Why MBAs Need to Know About Sustainable Business

30 years ago, there wasn’t much talk of corporate sustainability. Managers did not have to be well-versed in sustainability issues because other organizations, particularly those in government agencies, managed issues related to the environment and quality of life. People expected sustainability issues to be resolved through public policy interventions. Things have changed, however, and sustainable business practices are something every business leaders needs to understand.

“How you address some of these [sustainability] issues – whether it’s energy (the transition to a low carbon economy), climate, water scarcity – is often about the way we do business,” states Gitsham, explaining that, just as this has been the cause of many of these challenges, it also the vehicle through which we might effect change.

In order to adapt sustainable business practices, companies must look at how their industrial processes are structured, how their manufacturing operations work, and what products and services they can develop to help solve societal problems – how they can create value for shareholders and wider society at the same time.

Several major companies are exploring new business opportunities which have arisen through the exercise of making the world a better place. Some companies’ sustainability initiatives entail the development of products and services designed to solve environmental problems, while others focus on issues of public health.

GE transformed their business in 2005, after recognizing the need in the market for products that can help the transition to a low carbon economy, launching an initiative called ‘ecomagination’. Not only do GE’s sustainability initiatives save money for consumers and reduce environmental impact, they have also generated $25 billion in revenue in 2012, according to GE’s sustainability report entitled ‘Our Global Impact’. IBM is another major company that has gotten into the business of offering carbon management solutions.

Unilever is a further major company that has become known for its sustainability initiatives. Its plan to double the size of its business includes eight 2020 goals developed in response to the UN’s Millennium Development Goals that meet sustainability objectives and revenue objectives at the same time. One of Unilever’s public health goals is improving public hygiene to reduce diarrheal and respiratory disease. One of the ways Unilever has addressed this goal is through promoting washing hands with soap – a practice that many people still haven’t adopted. In central Africa, Unilever has developed a 21-day school hygiene program, in conjunction with their brand Lifebuoy soap. Last year, 119 million people participated in the hand washing campaign. In addition to promoting better hygiene, the program generates soap sales, and therefore revenue.

Not all companies, however, are as successful with their sustainability initiatives. Even companies that set out to do good don’t always succeed – particularly when companies engage in contradictory behavior with regard to sustainability. Gitsham cites the example of Coca-Cola, a company which has taken the lead in terms of innovating around lowering carbon emissions and addressing water scarcity, but has only just begun to get seriously engaged in the issue of the public health impacts of its products. Another example is Google, a company known for their motto “don’t be evil” as well as their involvement in the Arab Spring, but which has also attracted negative press for not paying corporation tax in the UK.

According to Gitsham, this disconnect in terms of corporate sustainability behavior results from the fact that corporations are made up of a complex mixture of people – some who ascribe to new values, and others who still subscribe to the old ways of thinking. He goes on to state that the education provided by business schools can help produce leaders who understand the sustainability needs of businesses. “Business schools have an important role to play in growing the number of people entering management positions who have a grasp of why it’s important to do business in a new kind of way.”

What can MBA students do in order to prepare themselves for leading corporate sustainability initiatives? Gitsham says there’s three things they need: traditional business expertise, a knowledge of what’s going on in the world, and a passion for sustainability issues.          

MBA applicants should also do their homework about where they want to study sustainability. According to Gitsham, “There are loads of schools now who are doing a really good job of embedding [sustainability] throughout their curriculum, but it’s amazing how many still aren’t doing anything at all, or are just scratching the surface and doing something very limited.”

MBA applicants who want to study a program with an emphasis on sustainability should also look into schools which offer opportunities to get involved with first-hand sustainability work, particularly those which give students a chance to address sustainability challenges in developing countries. Some programs allow students to work across different sectors. “Business leaders in the future are going to have to do far more partnering with third sector NGOs than in the past,” states Gitsham. Cross-sector work experience will give you a better understanding of how NGOs work. Volunteering is another source of valuable learning that will complement your sustainability studies.

Lastly, students should look for employers who are taking a lead in sustainability issues. That way, they can apply the skills developed during MBA program to real life, leading sustainability initiatives at their company.