The role of business in society has never been greater. The case for corporate responsibility strategies like product innovation, resource efficiency and diverse workforces grows ever stronger.
But where demands on businesses to take responsibility for society and the environment was once the preserve of a minority, today leaders are keen to become mindful managers.
Future business leaders are demanding an education that prepares them for grappling with the intersection of business, government and society, according to Jim Moore, managing director of the Business, Society, and Public Policy Initiative at Georgetown’s McDonough School of Business.
He argues that this is not just an altruistic sentiment but a critical part of the formula for business success.
The traditional notion of corporate responsibility is fast becoming outdated as companies refer to more innovative means to make an impact – disaster relief, global development and impact investment funds are a few common themes.
The barriers between public and private sectors are increasingly blurred. Companies are working with business schools, government and civil society to promote responsible business.
Honed focus on areas such as public health systems and water conservation in both the education and business worlds, is being driven by waning public trust after a stream of corporate scandals.
The most recent Trust Barometer produced by Edelman, the communications group, shows global public trust in the corporate sector has fallen to levels not seen since the run-up to the financial crisis. This year, trust in business is below 50% in two-thirds of the 27 countries surveyed – including the US, UK, Germany and Japan.
The alarming evaporation of trust has been compounded by scandals in the past 12 months – among them the foreign exchange rate rigging scandal that cost six global banks including HSBC and Citi $4.3 billion in combined fines, and high-profile cyber attacks on companies including Sony, and JPMorgan, which compromised millions of customer accounts.
Richard Edelman, chief executive of Edelman, argues that public distrust stifles business innovation. “Trusted innovation can only be achieved when business adopts a new framework, rooted in sharing information and fostering collaboration,” he says.
One way to combat this is by taking a down-up approach. “Innovation is hard to teach. But it is taking and, will take a more prominent place in the curriculum,” says Ian Macdonald, director of the public management specialization in the MBA at Schulich School of Business in North America.
Responsible management is already a focus for top MBA programs. A number of schools have moved in this direction – including Cranfield School of Management, and Copenhagen and Aston Business Schools in Europe.
Dana Brown, director of the MBA program at the UK’s Oxford Saïd Business School, says that business schools will focus more on culture – its meaning and significance for political, social and economic developments.
“Business students will find that they need to understand the ‘rules of the game’ that shape business environments, and the underpinnings of healthy business such as good education systems,” she says.
One example is the rise in the number of Master of Public Administration (MPA) programs. In the US, master and undergraduate degrees in public administration have grown from 17,000 in 2010 to almost 21,000 in 2013, says Kathy Gamboa, dean of operations at the College of Criminal Justice and Security at University of Phoenix.
The trend is global. The Indian School of Business and the Indian Institute of Corporate Affairs (IICA) will offer a certificate program in Corporate Social Responsibility Management in June. “CSR [is] a buzzword today,” says Dr Bhaskar Chatterjee, chief executive of the IICA.
SDA Bocconi School in Italy launched an MPA this month. Greta Nasi, director of the Public Management & Policy Department, says that managers are needed who can read their environment, understand the demands and needs of citizens, and translate this into public services.
Future leaders are pouring into these courses. “There has been a significant increase,” says Peter J Robertson, associate professor at USC’s Price School of Public Policy in California. The number of international applications for USC’s MPA program has surged from 78 in 2009 to 340 in 2014, he says.
Entrepreneurship with a social edge is now a focus area for MBA students and their schools. Spain’s IESE Business School, for example, last year launched a new MBA elective that focuses on social entrepreneurship.
Professor Antonino Vaccaro, who teaches the program, says that social impact has to go beyond corporate social responsibility, and companies are beginning to realize this. “They’re also discovering that a social focus makes them more competitive,” he says.
Student interest is powered by increased job opportunity at social institutions. There is demand for finance-savvy individuals and those with skills not traditionally focused on in the development world.
Good managers are always needed, says Henrik P Minassians, director of public sector partnerships at California State University – Northridge. “Many local public sector departments are hiring now.”
Accenture Development Partnerships, the international development wing of the management consultancy firm, now uses MBA internships. It expects to have tripled its total employee base from 1,000 in 2013 to about 3,000 by the end of this year, Accenture says.
Salaries are lower at public sector organizations but they have improved over the past several years, says Bill Rivenbark, director of UNC-Chapel Hill’s MPA: “Employee benefits and the prospect of stability are common recruiting tools for public organizations.”
Private sector responsibility strategies have been widely praised at companies such as Unilever, and Kingfisher and Marks and Spencer, the UK retailers.
Firms that are sustainable have been shown to be more innovative and adaptive to their environments, and experience less financial and reputational risk.
Total spend on CSR initiatives reached $15 billion in 2013, according to EPG, an economic consulting firm.
Investors too are warming to social responsibility. CDP – formerly the Carbon Disclosure Project – which asks large companies to reveal their environmental risks and opportunities – represents institutional investors worth $95 trillion in assets.
Pearson, Intel and Legal & General have all set-up impact investment funds, and Institutional investors such as Axa Group and Bridges Ventures are following suit.
MBA students at business schools – among them Haas School, UNC Kenan-Flagler and Ross School – are using socially responsible principles to lead funds worth millions of dollars.
Students running the social fund at UNC will be able to test their hypotheses about what makes one company better than another using the triple bottom line as the metric, says Carol Hee, director of the school’s Center for Sustainable Enterprise.
However many investors remain against companies that pay attention to CSR and problems that require long-term investment, but do not necessarily deliver shareholder returns.
How much business schools’ efforts to promote responsible management and social value will scale in business remains to be seen.