ESG Interest is Growing. But Are B-Schools Doing Enough?

While B-Schools have in recent years placed a greater emphasis on Environmental, Social, and Governance (ESG) issues in their MBA programs, some experts are saying they aren’t nearly doing enough.

Colin Mayer, emeritus professor of management studies and a former dean of Saïd Business School, recently discussed how business schools in Europe lag far behind corporate executives when it comes to putting ‘purposeful profit’ at their core.

“Many schools have been slow to recognize the extent of reform required to their curricula,” Mayer writes. “They have introduced electives on topics such as environmental, social and corporate governance and sustainable business but, for the most part, their core courses remain unchanged.”

But Mayer says it’s not just makeup of business school curricula that is lagging. It’s also how they’re teaching students about business at the core.

“Business school research and teaching should be the source of education for the coming generation of managers and entrepreneurs,” Mayer writes. “But shareholder primacy remains at the heart of schools’ programs, which are focused on economic theories, financial models and management studies. Courses start from the presumption that the purpose of a business is to maximize shareholder wealth and everything — accounting, finance, marketing, operations management, organizational behavior and strategy — follows from that.”

RETHINKING HOW B-SCHOOLS TEACH BUSINESS

Mayer suggests that B-Schools need to radically change how they approach the business education—a focus on the societal role of the business industry rather than a sole focus on maximizing shareholder wealth.

“Courses should begin with asking what the purpose of business is, why it is created and why it exists,” Mayer writes. “They should identify the rich variety of responses and build programs to match. They should draw on interdisciplinary knowledge from across the humanities and sciences to provide the skills and values required for business in the 21st century.”

In recent years, ESG has grown in interest among millennials. For example, almost two-thirds of American millennials are highly interested — not just simply interested — in sustainable investing, according to a 2020 study.

Mayer says a business school education approach that embraces purposeful profit will likely connect better with today’s students.

“This approach is inspiring for students, enlightening for leaders and productive for researchers,” he writes. “It positions schools at the heart of their universities, connects their knowledge with that of other faculties, and promotes the purpose of universities to contribute to human flourishing, wellbeing and prosperity alongside education and scholarship.”

Sources: Financial Times, CNBC, P&Q