Climate change: Why business schools are failing

To fill the gap, we must “rejuvenate the intellectual and moral training of future business leaders”, and encourage them to consider management as a calling in a similar spirit to how we train doctors and lawyers — a move away from the simple pursuit of a career for personal gain towards a higher professional and moral purpose in service to society.

To do this, we need to rebuild the business school on a system of aspirational principles. This is not a call for a “value statement” on which to “brand” a business school in a differentiated market. It is a call to make a clear declaration of aspirational principles that guide the business-school structure in how it: selects and socializes students; structures the curriculum, co-curriculum and pedagogy by which they are molded; invites recruiters for placing them in positions of leadership; chooses the role models to elevate as exemplars of the principles they seek to reproduce; accepts donations that often leave a physical and cultural imprint on their facilities; and guides the research and rewards of its faculty.  

To this end, the curriculum can no longer take the form and function of capitalism as unquestioned, but instead must guide students in a critical understanding of how multiple capitalism(s) are structured, the underlying models on which they are based, where they have failed, and what forms they might take in the future. This will lead to challenging analyses that move beyond simplistic notions of “expanding the pie” and the quest for Pareto optimality, which often support the inequities that are undermining society.  

Two critical components of this shift are re-examining the purpose of the corporation and the role of government in the market. On the first, most business schools continue to teach shareholder primacy as the purpose of the company. This misguided idea leads to a focus on one type of shareholder that is shortsighted and opportunistic, creating a host of market problems such as excessively short time horizons for investment planning and CEO compensation packages that border on the grotesque. To replace it, business schools should return to ideas like “the purpose of a company is to create a customer” and that companies should exist for the contribution that they make to society as a whole. Such ideas lead to a completely different approach to the role and education of the corporate leader.  

As for the role of government, far too many students think that government has no place in the market, that regulation is an unwarranted intrusion and that all lobbying is corruption. These views are simplistic and destructive, both for society and the companies in which these students will work. Government is the domain in which the rules of the market are set and enforced. If recent history has taught us anything, it is that companies and markets need strong and clear rules.  

The obstacles are large, but so too are the stakes 

A profound transformation of business education is an institutional challenge, one that requires a coordinated shift in the entire ecosystem: pedagogy, rankings, recruiters, admissions, donors, and faculty. The changes required are significant. But the potentially catastrophic consequences of doing nothing are more significant. As the cause of many of our challenges, most notably climate change, businesses must play a role in turning the market to solving them, becoming a net-positive influence on the environment and society. And business schools must play a role in training future business leaders to embrace that challenge. We can either be part of the solution or continue to be part of the problem. The choice is ours.