Training the next generation of managers is key to making ESG issues central to business strategies.
By Monica Baraldi, Visiting Fellow, Tellus Institute
(In collaboration with the Worldwatch Institute)
Aligning Financial And ESG Reporting To The Public’s Interests
Today, most companies consider and measure financial performance and environmental, social, and governance (ESG) indicators as separate domains. However, under increasing public pressure and government mandates to act with greater transparency on ESG issues, forward-thinking executives have begun creating strategies and related values for both shareholders and society. Their aim is to align financial and ESG reporting to the public’s diversified interests.
The emerging global interest in these issues is radically reshaping the business landscape, raising fundamental questions about the skills and sensitivity that executives at all levels need to develop, especially during their training in business schools.
How can we ensure that the ways that we promote society’s well-being today do not compromise the well-being of future generations? How can we inspire and champion responsible management education, research, and leadership globally?
Principles for Responsible Management Education
Many acclaimed researchers report that there is a strong link between management models, strategic thinking, and business performance. In light of these conclusions, the quality of management education represents a fundamental pillar on which to build sustainable business professionals and initiatives.
To streamline the efforts of more than 450 business schools around the world, in 2007 the United Nations Global Compact launched its Principles for Responsible Management Education (PRME) project, aimed at developing global common principles for these teachings. The initiative is based on six principles, with an emphasis on developing students’ capabilities to generate sustainable value for both business and society.
The PRME project also aims to establish partnerships with business managers and corporations, in order to better understand obstacles and clearly engage all stakeholders in addressing social and environmental issues.
One recent event, the Third Global Forum for Responsible Management Education, was held in conjunction with the Rio+20 Corporate Sustainability Forum and produced a final declaration to support future actions. Recommendations included:
- Teach sustainable development concepts;
- Encourage research on sustainable development issues;
- “Green” school campuses;
- Support community-led sustainability efforts;
- Engage with and share information through the international frameworks of several UN agencies.
Roadmaps to Management Education
Among the other outcomes of the Third Global Forum:
Moreover, 300 leading business school and university representatives agreed on a roadmap for management education to 2020, based on several concrete commitments to action. Although all the members are volunteers, they will be held accountable for their commitments, and if they fail to report regularly on progress, their affiliation with the Global Forum will be challenged.
Another high-level academic event is the annual meeting of the Academy of Management, a leading professional association for scholars dedicated to creating and disseminating knowledge about management and organizations. This August in Boston, Massachusetts, thousands of participants will host working groups dedicated to management education in the informal economy and the need to develop guidelines for curriculum change.
Companies Support Management Education for Sustainability
Additionally, global companies such as Boeing have supported the initiative for management education and sustainability efforts. Corporate demand for sound management education has played an important role in business schools stressing sustainability and environmental principles.
Specifically, companies emphasize three broad themes in their management training:
- Developing skills to advance a company’s sustainability strategy;
- Integrating sustainability into the operational management of the company;
- Implementing principles of sustainability that emerged from the collaboration between companies and MBA programs.
To bolster corporate implementation of environmental practices, organizations such as the World Environment Center assess and compare companies’ environmental practices. This ensures that companies continue to develop sustainably and share information.
Sustainability as a Business Concept
The above-mentioned trends suggest that sustainability is rapidly emerging as a business concept and must play a central role in the educational process of managers and leaders of the future. This transition will certainly take time and will require active collaboration and networking among public and private institutions.
However, it will allow for a global exchange of knowledge, skills, and highly qualified international professionals that are trained to develop sustainable strategies for the future well-being of billions of people around the world.
About the Author:
Monica Baraldi is a Visiting Fellow at the Tellus Institute and Assistant Professor of Business Administration at the School of Management, Alma Mater Studiorum-University of Bologna (Italy), where she teaches the following courses: Financial Accounting, Managerial Accounting, Strategic Planning, and Organizational Analysis. Her research interests include sustainable global economy, organizational network analysis, and corporate social responsibility.
Her current work focuses on describing and analyzing the essential characteristics of businesses that contribute to a sustainable economic system. Baraldi received her Ph.D. in Business Administration from the University of Pisa in 2003. She has been visiting scholar at the University of California Los Angeles and Boston University.