Many MBA graduates go on to lead top companies globally, so learning about sustainable business in the MBA classroom is imperative.
BusinessBecause spoke to Iwan Meier, Professor of Finance and Chair in Sustainable Finance at HEC Montréal, to find out how the advanced degree can help students become responsible leaders.
What is sustainable finance?
Sustainable finance, often referred to as "green finance" or "ethical finance," is a rapidly evolving field that blends environmental, social, and governance (ESG) criteria into financial decision-making processes.
This approach aims to align investments and business practices with long-term sustainability goals.
In recent years, global issues such as climate change, social inequality, and resource scarcity have intensified.
This is shown with the launch of the Glasgow Financial Alliance. This organization manages more than $150 trillion in assets and aims to support the Paris Agreement's goal of limiting global temperature rise to 1.5°C and commit the financial sector to a net zero future.
“The sheer number of $150 trillion to be managed according to carbon-neutral principles is an enormous challenge. This creates a huge demand for sustainable finance experts to manage these funds according to the new paradigm.”
In the Sustainable Finance course at HEC Montréal students learn how ESG advances companies’ performance.
"We discuss the latest findings on the impact of environmental, social, and governance issues on financial performance. We also examine the frameworks and best practices that are used to assess the environmental, social, and governance performance of firms,” says Iwan.
Sustainable development and finance enhances modern, adaptive leadership
Sustainable development is at the core of the HEC Montréal MBA, leading students to embark on responsible careers.
The MBA offers a track in Strategy and Sustainable Development, covering all three aspects of ESG, with a heavier focus on environmental.
“This innovative pathway trains managers to lead companies into this new and complex reality, reshaping best practices and future regulations,” says Iwan.
This track intertwines different elements of sustainability and prepares students for the complexity of sustainability within the business world.
“When I discuss the impact of a favorable environmental rating on financial performance in my course, it is important that students also know from their Sustainable Marketing course how to build a successful campaign for an environmentally friendly brand,” he says.
The volatility of the world means that the curriculum continually needs updating.
Current events such as the war in Ukraine has impacted energy markets and affects the performance of portfolios without fossil fuels in comparison to conventional investment portfolios.
“As a researcher, I am accustomed to constant evolution, and that is what makes my job so exciting,” he says.
Sustainable development and finance
helps you become a more ethically responsible leader
Alongside the environmental side of sustainability, having a well-rounded understanding of social responsibility is key to progressing as a global leader.
Having this knowledge will better prepare you to lead teams in a more effective way and create a cohesive, progressive organization.
“The Covid experience provided new insights into the value of social responsibility. Several recent research papers conclude that socially responsible companies have weathered the crisis better than their counterparts with worse social practices,” Iwan explains.
This research has found the engagement in Corporate Social Responsibility (CSR) activities can in some way mitigate the negative consequences of challenging economic conditions or crisis situations.
Social issues have a significant impact on sustainability, which is important to keep in mind as a future business leader.
“Many social issues, such as relations with indigenous peoples in a decision to construct a new hydroelectric power plant on their territory, are shaped by important ethical considerations,” says Iwan.
Gain experiential opportunities at top companies
While theoretical foundations can help students understand sustainability, it’s important to cement this knowledge through practice.
“Interaction with leading experts in the field allows students to connect the knowledge gained in the course with real-world applications,” Iwan says.
An integral part of the sustainability pathway is the HEC Challenge in Sustainable Development.
The intensive five-week consulting project gives students the opportunity to engage with industry professionals and organizations. It allows them to apply their knowledge and skills to work on a complex mandate within an organization.
Students Iwan mentored on the sustainable finance mandate have gone on to take jobs in sustainability. Some were actually hired by the company they were advising.
“Several students of teams I mentored on a sustainable finance mandate have taken jobs in sustainability, and some were even hired by the company they advised,” Iwan says.
Beyond courses, students connect with industry experts through student-led initiatives as well as activities organized by HEC Montréal.
Iwan moderated a round table during HEC Montréal’s Social Innovation Week, which discussed the role of sustainability in portfolio management with industry professionals.
Sustainable development is now essential to an MBA degree, believes Iwan.
Gaining a grounding in this vital area provides students with a modern skill set that can prepare them to run modern businesses, lead diverse teams, and future-proof their careers.