The question is of long-running research interest to Olga Hawn, associate professor of strategy and entrepreneurship at the University of North Carolina’s Kenan-Flagler Business School.

“I have always been intrigued by the gap between what companies say and what they actually do,” says Hawn. Her previous research on corporate social responsibility found that investors, though initially skeptical, ultimately saw value in corporate commitments to sustainability.

Currently, she and fellow researchers are examining investor reaction to politically charged debates on racial and gender equality.

After the death of George Floyd in 2020 caused a global reckoning on race, roughly 100 Fortune 500 companies pledged action on diversity. Investors initially reacted negatively (a dip in share prices), fearing a corporate stance on a polarizing issue would be bad for business, according to research by Hawn and fellow Kenan-Flagler professor Stephanie Mahin.

I have always been intrigued by the gap between what companies say and what they actually do.

–Olga Hawn, associate professor at the University of North Carolina

But when they analyzed consumers’ sentiments about such pledges on Twitter, the researchers found that companies that demonstrated authenticity about their commitments fared better than those that appeared to make pro forma undertakings. The lesson for companies, says Hawn, is “Take a stand.”

A different pattern emerged in relation to LGBTQ2S+ rights. Hawn and Aharon Mohliver, a strategy and entrepreneurship professor at London Business School, tracked shareholder responses to American company rankings on the annual corporate equality index (a measure of social responsibility) between 2002 and 2018. Companies that clearly picked sides either way on gender equality won backing from like-minded investors, while those that stayed on the sidelines were ignored by investors.

“There is an advantage to [stating] your position either for or against,” says Hawn, which hints (pending further research) at the merits of corporate authenticity.

How do we propel companies beyond “islands of sustainability”?

Professor Christopher Wright recalls what he told his business students in 2006, when the British government released its influential Stern Review on the Economics of Climate Change that called for environmental taxes: “The coal industry now is dead because the world’s economists have woken up, and we will price carbon emissions and it will be the end of fossil fuels.”

Wright’s assumption proved wrong, but it fuelled his interest in the “inherent contradiction” of companies that acknowledge the existential climate threat yet fail to respond.

“We keep doing what we are doing, which is to maximize shareholder value, continue economic growth and use coal, oil and gas to fuel all that,” says Wright, a professor of organizational studies at the University of Sydney Business School in Australia.

In his research, Wright examines a recurring pattern in which companies promise bold climate moves only for efforts to peter out because of bureaucratic inertia, pressure for quick profits and short-tenured leaders.

We keep doing what we are doing, which is to maximize shareholder value, continue economic growth and use coal, oil and gas to fuel all that.

-Christopher Wright, professor at the University of Sydney

Businesses alone cannot respond to climate action, Wright concludes. Despite some examples of what he calls “islands of sustainability” – businesses that pivot to a green focus – he notes “they can’t maintain the longevity because of the nature of the system.”

The co-author of Organising Responses to Climate Change: The Politics of Mitigation, Adaptation and Suffering, to be released this year, offers his admittedly unpopular remedy: global government intervention to price carbon and embrace renewable energy. “The problem is that the dominant political discourse is that government is the problem and let markets rule,” he concedes. “While we are in that fix, I don’t see any change happening.”

Still, he sees “pathways forward” through teaching and research to press for systemic change and equip a new generation of sustainability-conscious managers to reform corporate policies.

Wright, who uses op-eds, blogs, press interviews and social media to publicize his research, says academics in business schools and elsewhere need to “step out of the ivory tower and engage much more [than before] as public intellectuals” on the climate crisis. “It is bigger than a business case.”

A version of this story appeared in the spring issue of Corporate Knights magazine.

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Leading companies around the world are rapidly coming to the conclusion that operating a business focused solely on short-term, shareholder-driven profits will not be viable in the future. Governments and stock exchanges are tightening disclosure requirements on social and environmental indicators, while young graduates entering the workforce search for businesses that are making a positive impact on the world. A report for the Rio+20 climate change conference last year, “Leadership in a Rapidly Changing World,” interviewed top CEOs from multinational firms to determine what skills they are looking for when hiring. The overwhelming conclusion was that what’s needed are business leaders who are interested in addressing global challenges when creating value for their company.

In an important institutional shift, various MBA accreditation bodies have also begun to acknowledge this new paradigm. Earlier this year, the Association to Advance Collegiate Schools of Business, along with the European Foundation for Management Development, signed a long-term partnership with the Globally Responsible Leadership Initiative (GRLI). The goal, according to GRLI director general Eric Cornuel, is to foster responsibility and sustainability in business education. “GRLI will become the armed wing of our shared ambitions at EFMD and AACSB to accelerate change,” he announced in a press release.

One institution that has yet to evolve, however, is the business of business school rankings. Students examine yearly MBA rankings from top publications such as The Economist and the Financial Times to help determine which programs to attend, while companies use it for recruitment purposes. Each ranking is slightly different, but they all end up rewarding programs that place graduates in the highest-paying jobs possible. The one international ranking that focused instead on sustainability, the Aspen Institute’s Beyond Grey Pinstripes ranking, was suspended last year. It was with the intent of filling this important void that Corporate Knights decided to expand its annual sustainable Canadian MBA ranking globally this year.

The list of schools contacted by Corporate Knights was derived from the top international MBA rankings currently in circulation. The goal was to identify which of these programs – viewed as leaders in the field – are leading the pack on sustainable business education. Schools that wished to participate were sent a survey that asked detailed questions related to institutional support offered to MBA candidates and relevant student-led initiatives on campus, along with coursework dedicated to social or environmental impact management and/or non-profit management.

The Schulich School of Business at York University was the top-ranked program this year. Although strong in every category, it also managed to receive the only perfect grade in one of the three categories: institutional support. It boasts five institutes focused on everything from business ethics to building sustainable enterprises, while at least 10 professors published relevant papers in academic journals last year. Students are offered internships and consulting programs at a range of businesses focused on corporate social responsibility (CSR) and non-profit management.

In second place is the John Molson School of Business at Concordia University. Leading the way in student participation, the John Molson Sustainable Business Group and the Women in Business Club are some of many avenues available for MBA candidates to get involved on campus. The business responsibility oath is a voluntary student-led pledge taken by MBA graduates to commit towards the creation of value “responsibly and ethically.”

The program in third place is the University of Exeter Business School. Working with the World Wildlife Fund, the One Planet MBA program was established in 2011 with the goal of producing business leaders focused on preserving our natural environment. As a result, the curriculum was the strongest found among all programs ranked.

In previous years we received some feedback in regards to our survey placing smaller programs at a disadvantage. The student participation category, in particular, rewarded institutions with larger numbers of students. Keeping this in mind, we also produced a list of the Top 10 smallest programs this year (where there are fewer than 50 graduates). The University of Exeter came first, followed closely by the American schools Duquesne University and the University of Oregon.

The results, involving programs from 14 different countries, displayed several interesting regional trends. Although Canadian schools made up three of the top five programs, the results grew more diverse further down the list. The United States had 11 programs in the top 30, followed by Britain with three. France and Australia both had two programs. The highest-ranked schools found in Asia were the Korea Advanced Institute of Science and Technology, followed by the Guanghua School of Management at Peking University. Although extensive efforts were made to reach out to more Asian programs, participation was low, making it difficult to extrapolate broader regional trends from that area.

Upon examination, there are several different methods for incorporating sustainability currently being pursued in business education. As all programs in the ranking are ones submitted for scrutiny, there is an acknowledgement that these are faculties leading the way on this new form of business education. Certainly, there are many programs that have yet to make this pivot, and that for the most part were not a part of our survey this year.

Faculties like the Desautels Faculty of Management at McGill University and the Copenhagen Business School have moved towards embracing an integrated approach to management. At McGill there is an institute specifically dedicated to developing this method of education. It is described as “one that breaks down disciplinary barriers, embraces multiple perspectives and encourages holistic, context-sensitive thinking about organizations.” The institute’s educational priorities are social well-being, sustainability and health.

As our ranking was originally conceived to mark traditional MBA programs that offer both core and elective courses, programs that only offered a core/integrated curriculum were disadvantaged. To allow for different methods of sustainability education, an integrated management question was added to the survey this year.

Another technique that is becoming more prevalent is an MBA entirely dedicated to sustainability. A prime example is the University of Exeter, where a previously conventional faculty was overhauled with the assistance of civil society and management experts to focus on corporate social responsibility, sustainability and non-profit education. The Audencia Nantes School of Management is currently undergoing this transition. Over the past several years, the curriculum has been overhauled so that each class dedicates a minimum of 10 per cent of its coursework towards CSR and sustainability. Starting next year the program will be called the MBA in Responsible Management, and will be designed to “attract students wishing to follow a quality generalist MBA which places the notion of responsibility at the heart of its philosophy.”

The third approach remains the most popular model, which is tweaking the existing MBA program so that sustainability is a strong element woven throughout the educational experience. Most of the schools in our ranking this year favour this strategy, including the School of Management at Boston University and the Central European University Business School. The faculty will add a handful of relevant core courses into the curriculum, to ensure that every student receives a foundation in sustainability, ethics, non-profit management and CSR. A number of elective courses are offered for those more interested in a specific stream, such as co-operative business management, and individual professors remain the catalysts for further integration of sustainability into the program.

The report for the Rio+20 climate change conference has a timeline detailing shifting ideas about business leadership since the birth of the MBA in the late 19th century. The 1950s-1960s was the dominant period for the rational manager, while the 1990s-2000s was the era of relational leadership. The theme for the 21st century? A generation of global citizens, where shifting power structures means that success entails partnering with others to lead systemic change in society.

A cartoon in the Financial Times earlier this year showed an eager MBA candidate at a job interview. She looks across the table and tells the interviewer: “I may not be the employee you want, but I’m the one my business school thinks you need.”

In other words, business education is still playing catch-up.

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