We have 10 years to prevent irreversible damage to the planet — and the hero of this story will be an unlikely one. Business and environmental interests are famously opposed, so who would have guessed that the fate of the world now lies in the hands of MBAs?
Corporations are the largest contributors to climate change. Since the Industrial Revolution, two-thirds of all carbon emissions are attributable to 90 corporations. Blaming consumers for climate change woes is largely misguided. Waiting for consistent policy leadership is a gamble. We’ve reached a tipping point where limiting global warming to 1.5 degrees Celsius by 2050 requires businesses to act now.
For better or worse, MBAs are the most concentrated group of business leaders across the U.S., and therefore the biggest opportunity for a mass mentality shift. Forty percent of Fortune 500 CEOs hold an MBA degree including at Apple, Walmart, and Exxon Mobil. Not surprisingly, those who seek formal education on how to run and grow a business ultimately end up doing it.
The time is nigh — and arguably overdue — for MBAs to take the reins. But how?
3 WAYS THAT MBAs CAN MAKE A DIFFERENCE
- As students or alumni. Environmental issues need to be taught as a baseline business principle and not as an elective. Call your school as a concerned student or alum to understand how deeply embedded environmental, social, and corporate governance (ESG) is in the curriculum. Ideally, business schools will teach sustainability as a core subject the same way that accounting or strategy are required courses. Alternatively, schools can incorporate the learnings of climate change successes or failures in each of those subject matters. Business schools must question whether they are doing all they can to deliberately instruct on climate change today; and alumni, especially donors, have influence. Business leaders are increasingly expected to voice a position in societal matters. Tomorrow’s best-prepared managers will be the ones formally trained to problem solve for today’s largest societal threat.
- As employees. The most impactful thing employees can do is investigate and implement planet-friendly opportunities that increase business profit. Unilever, Ikea, Whole Foods, Xcel Energy and others have already set examples for how to be both profitable and green. A longer-term profitability argument is that the world will lose 7.2% of GDP per capita due to climate change inaction by 2100. Businesses that don’t proactively address this will become increasingly uncompetitive. Even sooner on the horizon, if Joe Biden wins the presidency this fall, $2 trillion will enter the economy pointed toward climate change over the next four years. That level of investment and focus will have a direct impact on American corporations, so best to get started now. Lastly, individual employees can intertwine their company’s existing ESG efforts at every opportunity. Make sure that your chief sustainability officer has a seat at the table during company strategy discussions. The power of employee voice has never been stronger on this topic.
- As business leaders, board members, or investors. A bold leader at the top is the common denominator across U.S. companies with big climate commitments. In Europe, many executives are rewarded for climate change efforts. Incentives here, however, are less aligned. A U.S. company’s sustainability journey often starts with a CEO committing to buck the trend. Boards are critical to counteracting the default incentive structure of companies toward shorter-term profits and goals. Board members should use their influence to prioritize sustainability as an agenda item to tackle today instead of tomorrow. Taking it a step further, CEOs and boards have an opportunity right now to change the narrative. Instead of viewing climate change as a check-the-box business risk that must be addressed, it can be positively elevated as a leader’s personal legacy.
MOST CORPORATIONS HAVE NOT MADE MEANINGFUL CLIMATE COMMITMENTS
Recent changes in the work world — particularly the switch to working from home amid the coronavirus pandemic — have shown us how quickly corporations can adapt when they need to. However, despite the climate pandemic underway for decades, 75% of corporations have not adapted and still lack meaningful climate commitments.
We are on the cusp of change, though. Gen Z is already headed toward purpose over profit. Joe Biden’s climate budget proposal is not only the most ambitious of any nominee with respect to emissions goals, but it is also the most interwoven with economic recovery and job creation of any proposal to date.
We still need business leaders to do their part. We cannot afford to hold our breath for another inspiring, but scant handful of CEOs to come forth and take a stand for the environment. We require an entire generation of corporate leaders to attack climate change head on. Our best shot, and the world’s greatest need, is for MBAs to wield their influence from every seat they occupy in corporate America today.
Gerrine Pan is a Class of 2010 Harvard Business School graduate and a fellow at the Clean Energy Leadership Institute. From speaking with students and HBS alumni center, she has observed a growing interest among MBAs interested in ESG/sustainability and climate. This story was originally written for CELI.