A Dearth of Data: Business Schools Seek to Address Social Impact—But How Are They Measuring Their Progress?

The Financial Times recently shined a light on the relative lack of meaningful data on business schools’ social impact initiatives. Without such data, they report, it is difficult for the schools to analyze, benchmark, and improve upon their efforts. Still, the Times acknowledges signs of progress in current aggregated reporting efforts. These may help move the business school community towards a more focused discussion on the outcomes of sustainability and social impact initiatives. 

Two organizations, Responsible Research for Business and Management (RRBM) and the United Nations Principles for Responsible Management Education (PRME) have taken a lead in calling upon business schools to update their curriculums to equip future leaders to take on climate change, inequality, and other societal and environmental challenges, reports the Times. The RRBM and others, including the Financial Times itself, have recently led competitions that highlight strong individual examples of ESG courses and research. The PMRE requests regular reports from members, although the responses are not easily measurable or comparable between schools. 

In September 2022, the Association to Advance the Collegiate Schools of Business (AACSB), a nonprofit organization that provides trustworthy accreditation, published its first outcomes-based report on business schools’ initiatives mapped to the UN’s 17 Sustainable Development Goals for 2030. The AACSB noted that just 74 schools, predominantly in the U.S. and the U.K., submitted reports, and few went beyond describing activities. Most submitted initiatives focused on quality education, decent work and economic growth, and gender equality. The AACSB described the report to the Financial Times by saying, “Schools are quite immature in their societal impact plans. Most…are just figuring out the areas in which they want to concentrate their efforts.” They continued, “[They] need to progress beyond a list of service activities.”

In contrast to other countries, in the U.K. all universities must provide case studies and research papers to demonstrate their actions and impact to the Research Excellence Framework (REF), reports the Times. The REF then provides an external assessment of each submission and assigns a grade to the universities based on the “originality, significance, and [rigor]” of the initiatives. However, critics of the REF note that the time and resources used for reporting social impact might be better spent on pursuing social impact. 

As we blogged in January, environmental and social conscientiousness is indeed becoming a bigger part of business school curriculums. This is necessary in part because corporations themselves value these things more and more, and students must understand the modern work culture. "Profit, equity, sustainability, and inclusion must co-exist," Federico Frattini, dean at MIP Politecnico di Milano told BusinessBecause. New reports bolster the importance of schools addressing social issues on campus too, lowering their carbon footprint and caring for students' mental health. 

BusinessBecause interviewed 17 business school deans about the key trends they expected would influence business education in 2022. The deans noted that, among other trends, climate change and social issues will play an important role in the future of MBA education. Specifically, they pointed to the need for schools to update their curriculums to better reflect businesses’ expanding views on creating value and the importance of considering their own operational sustainability.

Related:  MBA Curriculums Expand to Include Content in Environmental and Social Conscientiousness

Biden Administration Remains Under Pressure to Move Forward with Student Debt Cancellation

On May 1, 2022, which is just three months away, federal student loan payments will resume. This comes after a two-year period during which borrowers could choose whether or not they would make payments. As the date nears, the Biden administration is under pressure to make good on campaign promises to reduce student debt for millions of Americans with federal loans. Last week, 85 Democratic members of Congress sent the President a letter urging him to, “...direct the Department of Education to publicly release the memo outlining your legal authority to broadly cancel federal student loan debt and immediately cancel up to $50,000 of student loan debt per borrower.”

But it is still unclear how President Biden will move forward. During his campaign, he promised to forgive up to $10,000 per student loan borrower, but he has since expressed hesitancy to extend loan forgiveness to those attending elite schools or who obtained professional graduate degrees, and have strong repayment prospects. In a press conference last month, President Biden declined to comment on a question about student loan forgiveness. 

An article in the Wall Street Journal speculates that the Biden Administration may opt to forego blanket debt forgiveness for an alternative path, “...by starting a regulatory process, complete with input from stakeholders, to set up a debt-forgiveness program that targets people most in need.” This path may allow the administration to avoid a potential Supreme Court battle that an Executive Action may spur.

In the meantime, the administration has moved forward with more targeted loan-relief initiatives, such as a revamp of the long-standing Public Service Loan Forgiveness (PSLF) program. This would allow those who have worked for a public or nonprofit organization, and also made monthly payments for a ten-year period (120 payments) to have their loans forgiven. A revamp is exciting for current business, medical, and law students who wish to go into public service, and necessary. The original program, which dates back to 2007, burdened participants with bureaucratic hurdles, and only provided benefits to a small percentage, about 16,000 out of 1.3 million. 

MBA Curriculums Expand to Include Content in Environmental and Social Conscientiousness

Sustainability. Social enterprise. Impact investing. These words may have been in the course titles of fringe electives a decade ago, but today they are quickly becoming mainstream components of leading business school curriculums. This is well-evidenced by the Financial Times Responsible Business Education awards, which celebrate the best “examples of work by business schools seeking to focus on people and planet alongside profit” in three categories: academic research, teaching cases, and alumni change makers. There is an emerging trend for business schools to think and teach about outcomes and values beyond profit maximization. 

A recent New York Times article on Environmental, Social, and Governance’s (ESG) increasing role in business education and the workforce noted that the incorporation of ESG topics within the MBA is being driven by student and employer demand. At Yale’s School of Management, sustainability is integrated into required core courses such as microeconomics, accounting, and corporate finance, while Duke’s Fuqua School of Business has added a new core course titled Business and Common Purpose. At University of Pennsylvania’s Wharton, there are more than 50 undergraduate and graduate courses related to social impact, and at Harvard Business School, an elective course on social enterprise had 600 matriculants (a sizable increase from 251 in 2012). 

In the past, there was a sense that MBA students who wanted to go into ESG could not command the same salaries as those following more traditional—consulting or finance—career paths. A study, not yet published, by the Yale School of Management including more than 2,000 students across 29 business schools, found that over half (51 percent) of students would accept a lower salary to work for an environmentally responsible company, an uptick of seven percentage points from five years ago. Students’ preferences are obviously changing, and so is the market. 

According to McKinsey, global sustainable investment grew by about 68 percent between 2014 and 2019, reaching over $30 trillion. This has created a number of new job opportunities, and the demand in the market has put upward pressure on ESG-related salaries. Further, the relative “newness” of the field also creates an appealing opportunity in terms of career growth, with relatively few people standing in front with seniority. MBA graduates can advance quickly. Recruiters tell the New York Times that filling experienced-hire and senior roles in sustainability is challenging; this may also benefit MBA graduates by providing them with early access to more senior positions. 

There also appears to be a growing need for ESG skills across industries. “There’s this tension for any student who wants to pursue sustainability, which is, ‘I have massive debt, but I also want to do good,’” said Bethany Patten, the Senior Associate Director of the Sustainability Center at M.I.T.’s Sloan School of Management. However, she points out that jobs at banks and investment firms that require sustainability skill sets, as well as finance, are offering salaries that are generally on par with typical finance salaries. 

The opportunity for ESG roles in the marketplace is ripe, and many students are interested in pursuing them, but the number of graduates who take purely ESG roles directly out of an MBA program remains relatively low. At Wharton, just 1.8 percent of graduates went into social impact work. At Stanford, the proportion was higher at 19 percent. But Dr. Costis Maglaras, Dean of Columbia Business School thinks these numbers will continue to increase. “Over the last two decades if you ask yourself, ‘What is the thing that really transformed businesses?’ It’s been technology, data, analytics. If you were to ask what will transform businesses in the future, I believe it’s going to be climate change.”

Environmental, Social, and Governance Issues Becoming Important Component of Graduate Management Education

At the conclusion of each year, Poets and Quants asks business school deans to predict future trends in and relating to business education. This year social impact emerged as a prominent theme. More specifically, the idea that amidst society’s environmental, political, and social challenges, business leadership will be called upon to act and that those who do not will be held accountable. Scott DeRue, Dean of University of Michigan’s Ross School of Business, tells Poets and Quants, “In 2020, I anticipate that society will continue to be challenged in many profound ways… In business, CEOs will be expected to be more engaged than ever in policy-related issues and social causes. Employees, customers, and investors will increasingly demand that companies explain how they are diversifying leadership, addressing climate change and sustainability, and improving equitable access to jobs and economic opportunity. It will be a challenging time for leaders across all sectors, wherein missteps will be very public, and purposeful leadership celebrated.”

The role of social impact in business education was also the topic of a Financial Times special report released in late October. The report noted that the demand for increased integration of policy-related topics in the business school curriculum is coming from both current and prospective business students, as well as corporations that recruit from the schools. Students who may have once pursued graduate degrees in public policy are now looking to obtain an MBA and make a positive difference in the world via business. Kevin Stevens, Dean of Loyola University of Chicago’s Quinlan School of Business, told the Financial Times that, “Demand is coming from all sides: we are hearing it from corporations and we are really hearing it from our students. This generation is so concerned about what the future looks like and what shape the planet will be in that they are demanding we focus on it.” In response, schools are updating courses, initiatives, and even their own operations to incorporate environmental, social, and governance (ESG) issues.

To gain a better understanding of how schools are incorporating ESG into their offerings, the Financial Times requested that schools submit examples of current initiatives within four categories: teaching, research, special initiatives, and business school operations. The goal of the request was for a specified group of judges to look at both trends and best practice examples, as social impact is inconsistently defined and difficult to measure. The most notable take-away was the sheer number of submissions that the Financial Times received. In response to the call for information, 220 business schools submitted various ways in which they were delivering social impact, based on the four categories. But the judges found challenging the wide variety of definitions used and the complexity of assessing the impact of the programs.

Additional noteworthy trends identified by the Financial Times’ special report:

• Higher levels of ESG activity were associated with schools with religious affiliations (e.g., Loyola University Chicago, and Fordham) or those located in Northern Europe or France.

• Judges found it difficult to assess the quality of ESG-related courses, which many schools offer, but few make a mandatory part of the curriculum.

• Prestigious schools such as Harvard, NYU, Stanford, and Oxford appeared predominantly within the research category.

• There was a lack of clearly connected peer-reviewed research that proposed implementation plans.

See list of submissions deemed best practice here: https://www.ft.com/content/b6bcfa02-ef37-11e9-ad1e-4367d8281195

The Aspen Institute also reviews and recognizes ten courses annually that they designate as the best for preparing and inspiring business students to address the largest issues of our time as a part of the Ideas Worth Teaching initiative. This year the ten winning courses covered topics including: accounting and defining business value, sustainability and climate change, leadership, strategy, people analytics, and marketing. The courses, including syllabi and readings, are available online here: https://www.ideasworthteachingawards.com/

Social impact and the role of public policy are becoming more integrated into daily business dealings, particularly for those in or aspiring to leadership. Anyone considering an MBA should familiarize themselves with the Financial Times’ designated best practices or the Aspen Institute courses to understand how these ideas are best integrated into the MBA curriculum. Reading and creating a point-of-view on areas of interest will also serve prospective students engaging with admissions officers, as well as current business school students interviewing for internships or jobs. The role business schools and students have in leading research and innovation for society’s greatest challenges will only grow over time.