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Greener economies, transformational changes to our systems and society and a global resetting; the pandemic has started a large movement focused on shaping the ‘new normal’. In line with this trend, the business and finance landscape is changing. Shareholder activism is becoming increasingly influential, educational institutions are divesting their fossil fuel assets because of student pressure and courts hold governments and companies accountable for their pollution. The need for change is clear and the pandemic seems to have strengthened the voices calling for action.

Professor Sir Partha Dasgupta of Cambridge University is one such voice. Together with a group of independent researchers, Prof. Dasgupta recently published The Economics of Biodiversity: The Dasgupta Review. The report referred to many aspects of the relationship between humans and their economics, and nature. In their final paragraph, however, the authors focused specifically on education, reaching the conclusion that “we are embedded in Nature. To detach Nature from economic reasoning is to imply that we consider ourselves to be external to Nature. The fault is not in economics; it lies in the way we have chosen to practise it.”

Led by this generation’s graduates

So, if we are practising economics and business in the wrong way, why are we still teaching students inadequate and incomplete theory? After all, the businesses we so desperately want to operate more sustainably will be led by this generation’s graduates.

In line with this reasoning, some argue that we need to teach students about ecology (the knowledge of the home environment) before we teach them economy (how to manage that home). Others suggest that the pandemic offers the opportunity to transform business education or that the demand for environmental, social and governance (ESG) talent is growing. Business schools only have to follow the trend and educate their students appropriately.

I asked Willem Schramade, a member of the Erasmus Platform for Sustainable Value Creation, about his views on integrating sustainability in the curricula of business schools.

Willem is a researcher and consultant in sustainable finance and impact investing who believes that the main motivator for the integration of ESG factors in business education should be “to make capitalism fairer and more sustainable.” He argues that with more integrated approaches “we can get better outcomes, avert ecological collapse and create value for everyone. Ambitious business schools educate the leaders who can deliver on that promise.”

‘Blind to other types of value’

In order to educate these leaders, Willem is clear: “Sustainability should be incorporated into all business disciplines. Taking a single approach tends to narrow the view to such an extent that important questions are often not asked.” He goes on to explain: “If you specialise in finance and only consider maximising shareholder value and investment returns, you blind yourself to other types of value.”

His experience at large investment firms informs his view of the importance of understanding different types of value. “When I started out as an investor, I was hardly aware of the wide range of negative externalities created by companies and the race to the bottom that they generated – let alone the poor societal outcomes.” He goes on to say: “It is very hard for people to truly work in an interdisciplinary way, as they lack the tools and often even the language to work with people from different fields.” Because everyone has different methods and goals, “sustainability analysts often have a very hard time understanding and working with financial analysts, and vice versa.”

According to Willem, this is why the integration of sustainability in business education is so important. Adding interdisciplinarity with a focus on sustainability “forces students to think about the interactions between various fields and different types of value,” he says. People with this expertise can make real progress, learn to align their goals and methods with those of others and “can connect the dots where others cannot.”

Integrating sustainability into business education should not just be in a programme’s electives, but also in its core courses, he thinks. Students’ educational demands are shifting but Willem thinks that business schools can be too conservative to respond. The question thus arises if we should wait for gradual bottom-up integration or more radical top-down implementation. According to Willem, “change needs to come from both the top-down and bottom-up.” From his own experience he believes the top can “give the crucial starting signal”, grow interest in the topic by providing incentives, and train faculty on the relevance of sustainability in their specific field. At the same time, bottom-up experiments should complement the change, allowing students and faculty to learn from each other.

‘More daring hires’

“Business schools have been quite slow at adapting because they stick too much to a model based on publications, which does not reward people who do unorthodox things or who come from practice.” He concludes: “Businesses and business schools should be more daring and hire people with less obvious backgrounds, something that is also great for diversity, inclusion and innovation.”

More information

This is a blog from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). The Platform aims to enhance knowledge and debate on sustainability in the financial sector. Curious to learn more? Please see our webpage to find out more.

Platform for Sustainable Value Creation blog