Business schools are now going out of their way to woo an increasingly environmentally aware next generation of leaders with more sustainable finance and business courses.
In truth, until recently the rapid growth of sustainable finance practices caught most business schools off guard. But with the realization that responsible investing is not a fad triggered by millennials and most if not all investing is likely to become sustainable one day soon, the financial market and its constellation of service providers, including business schools, adjusted quickly.
Most of these courses are not necessarily on impact investing or social entrepreneurship, a small niche within the much broader sustainable finance field
The centre for sustainable finance at Cambridge University describes the emergence of the sustainable economy as a “‘quiet revolution’ in the global financial system.”
But what are doing business schools worldwide doing to bolster their sustainable credentials to potential students?
Virtually all top business schools offer courses at the MBA or Master’s level. Berkeley-Haas, for instance, offers approximately 15 courses including “socially responsible investing” or “creating shared value,” and Harvard Business School offers since 2016 the popular elective course: “reimagining capitalism”.
Most of these courses are not necessarily on impact investing or social entrepreneurship, a small niche within the much broader sustainable finance field. They are mostly targeted at preparing future asset managers and other financial players to manage money and to invest in all asset classes weighing ESG risks and opportunities.
Business schools also establish hubs, programs, research groups, platforms or initiatives dedicated to sustainable finance. They are magnets around which events are organized, research is conducted and teaching is delivered. The School of Economics at Stockholm University has set up the sustainable finance platform, for instance. Oxford, Hamburg, MIT Sloan, Wharton, and Stanford, as well as so many others, have taken a similar turn.
Other schools are more ambitious and launched fully-fledged centres dedicated to a sustainable economy. INSEAD set up the Hoffmann Global Institute for Business and Society in 2018 through a €40 million commitment from André Hoffmann, the largest in INSEAD history. NYU Stern’s Center for Sustainable Business, the Sustainable Finance Center at Toulouse School of Economics, or the Center for Sustainable Finance and Private Wealth at the University of Zurich are other cases in point.
The high demand for courses on sustainable businesses or responsible investing has also encouraged some business schools to leap towards offering masters’ programs exclusively devoted to the interdependence between finance and sustainability, such as the master in international and sustainable finance by Business School Lausanne or the master in sustainable finance at Maastricht University’s School of Business and Economics.
Interestingly, other schools are offering students hands-on experience. At Berkeley-Haas students are given the opportunity to manage the school’s socially responsible investment fund, which invests in public companies with strong ESG performance. The fund was established in 2007. At New York University students can engage with the impact investment fund, which invests in private social enterprises. It is a joint venture between the faculty and students of the university’s Stern, Wagner, and Law schools.
Ideally, across all these programs students will learn to mainstream ESG in investment processes by applying best practices in ESG integration across all investment strategies, from universe construction to stock selection and portfolio optimization.
Investment banking, investment management and capital markets courses should also adopt an ESG angle. In classes, students need to learn how to evaluate a company based on its environmental, social and governance profile and be familiar with indicators such as the company’s labor practices, environmental performance or supply-chain management.
Rodrigo Tavares is founder and president of the Granito Group, a company that advances the sustainable economy through management consulting, financial advisory, and policy & research. He was nominated Young Global Leader by the World Economic Forum (2017)