ESG-wise, business schools lag behind Europe’s corporate leaders

The business world is changing dramatically. Executives throughout Europe are in charge of promoting meaningful, responsible, and sustainable business, spurred on by legislative reforms suggested by the European Commission. European business schools should be in the forefront, yet they are at risk of falling behind.

Many schools have been hesitant to recognize the extent to which their curriculum need to be reformed. They’ve added electives on themes including environmental, social, and corporate governance, as well as sustainable business, but their core courses have not changed much.

The research and teaching of business schools should serve as a source of instruction for the next generation of managers and entrepreneurs. However, schools’ programs, which are centered on economic theories, financial models, and management studies, continue to emphasize shareholder primacy. Everything — accounting, finance, marketing, operations management, organizational behavior, and strategy — is based on the assumption that the objective of a firm is to maximize shareholder value.

Courses should start with a discussion of what business is for, why it was founded, and why it exists. To give the skills and ideals essential for business in the twenty-first century, they should rely on multidisciplinary knowledge from across the humanities and sciences. This method is motivating for students, instructive for leaders, and fruitful for researchers. It supports universities’ mission of contributing to human flourishing, welfare, and prosperity in addition to education and scholarship.

Such an approach demonstrates how businesses collaborate with the not-for-profit, public, and social entrepreneurship sectors to address global concerns through business and technical solutions.

These are the skills that employers are increasingly looking for when hiring new people. Employers are looking for graduates who can assist them in tackling rather than contributing to environmental deterioration, inequality, social exclusion, and distrust. They require individuals with new skills in engagement, cooperation, and inclusive decision-making, who can use them as sources of value creation for investors and society at large.

There are some exciting innovations in the works. One example is the Hoffmann Global Institute for Business and Society, which was recently founded at Insead in France and aims to reform business education around sustainability, inclusivity, and wellness. It is founded on the premise that business should be a source of both profit and environmental and social improvement, and that this should be at the forefront of research and education.

In addition, Harvard Business School offers a course called Reimagining Capitalism: Business and Big Problems in its MBA, as well as a research program on impact-weighted accounting to quantify corporations’ benefits and burdens. Saïd Business School at Oxford University has offered fundamental courses on responsible business and how it might address global concerns for numerous years. It offers research programs on business purpose and ownership, governance, measurement, and performance, and it is working to solve the climate problem with seven top European schools.

Unfortunately, none of these institutions has gone far enough in emphasizing the importance of corporate mission in core courses. One reason is that they have money invested in current knowledge, processes, and the research, data, and reputations that go with them. Second, they’re concerned about their standing in rankings that place a premium on metrics like alumni salaries tied to profits over broader indicators of accomplishment. Third, there is worry that migration to what some see as the “soft end” of business school instruction — culture rather than competitiveness — may result in a loss of competitive position.

Businesses have a critical role in pushing business schools to change. They can make it a priority to attract students who have the skill sets associated with ethical business operations. They can fund large-scale research on “profits from advancement” themes. They might provide scholarships and faculty seats to attract students and academics who have the right attitudes and skills.

The ability of institutions to adapt themselves, with the support of industry, will decide whether business education remains relevant and survives in the years ahead.