In the wake of the meltdown of Enron, and now the latest scandal with Worldcom, both involving Andersen in a flurry of allegations of corporate malpractice, business schools and companies alike are showing new interest in the area of corporate social responsibility (CSR).
This year’s Association of MBA Conference, is being held July 14-17 in Barcelona, and is sponsored by the two Spanish business schools IESE and ESADE. It will feature a keynote speech from the Dean, Prof. Xavier Mendoza, on this subject. At the same time, INSEAD is launching an Academy of Corporate Citizenship.
These two schools, along with Ashridge Management College and Cranfield School of Management from the UK, come together as part of the CSR Academy, formed with the aim of helping teaching faculties to build CSR into mainstream business education. In a separate initiative, London Business School has recently announced the creation of a newly endowed chair in Business and Society, funded to the tune of £2 million by Adecco, a personnel solutions company.
There has to date been little consensus about the exact nature of a company’s social obligations, nor how it can benefit the bottom line. However, research among companies in the US shows that the 100 US companies rated the best ‘corporate citizens’ easily outperformed the average of the S&P 500 index.
In the UK, companies with a history of progressive attitudes to the workforce and their society such as Cadbury and Rowntree have proved to be successful and enduring brands. Others, such as Unilever and BP, have addressed environmental and social concerns head on and garnered both respect and increased shareholder value.
“Investors and insurers looking at a company's performance are now acknowledging that the way a company deals with these risks has an impact on its shareholder value and competitive edge,” says Neela Bettridge, director, Article 13, a sustainable development and corporate social responsibility consultancy. “Shareholders are now aware that well-managed companies pay close attention to their impact on society, as well as their traditional aspects of strategy and performance.
“The key point is that socially responsible investment and innovation are now interlinked. It's all about a new of doing business and this requires a forward looking approach and real innovation by organisations.”
Sue Cheshire, managing director of the Academy for Chief Executives, highlights the fact that CSR is not only the domain of the large corporate players but is quietly starting to be embraced by forward thinking organisations of all sizes.
“Recruiting a diverse workforce and thinking about human rights issues such as where goods are sourced are steps that all responsible businesses need to take,” she says. “We hear about the pressure on big brands to sever their links with sweatshops, but many small manufacturing companies source from the developing world, and they too should consider their suppliers not simply on cost alone.”
In preparing the next generation of business leaders, progressive schools are tying their CSR colours to the mast. In the same way in which they recognise that they add value to their courses by agreeing to undergo the continual scrutiny necessary for accreditation by the Association of MBAs, there is a clear understanding that the best students will demand that social responsibility form a core part of the MBA curriculum.
By providing this facility, the schools are also serving the needs of business: in many cases, a company’s ability to integrate corporate social responsibility in its practice and communications is limited by a shortage of staff with experience and training in this area. When people with these skills are available, they are snapped up.
Human resources directors are already alerted to the possibilities of extending this capability throughout their organisations: “This is a classic example of best practice HR which helps the business as a whole to achieve its aims and deliver across the board to its customers,” explains Jane Robson of Courtenay HR. “It is a reflection of the qualities that we as consumers demand of businesses.”
The spread of awareness will help narrow cultural differences between different markets. In the US, where corporate philanthropy is more prevalent, CSR is often perceived to form part of that remit, and was adopted comparatively early.
A 2001 survey by the Aspen Institute Initiative for Social Innovation through Business identified 82 MBA programmes that included social and environmental topics, with the majority of those in the US. However, the recent initiatives by schools such as INSEAD and ESADE, along with the Warwick Business School’s Corporate Citizenship Unit identified in the study, show that Europe is moving fast to catch up.
Business schools in Europe are also aware that the pace of change may be forced by legislation. Labour MEP Richard Howitt has introduced a bill to the European Parliament that would require companies to present an annual social and environmental report alongside their financial accounts – if accepted, it will become a part of European Union company law.
“Corporate social responsibility is something that is already on company and academic agendas, affirm Xavier Mendoza and Josep M. Lozano, professor and director of the Department of Social Sciences at ESADE.
Identifying defensive and overly-pragmatic attitudes as possible causes of resistance, professors Mendoza and Lozano issue a call to action for a strategic response from the business and educational communities: “What we need is a forum to link academic and business worlds in order to turn CSR into a learning opportunity. Our response to the challenge posed by CSR needs to be based on innovation and learning.”
They add: “Social responsibility is incorporated in the dynamics of corporate change in order to provide answers to both market expectations and what society expects of companies. In this context, it is well worth asking what implications this has for an MBA education.”
Further information on MBAs can be found in the Official MBA Handbook, published by Prentice Hall and the Association of MBAs. Details of accredited schools, courses and how to obtain the handbook can be obtained via the website: www.mba.org.uk.