Why would a multinational financial services company like Wells Fargo need to think about environmental sustainability? Because if it were looking for growth opportunities in, say, the dairy sector, a huge operational expense is mitigating the environmental impacts.
Whether Wells Fargo invests in environmentally sound practices because of regulatory mandates or through a sense of social responsibility, there is a business case for sustainability, argues Vishal Agrawal, provost’s distinguished associate professor and Henry J. Blommer Family endowed chair in sustainable business at Georgetown University’s McDonough School of Business.
This is not merely a hypothetical case study for Georgetown McDonough students. As part of its emphasis on experiential learning — and in response to an increasing interest in environmental stewardship by both students and consumers — students recently researched sustainable growth opportunities in the dairy and agriculture sectors for Wells Fargo. They studied climate-related risks in West African supply chains in search of more sustainable cocoa farming. And they worked with a financial services company to measure the carbon footprint of its remote workforce in the wake of the Covid-19 pandemic.
THE BUSINESS CASE FOR SUSTAINABILITY
“These are examples of really practical, important problems that we’re working on,” Agrawal tells Poets&Quants. “The outcomes are really useful for the companies, and students gain a lot of skills that are scalable and applicable to whatever else they do in the future.”
The McDonough School has a growing list of courses and degree programs focused on environmental sustainability in the context of business, from the Sustainable Business Fellows Program for undergraduates to a new M.S. in Environmental and Sustainability Management that will welcome its first students next August. Georgetown also offers an MBA Certificate in Sustainable Business.
Agrawal is also the academic director of McDonough’s newest initiative to prepare new and future leaders to make the business case for sustainability. The Business of Sustainability Initiative launched about two weeks ago and now serves as the umbrella for its sustainable coursework. Its mission is “focusing on sustainability within the context of business” through student learning, thought leadership and research, and bringing together the stakeholders in business, policy and academic expertise.
Agrawal sat down with Poets&Quants to discuss why it’s good business to embrace sustainability and why today’s business students need these skills.
How did you start thinking about the intersection of business and environmental sustainability?
My initial training was in engineering and operations research which is all about solving difficult problems in math and economics. When I started my doctoral program 15 or 16 years ago, I wanted to solve problems which were interesting and impactful, and I was drawn to sustainability which was still an early concept in the business world. Sustainability problems are challenging. They require you to harness the power of different disciplines to do some good. It’s great that some people improve algorithms by seconds but that’s not what I wanted to do.
One of the things that drew me to the faculty of Georgetown 11 years ago is that Georgetown is a place which naturally lends itself very well to looking at sustainability, especially in connecting policy and business. Georgetown and Washington, D.C., is a perfect place to be in that regard. Georgetown also has this emphasis on society. Finally, sustainability challenges are always global in nature, no matter what you’re talking about, and that’s where Georgetown shines as well.
Have you noticed an increase in business student interest in sustainability over the last decade?
Yes. Student interest is through the roof. All of the curriculum offerings that we developed on this topic are packed. Students are just really interested and passionate about this. Not just from the business school, but also from other schools on campus who want to understand how businesses think about sustainability.
What’s been interesting is there’s been an evolution on the business side as well. When I first started out, a lot of my conversations with companies tended to be, “Why should we think about sustainability? What is the business case?” These days, the conversation is slightly different. Businesses know they want to do something, but they want to know how to do it.
There is also an interesting evolution in terms of what our students should know when working in sustainability jobs. Fifteen years ago, maybe some companies had a sustainability person that would typically be like Environment, Health and Safety. That’s no longer the case. Now we are at the stage where most of our MBA or graduate students will be dealing with sustainability in some way. We have students who now work in supply chain for Amazon or Starbucks, and on the surface it’s not a sustainability job, but they’ll tell you they spend a big part of their job thinking about sustainability, because it’s integral. Now, some of our students are going to go work on Wall Street and want to understand ESG (Environmental, Social and Governance investing) and sustainability because that’s going to be part of their job. Some of them are working for Amazon in tech, but want to understand how sustainability is gonna intersect with them. One of the things I always say now is that no matter what industry or functional area a student is going to be working in, they need to understand how sustainability intersects with that and how to incorporate that into decision making.
What is the business case for sustainability?
That is a very big centerpiece of how we’re approaching sustainability at the McDonough School of Business. There are many reasons why businesses should focus on sustainability or social responsibility. The most obvious, and some of my colleagues will tell you this as well, is the ethical reason to do this. It’s the right thing to do. What I want to focus on, and what we’ve learned also resonates a lot with companies, is what I call the “business approach to sustainability” or the “business case for sustainability.”
What that means is that I’m not just going to tell you to do something which is good for the environment or society just because it’s the right thing to do. What I’m gonna do is to be able to help you identify how that can also be good for your business. It is generally much easier to get companies to do something about sustainability if it also aligns with their business model and understands the constraints of their business operations.
If I put my business professor hat on, I say that you have to help companies make these decisions in the business context and understand that. If you want to influence businesses and companies and organizations to be more sustainable, you have to speak to their incentives. And it could be a variety of things. Typically we think about efficiency and saving on costs. Or there is something which is expensive in the short term, but it’s going to reduce your risks in the long term. A lot of companies which rely on natural resources are taking sustainability quite seriously with the threat of climate change. They’re investing hundreds of millions of dollars in some cases because they face this existential crisis, 40-50 years down the line, of not being able to have access to their supplies.
The reason why we picked this sort of approach for the initiative is it gives students the right skills to be able to tackle these kinds of challenges for whatever employer they have in the future. Whether it’s a publicly traded company, whether it’s a company which is very innovative on sustainability or maybe it’s just trying to get their footing in the sustainability space. This makes our students very well poised for the business world.
How did that idea develop into the Business Sustainability Initiative at McDonough?
While the initiative launched just a couple of weeks ago, internally we’ve been developing this for quite a while.
A lot of the activities that we’ve been doing and the courses we’ve offered, were slowly and organically sort of happening. And, a lot of other centers and initiatives which are not primarily focused on sustainability at McDonough also work on some related issues. What we noticed was that there was this incredible amount of demand – from employers, from businesses, even in terms of population research, as well as from students – in all of these different things we were doing. So we thought it was a very good idea to do it in a more systematic way.
Six or seven years ago, I started teaching some key courses around sustainability – sustainable operations, sustainable business models, supply chains – and those were kind of getting filled out. At the same time, we started doing these capstone and practicum courses where students were actively working on real life projects with international companies and NGOs around sustainability. That naturally led to us launching the MBA Certificate in Sustainable Business which allows our students to actually specialize in sustainable business and especially signal to employers that they have the expertise or knowledge of the space. Just a few months ago, we launched an M.S. in Environment and Sustainability Management, which will welcome its first class in August. This is an interdisciplinary degree which blends science and business together to tackle these problems. So, in some ways, we started with the courses and then added certificates and the practicums and the experiential projects, and that has slowly grown into the initiative.