all of a company’s efforts to reduce its negative environmental and social impacts and to create enduring, sustainable value for its stakeholders: shareholders, customers, employees, suppliers, regulators, communities, and society. Sustainability goes beyond safeguarding a company against risk or investing with an environmental, social, and governance (ESG) lens; it implies a broader commitment to creating good jobs, valuable products and services, and long-term prosperity.
Future business leaders have three complex, intersecting sustainability mandates. First, they must be at the forefront of efforts to reduce greenhouse gas emissions to net zero by 2050. 4 Second, businesses must respond to the current increasingly stressful and unpredictable impacts of climate change. Finally, businesses must work with the rest of the society to build climate-resilient systems for the long term. They will need to do all of this while managing stresses on natural resources and disruptions to supply chains, including wildfires and water scarcity in western states. 5
The challenges facing business—and consequently business education—are profound. Leaders will need to be masters at change management, bring all their stakeholders along, and communicate risks and benefits without greenwashing or stonewalling.
One big challenge is the need to comply with increased reporting and disclosure requirements. California’s new climate disclosure rules, SB253 and SB261, 6 align with initiatives from the European Union. The Federal Securities and Exchange Commission is drafting new rules as well. A study estimated that SB253 and SB261 alone will affect 73% of Fortune 1000 companies. These new disclosure requirements immediately impact accounting practices. California rules stipulate that covered firms must report their direct emissions for 2025 by 2026 and their Scope 3 emissions by 2027. Furthermore, these firms must disclose climate-related financial risks and their plans to alleviate them. Penalties for non-compliance could hit $500,000 per annum.
Business schools have both the capability as well as the responsibility to facilitate research and train future business leaders to address these challenges. Mainstreaming the right business response and aligning it with value creation can make this transformation faster and more efficient than with regulations and state mandates alone.
One striking aspect of the business school response to the challenge of sustainability is a strong focus on working across disciplines. Sustainability cannot be siloed within the disciplines of strategy, economics, marketing, finance, operations, or accounting. It touches every dimension of the built, manufactured, and traded world.
Just as important in the definition of sustainability are equity and the related notion of environmental justice. The World Bank estimates that climate change will drive 68 to 135 million more people into severe poverty by 2030, threatening three decades of global progress.
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There are too many people without resources to adapt effectively—not just in sub-Saharan Africa or India, but in parts of the United States, including California.
Questioning the Status Quo
Perhaps the most exciting part of the sustainability agenda for those in the field of education is the human capital revolution that comes with it. How do business schools prepare students for leadership in this area? Interdisciplinary education and innovative mindsets have critical roles to play.
“Identifying sustainability opportunities in a decarbonizing economy is an integrative effort,” according to Brandi Pearce, a lecturer at Haas and an expert in the collaborative dynamics of complex global organizations. “It requires leaders to invest in people and teams to foster collaborative decision making across diverse stakeholders.” Pearce directs courses and programs on “Leading High-Impact Teams” that help students learn and practice this type of decision-making as it relates to the realm of sustainability. Examples include wildfire mitigation simulation that necessitates integrative decision-making among interdisciplinary team members or a case study on the power of industry-wide sustainability partnerships. “Through these learning experiences,” Pearce says, “I hope students will not only expand their team leadership toolkit, but also reimagine how we define team and business success that unites purpose with passion.”
One important component of this revolution in human capital is a greater appreciation and realization of the many forms of capitalism. In the second half of the twentieth century, a narrow vision of market capitalism permeated educational institutions, led by individuals such as Milton Friedman and supported by those who favored a strict version of neoclassical economics. Among multilateral institutions, this narrow vision of capitalism was known as the Washington Consensus, which elevated the importance of the market mechanism and openness to trade and discouraged government intervention.
In this new world of pandemics, extreme weather events, and climate change, educating students about the fundamentals of responsible capitalism will become increasingly important. Understanding both the strengths as well as the shortcomings of markets is absolutely critical for delivering business solutions and creating successful partnerships with the public sector. One important area of research includes work on political economy that addresses the appropriate relationship between business and government—knowledge that will become increasingly important as nations seek more effective solutions to climate change. Both sectors have a critical role to play in developing innovative strategies to reduce greenhouse gas emissions without compromising economic growth.
Andrew Hoffman, in his new book Business School and the Noble Purpose of the Market, writes that one of the most important contributions of educators is to point out the failures of the market in a capitalist society. 8 Providing examples of alternative modes of capitalist states, such as the Nordic Model, 9 opens up student views on climate solutions. Too often, the teaching of standard economic models glosses over the critical assumptions—such as perfect competition, complete information, and lack of market power. These basic assumptions of neoclassical economics are frequently violated. Conversations are needed in classrooms to acknowledge market failures and likely solutions.
A related theme that deserves greater attention in the context of business school research and curriculum is the relative importance of shareholder versus stakeholder maximization. In a world where markets are not perfect, standard textbooks identify government taxes or subsidies as one solution to fix problems. But what if the government cannot address the environmental challenges, either due to political blockages or the sheer scope of the problem? Both management and finance scholars are tackling this issue, as well as business groups such as the Business Roundtable and the World Economic Forum, but these debates deserve greater attention in both the classroom and in faculty research. In their response to Milton Friedman’s argument for a focus on profit maximization, finance economists Oliver Hart and Luigi Zingales write:
A second argument that Friedman and his supporters make in favor of profit maximization is that externalities should be left to government. Like many people these days (and maybe always), we are not that sanguine about the efficiency of the political process. Also, even if the political process is efficient, it might be very difficult to write a regulation that specifies, say, that companies should treat their workers with dignity. It might be better to leave the implementation of this goal to shareholders.
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Hart and Zingales then develop a model that proposes maximizing shareholder welfare—which could include internalizing externalities associated with pollution, lower than optimal wages, or other factors not typically associated with profit maximization. Increasingly, scholars are questioning simplistic models of the firm and society and proposing alternatives that should be carried into the classroom. In his recent book, Beyond Shareholder Primacy: Remaking Capitalism for a Sustainable Future, Stuart L. Hart argues that “shareholder primary capitalism” has become both outmoded and dangerous and urgently needs to be fundamentally transformed. 11 He proposes instead a vision of sustainable capitalism that incorporates the needs of both society and the planet. Hart adds that business education has a critical role to play in developing new business models that can transform capitalism and position business to address the challenges that we now face.
The Six Critical Components of Business School Transformation
In the past few years, many business schools have created dramatic new initiatives that respond to Hart’s challenge. The transformation needed cuts across six major aspects of the modern business school: Faculty Leadership, Curriculum Transformation, Co-Curricular Programs and Student-Led Initiatives, Operations, Reorganization, and National and Global Leadership.
Faculty Leadership: Research and Evidence-Based Analysis for Change
Academic faculty can play a critical role in the search for proven climate solutions and data-backed evaluations of those solutions. Increased funding and institutional support for research into sustainability and business topics has slowly begun to unlock a fascinating array of analyses with immediate real-world impact—from wildfires and energy shortages here in California to net-zero pledges at a UN conference in Azerbaijan.
Since faculty leadership is critical, retaining and growing faculty who are knowledgeable about sustainability is the first imperative for this agenda. In 2022, nine top business schools were surveyed to assess their sustainability landscape (in terms of the number of faculty engaged in sustainability). Those schools included Berkeley Haas, Stanford GSB, Northwestern Kellogg, MIT Sloan, Michigan Ross, Duke Fuqua, and Cornell Johnson. Harvard Business School led the way for faculty engagement with 39 faculty affiliates of their Business & Environment Initiative (BEI). Research and teaching roundtables among BEI faculty affiliates have shed light on the range of work being done on climate change at HBS and have allowed for deep dives and support across faculty in developing new content. Haas is a close second with 36 faculty members involved in sustainability topics. In terms of research topics, energy, impact investing, and sustainable finance appear to be common research topics across most of the schools benchmarked. Social enterprises and sustainable supply chains are also popular focus areas.
As an illustration of the kind of work business school faculty are doing, Haas Real Estate professor Nancy Wallace has been crisscrossing the country and globe presenting research to government, business, and academic groups that shows the massive financial risk fires pose to the housing, real estate, and insurance markets 12 as well as to investors and homeowners. She has been conducting research for a decade in partnership with the Lawrence Berkeley National Laboratory on the development of capital markets for funding and properly valuing energy retrofitting, as well as for hardening buildings against wildfire and flood risk. She says that a big challenge currently is residential exposure to wildfire risk. However, her work does not just expose problems; she advises policymakers on innovative financial solutions, like Property Assessed Clean Energy (PACE) financing. PACE stretches the financing over the 30-year life of a mortgage, and the assessment transfers with the sale of the property, enabling property owners to finance needed investments.
Tackling the challenge of sustainability through a business lens is, by its very nature, a cross-disciplinary challenge. Understanding climate change requires a science-based conversation, but tackling it requires embedding knowledge into all facets of a business education. One important way that Berkeley Haas has been able to address such a massive challenge is by relying not only on ladder faculty, but on a strong core of professional faculty.
One such faculty member is Andrew Isaacs, who teaches a highly popular course on Climate Change and Business Strategy. Professor Isaacs comes from a background as a climate scientist. He covers the different potencies of the main greenhouse gasses, presents a quick tutorial on the First Law of Thermodynamics—energy can neither be created nor destroyed, only converted from one form to another—and posts graphs that show how much countries have warmed over time and tracks the loss of ice and snow around the world. “There will be a September within your lifetime that sees an ice-free Arctic Ocean,” he tells the full-time and working professional MBA students who typically fill up every seat in his classes. The class covers a sweeping number of topics, including climate governance, carbon offsets, carbon capture and storage, greenwashing versus informed decision-making, and investing in climate solutions. Students also examine corporate strategies, studying Apple’s climate roadmap, Tesla’s impact report, and Unilever’s progress. As a geochemist who started his career as a scientist at NASA, Isaacs created the Climate Change and Business Strategy course after being forced to evacuate his home in Napa, California, during the 2020 North Bay wildfires. Isaacs did not end up losing his house, but the fire did lead him to examine how he could do more to educate students about climate change. Since introducing the course, he has also helped Haas launch a summer minor in sustainability that is open to all UC Berkeley undergraduates. A basic understanding of the fundamental science of climate change is critical to implementing and evaluating whether a business’s sustainability efforts are effective.
Curriculum Transformation: The Challenge and the Opportunity
Since sustainability is a mandate that cuts across a broad range of disciplines, there is a need to imbed content in more than just certain tracks or electives. A business school’s sustainability offerings are shaped like a funnel or a pyramid. At the broadest end, there is a large range of course offerings that allow all students to graduate climate-literate. At the narrow end, a number of schools offer specific dual-degree programs that allow a deep dive into both business and sustainability.
To avoid a siloed approach to sustainability, Berkeley Haas has worked with faculty across multiple subject areas—finance, operations, accounting, economics, and marketing—to integrate sustainability into their courses. Across more than a dozen required courses in the curriculum, many had no relevant coverage of sustainability and climate-related topics. A multiyear effort was made to ensure all classes touched on concepts of sustainability so that students could see how they are linked and essential to core business strategy.
To identify the best paths to incorporate sustainability into the classroom, its also important to consider the demands of the job market. Katherine Baird, Director of the Office of Sustainability and Climate Change at Berkeley Haas, and Haas Professor Adair Morse studied the value of sustainability skills in the minds of corporate leaders and recruiters. They found that hiring people with sustainability skills was an immediate priority in the majority of firms, including large-cap firms. The hiring was strong in Strategy, Communications, Reporting, Finance, Operations, and Data Analysis, but not equally across all disciplines. Their revealed preference analysis further suggested that integrating sustainability unlocks value for business and that it needs to be more than window dressing. There is a growing trend in functional specialization of sustainability skills. This suggests curricular offerings in sustainability must be more integrated into post-core, advanced electives. They also need to become more solutions-oriented and, at times, industry-specific.
Which topics within sustainability should be introduced in the Core Curriculum? Should they be woven into existing classes or taught in a separate class? Some business schools have introduced a core required course that focuses exclusively on sustainability-related topics. Harvard Business School offers a core course on business, government, and the international economy that provides tools for studying the political and economic environment of business (including global environmental issues) to help managers understand the implications for their companies. At Yale SOM, the course “State and Society” helps students understand how organizations interact with the societies that surround them, examining the role of nonmarket constituencies such as public officials and nongovernmental organizations (NGOs), legal and regulatory environments around the world, and the impact of societal trends on the opportunities and risks faced by businesses. Harvard Business Publishing features numerous course modules and case collections that cover sustainability and climate change. This content creation is critical to making sure more of these topics are taught in business classes around the country.
Specializations within the MBA
The next step involves certificates and concentrations. At Michigan Ross, students have the option to complete a concentration in ESG. The concentration requires completing three foundational strategy courses, including two courses in strategies for sustainable development and one course on equity analytics. The concentration is complemented by an ESG Workshop series that educates and engages students on key sustainability and ethical considerations in business and investment practices. The workshops cover everything from reporting and regulatory frameworks to data providers and the impact of ESG factors on financial performance and risk management. Berkeley Haas offers a Michaels Graduate Certificate in Sustainable Business, launched in 2021. About 50 students a year complete the nine-unit (three-course) certificate. Certificate programs in general are increasing in appeal to MBA students, many of whom seek to deepen their level of expertise in a particular subject area but do not have the time or resources to add an additional joint degree.
Across our survey of nine schools, three (MIT Sloan, Berkeley Haas, Stanford GSB) offer a sustainability-related certificate, while three other schools (Johnson, Ross, Fuqua) offer concentrations or fellowships with a required number of credits and registration timeline. Kellogg offers sustainability and social impact pathways on its website that are not noted on transcripts. MIT Sloan points out that the advantage of a certificate is that enrolled students join a special cohort and extended community, with access to alumni at multiple events throughout the year.
Concurrent degree programs
At the top of the sustainability curriculum, the most in-depth opportunities to study business, climate, and sustainability are concurrent degree programs. Five of the nine schools surveyed offer joint degrees with their university’s school of environment. These include Duke Fuqua, Michigan Ross, Stanford GSB, Yale SOM, and Berkeley Haas.
Haas’s newest concurrent degree program—the combined MBA and Master of Climate Solutions (MCS)—aims to develop critical skills and knowledge in climate data science, carbon accounting, and lifecycle analysis, as well as technological and nature-based solutions. Students in the MBA/MCS cohort spend the first year completing MBA core coursework at Haas before moving to classes at UC Berkeley’s Rausser College of Natural Resources. MCS courses translate the fundamental science and groundbreaking discoveries of UC Berkeley experts, enabling professionals to learn how to evaluate technologies, develop climate strategies, and remove barriers to implementing practical climate solutions.
“New research on climate solutions is still critical, but we already know many of the things we need to do to address the climate challenge,” said James Sallee, faculty director of the MCS program. “What we really need are people spread throughout society and the economy who are in a position to take action on climate and who are equipped with the tools to make the right choices.”
Co-Curricular Programs and Student-Led Initiatives
Learning is never confined to the classroom at business school. In addition to coursework, students have many opportunities to build leadership skills, make decisions, and manage real projects. These activities are also crucial to helping students build the personal and professional networks that can help them find jobs and connect to alumni in relevant industries or roles.
Many of these activities take the form of centers, institutes, and initiatives. Out of the nine schools surveyed, two had their own Energy Institutes (Duke and Haas), while three other schools collaborated with their university’s energy institute or initiatives. Stanford GSB has a total of nine centers and initiatives related to sustainability, three in collaboration with other Stanford schools. Michigan Ross has a highly active Business + Impact center, while the Harvard Business School has its comprehensive BEI.
At Haas, hands-on education and applied learning have long been a cornerstone of sustainability offerings. Directly building the skills needed and meeting people in fast-moving fields is critical for students to secure impactful sustainability jobs upon graduation. One leading example of an important co-curricular sustainability program is its Cleantech to Market (C2M) program. C2M pairs graduate student teams with clean energy startups. The C2M program brings together scientists and entrepreneurs to bring clean energy solutions out of the laboratory and into the marketplace. The program custom-builds interdisciplinary teams of MBA and other graduate students (e.g., engineering, chemistry, law, and other schools at Berkeley) and guides them as they work with cleantech startup founders—helping them identify the most promising initial markets and associated business models to make their visions a reality. C2M has forged alliances with agencies such as the California Energy Commission and the Advanced Research Projects Agency for Energy (ARPA-E) in the US Department of Energy, as well as top universities, and a network of incubators. “We’ve gone from a local pilot to a national pipeline,” says C2M Director Brian Steel.
To date, of the 44 startups assisted by C2M teams, three-quarters are still in business after five years, and the majority of those are profitable or revenue-generating. These entrepreneurs have raised more than $200 million in critical funding. More than 400 UC Berkeley graduate students have been paired with scientists and researchers through the program—preparing the next generation of cleantech leaders.
Another important set of activities teaches students how to invest successfully in public and private markets. The transition to a low-carbon economy will require a transformation of entire economic sectors and the mobilization of trillions of dollars to finance it. Finance firms are starting to lead the needed economic transformation by investing in new technologies, reshaping portfolios to be climate resilient, and reducing investments in fossil fuel and other high-emitting sectors. Financing investments in new technologies and companies will propel the commercialization of climate solutions at scale. Building sustainable investment capability will require re-examining the entire approach to asset management and investment allocation.
At Haas, one of the cornerstones of these new efforts is a series of classes that allow students to invest in both public and private markets. The Berkeley Haas curriculum for sustainable finance and impact investing was recently rated number one in the nation at the MBA level by the Wall Street Journal. The suite of Haas courses is now known as the Sustainable and Impact Finance (SAIF) initiative. The goal of SAIF is to develop leaders who use impact investing and sustainable finance to drive positive change and opportunities. Investors need to be able to differentiate between greenwashing and genuine ESG impacts.
Yet another elective, the Impact Investing Practicum, is an applied innovation course that pairs small teams of MBA students with impact investing firms for a 10-week project. The class is designed to enable MBA students to gain hands-on experience with impact investing strategy, mapping, and measurement projects within the context of a faculty-led course. The newest addition to this set of offerings was launched in November 2023, when Haas announced the first business school Climate Solutions Fund. MBA students manage this innovative $2.36 million investment fund, made possible through a gift from Carlyle Group’s Allan Holt. They are learning how to structure financing in complex private markets by co-investing in real-world deals. All opportunities are focused on solutions to climate change.
“We teach students in teams how to assess different opportunities,” says Professor Adair Morse, Founding Faculty Director of SAIF. “On the way, they learn to be entrepreneurs, corporate leaders, strategy officers. Students love it—it’s intense, but it’s fun. You’re working for a clear goal, learning a ton along the way. It’s a model that’s unique to us.” Achieving this required dedicated fundraising to set up a separate pool of money to avoid conflicts of interest at Haas and the university at large. Profits go back into the administration of the initiative.
Korawat Techaphulphol participated in the Haas Impact Fund and got assigned to a project doing mangrove restoration in the Philippines, an area he said “is very new to me” and also relevant to his own country.
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He says he is inspired by the core values of impact investing, and shared the following insights:
The startup should have a very good return. We won’t create only social and environmental impact. The revenue generation is also important. If you have impact creation and good financial return, the business can sustain itself in the long run. It’s a comprehensive way of working. It’s about managing expectations from everyone–our customers, regulators, shareholders.
Operations
At the companies they are joining and founding, Haas students learn to walk the talk and put hard data behind soft promises. Haas, as a school, is doing the same. Berkeley Haas was the first business school to commission an independent carbon footprint inventory. With the rest of UC Berkeley, the business school is on a transition path from onsite combined heat and power generation to 100% renewable energy. Haas is also working to measure and reduce our scope 1, 2, and 3 emissions 14 (direct emissions from activities, indirect emissions from the energy purchased, and indirect emissions related to goods and services acquired).
Chou Hall, an 80,000-square-foot structure that opened in 2017, 15 is the flagship of these efforts: the greenest academic building in the country and the first certified zero-waste academic building in the world. After more than a year of efforts to divert over 90% of landfill waste, Chou Hall earned three critical certifications: WELL Gold, TRUE (Total Resource Use & Efficiency) Platinum Zero Waste, and LEED (Leadership in Energy & Environmental Design) Platinum. UC Berkeley as a whole has committed to the strongest ban on plastic in the country, 16 and Haas has mandated eliminating single-use plastic by 2025. Examples of changes at Haas include decorating for celebrations with reusable vinyl balloons, reusable centerpieces, and utensils. Green spaces now feature pollinator gardens and bee hives. Haas is also expanding efforts campuswide to take back and reuse graduation gowns. Areas such as travel and procurement have proven more complicated to mitigate or abate. Cross-campus partnerships, including UC Berkeley’s Business Air Travel Carbon Mitigation Program and new university procurement policies, are critical steps forward.
Reorganization
At Haas, like many other schools, sustainability initiatives and programs had existed mostly on the periphery of the business school ecosystem. In creating a centralized Office of Sustainability and Climate Change, Haas has mirrored transformation in the business world, where forward-looking companies are elevating sustainability to a C-suite level position. The Office of Sustainability and Climate Change enhanced coordination across units and organized an informal community of practice, bringing together experts across different areas.
Rather than a separate “institute” located on the periphery, the Office of Sustainability and Climate Change elevates sustainability as a priority and enables it to partner and network with other core functions of the school (Marketing and Communications Team, Admissions, Development and Alumni Relations, the Career Management Group, Facilities and Operations teams). Symbolically, it sends a strong message about the importance of sustainability to our mission; and practically, it encodes that message in action.
National and Global Leadership
Ultimately all schools, everywhere, need to be creating innovative, sustainable leaders. As a school, we are grateful to and have learned from the strong work led by faculty and administrations at several of our peer institutions, as well as through international initiatives such as UNPRME, a United Nations initiative to promote sustainability in business education. Former Haas Dean Ann Harrison is a board member of UNPRME, attesting to the importance of international coordination and support. A number of initiatives across business schools have enhanced sustainability education, including:
As part of an initiative coordinated by Columbia Business School, faculty share diverse curricula on climate change. This content is shared with other business schools, especially those in frontline climate communities that might not have the resources to develop their own.
In 2016, Duke Fuqua Business School founded the ClimateCAP Initiative—a multi-school partnership hosted within its EDGE (Energy, Development, and the Global Environment) Center. In 2022, Duke embarked on a Climate Pledge. Each of the ten schools within the university, including Fuqua, is committed to embracing a “fluency framework” spanning skills, behaviors, and attitudes that uphold climate and sustainability understanding.
In 2021, the Yale School of Management introduced two short, asynchronous online programs in its Executive Education division: Corporate Sustainability Management: Risk, Profit, and Purpose and Sustainable Finance and Investment.
At the University of Michigan, The Erb Institute is a partnership between the Ross School of Business and the School for Environment and Sustainability. The Institute convenes the state’s corporate leaders from the automotive, food, agriculture, manufacturing, financial, and other sectors in the Michigan Business Sustainability Roundtable. In this public service partnership, the university provides the research and facilitation necessary to further a shared agenda for a sustainable future for Michigan.
The UN’s Principles for Responsible Management Education (PRME) initiative brings together the UN and business schools around the world to “inspire and champion responsible management education, research, and thought leadership globally” through the application of six principles: purpose, values, method, research, partnership, and dialogue. Today PRME has more than 800 signatories worldwide and is the largest organized relationship between the United Nations and management-related higher education institutions.
Ongoing Challenges and What’s Standing in the Way
A realistic look at the path toward becoming a climate leader requires an assessment of the obstacles that Haas and other business schools face in this transformation. While universities are often at the forefront of innovation, they are also slow to change their pedagogy. Brian Rosenberg, a former college president, wrote a book in 2023 about his experience and gave it the title “Whatever It Is, I’m Against It”: Resistance to Change in Higher Education. 17 The first challenge for business schools is consequently overcoming this resistance. Following are some specific ongoing challenges to mainstreaming sustainability into business education.
Use the Carrot, Not the Stick
Mainstreaming sustainability into business requires modifying all aspects of core courses across the business school curriculum. At Haas, the first stage of this transformation was accomplished by providing special grants to faculty. Core course professors submitted proposals for new class materials to the Office of Sustainability and Climate Change and were awarded grants to make the changes. In addition, celebrations were held year end to recognize their efforts in transforming the curriculum.
Imposing course content requirements is unlikely to be a successful strategy with independent-minded faculty. However, providing resources for faculty to develop new case studies and class content linking topics to sustainability is likely to be more effective. Recruiting new faculty with interests in teaching sustainability courses is also likely to be helpful. Professional faculty (sometimes referred to as clinical faculty or professors of practice), who often have ongoing linkages with companies engaged in sustainability efforts, are also a great source of expertise.
Job Placement and Career Paths for Graduates
Recruitment across business schools has undergone many changes in the last several years. The pandemic led businesses to rely less on in-person campus interviews and broaden the scope of traditional hiring. Students themselves have expanded their interests beyond traditional careers in areas like banking and consulting. Hiring in some fields, such as the growing field of sustainability, is requiring new approaches to recruiting.
There is limited information that would allow us to identify the demand for sustainability roles—clearly a factor that would enhance the transformation. Based on our 2022 survey, Michigan Ross and Stanford GSB had the highest percentage of students going into sustainability/environmental/social-responsibility roles. At Michigan Ross, 15% of the Class of 2020 took a Sustainability/Environment FT role (63 out of 420 graduates). At Stanford GSB, 14% of the Class of 2021 chose a socially responsible role (~53 out of 379 graduates).
Most schools work closely with their Career Management Centers and student clubs to offer tailored events and services to students interested in sustainability or social impact. Yet recruiting is not well-organized the same way it is for more established career paths. At HBS, their BEI institute collaborated to host or co-host over 25 programs and events, including a mentoring program with alumni, weekly career coffee chats, networking events, entrepreneurial support, and a series of sustainability career events in partnership with the Career and Professional Development department. At Kellogg, the Career Management Center Library resources included an Energy and Sustainability jobs board, Energy and Sustainability Club-sponsored speaker events, and career treks.
One way Haas is addressing the new challenge of matching employers with students in the area of sustainability is through the use of data analytics. Haas is using data analysis on where students from the program have gone in the last three years to map out what types of jobs exist across different industries in sustainability. New information on the changing employment landscape, in turn, informs our curricular development in progress. To address the different approaches that are needed to place students in sustainability-related jobs, Haas has invested in new approaches and new specialists to assist students in seeking sustainability roles. Unlike more traditional career paths for MBAs, such as consulting or investment banking, sustainability roles are often filled on a just-in-time basis, and the recruitment path is often idiosyncratic. Networking opportunities are more important than ever before, which is one reason why the alumni working with the Haas development and alumni relations team have created a sustainability affinity group. Initiatives that bring students together with current professionals in the field further inform our job seekers about opportunities in this fast-moving world.
Accounting, Data, Transparency, and Metrics
Clear goals that are easy to understand, combined with competition and accountability, can have world-changing impacts. Today, there are competing rating agencies looking at sustainability. If an investor were to check the correlation between company sustainability ratings, they would find that correlations between the ratings are often zero. Morgan Stanley Capital International (MSCI) might consider a firm sustainable, while Standard & Poor’s 18 will not.Comparability has been called a greater problem than greenwashing in these indices. Analysts and investors are using different measures and weighting schemes, while the actual underlying data are not the same.
“What gets counted counts” goes the phrase, and for Haas Accounting faculty Panos Patatoukas, Shawn Kim, and Omri Even-Tov, ESG disclosure and corporate environmental reporting is the next frontier of business accounting. All three professors have undertaken extensive research 19 to unpack the market advantage of ESG optimization and how it affects a firm’s alpha (return in excess of a benchmark). By relating ESG alpha to firm fundamentals, Patatoukas and his collaborators demystify the ESG advantage while also increasing confidence in its enduring nature. Kim unpacks heterogeneous investor preferences in relationship to net-zero pledges. Even-Tov et al.’s research finds a positive relationship between enhanced disclosure requirements, real impact on the environment, and government funding.
The measurement of sustainability is clearly in its infancy. Getting more clarity and agreement is a huge task. When companies publish their quarterly results, everyone knows who’s profitable and what their bottom line looks like. A goal for business schools is to look at the underlying metrics of sustainability ratings and see which of these measures are the most reliable, the most systematic, and the most similar across different firms.
Concluding Remarks
The case for responsible management education has never been stronger. Scientists estimate a 10% to 20% probability that we are headed for species extinction by the end of the century. 20 Global corporations dominate world economies, in many cases, eclipsing the scope and power of nations. In the Organization for Economic Co-operation and Development (OECD), fully 25% of graduate education is in the area of business. Given these facts, it is easy to conclude that prioritizing sustainability in management education should be at the top of every school’s agenda.
We hope that this review points the way. Becoming a leader in sustainable business education requires diligence, not dazzle. While change in universities is difficult, it can be done. The first lesson is that the process requires a comprehensive approach. It matters what faculty teaches in the classroom, and it also matters that administrative staff do not use throwaway plastic cups at receptions. Giving high-profile speeches at gatherings of our colleagues and fundraising events is part of the work. So is working across institutions in back offices and late nights to support the creation of new data collection models that will ultimately come into use at companies and in markets around the world.
The second lesson is that embracing sustainability in business is now mainstream. Michigan Ross offered 50 sustainability electives in 2022; MIT Sloan offered 34. Business schools are transforming core classes, offering dozens of electives, creating special tracks, offering experiential learning opportunities, and helping students find meaningful work. While Haas has also created a centralized Office of Sustainability and Climate Change, with its own dedicated stream of funding, this key structural move is not a prerequisite for change elsewhere. At Haas, top leadership catalyzed the school’s efforts to focus on sustainability. These efforts are connected across operations, from curriculum transformation and hands-on learning to faculty hiring and administration.
Serious challenges remain. A major problem facing the entire sector, not just business education, is the availability, comparability, and quality of metrics and models used to measure success. In addressing some of these challenges, key aspects include the need to hire and retain committed faculty members and staff. Both ladder (tenure-track or tenured) and professional faculty play key roles. Since sustainability is, by its very nature, an interdisciplinary challenge, hiring committed faculty across a range of disciplines is essential. The third lesson is that a “use the carrot, not the stick” approach works best. Haas, for example, provided stipends to faculty who wished to add sustainability content to core courses.
The fourth lesson is that for all of these changes—from creating new curricula and adding new faculty and initiatives to creating experiential pathways—additional resources are needed. Andrew Karolyi, the Dean of the Cornell SC Johnson College of Business, argues that the schools most successful in this transformation are likely to be well-resourced, globally oriented, authentically dedicated to solving environmental and social problems, broad in their approach, and deeply engaged with industry.
The final lesson is that a willingness to bridge differences and have an open mindset is critical. Deans, faculty, and staff must be excited about collaboration across disciplines. They must be open to new ideas. The time has come to question standard models of profit-maximizing and purely market-driven entities. If we are to avoid species extinction, we need to move away from a sharp delineation between the roles of governments and markets. Ann Harrison, Berkeley’s former dean, credits her previous roles at the World Bank and before that as a professor in Berkeley’s College of Natural Resources as critical for allowing her to forge alliances across the university and with the business community.
We are all in this together, and like any group of intrepid explorers, we will rely on each other as we try to navigate the exciting and perilous new future ahead of us.
Footnotes
Notes
Author Biographies
Ann Harrison is a professor and the former Dean of Berkeley Haas, the business school for the University of California, Berkeley, and was previously a professor at Wharton and a Director at the World Bank (email:
Michele de Nevers is the executive director and Chief Sustainability Officer for the Haas School of Business at the University of California, Berkeley, and was formerly a manager at the World Bank (email:
Katherine Baird is the director of the Office of Sustainability and Climate Change at the Haas School of Business at the University of California, Berkeley (email: