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McLean, Robert --- "Do Well, Do Good: Teaching Csr in Business Schools" [2005] ALRCRefJl 29; (2005) 87 Australian Law Reform Commission Reform Journal 47


Reform Issue 87 Summer 2005/06

This article appeared on pages 47 – 48 & 89 of the original journal.

Do well, do good: teaching CSR in business schools

By Robert McLean *

The top management of Anglo American, a global leader in mining and natural resources, gave a presentation to the financial community in May this year on its sustainable development performance for 2004–05.1

The Chairman and CEO led off the discussion, covering safety, energy use, including carbon, environment and occupational health, black economic empowerment, HIV/AIDS and social and community issues. What is clear from this presentation is that social issues play a key role in Anglo’s business plans and operations. Paying attention to safety and occupational health fit into conventional notions of duty of care. What’s new are initiatives such as HIV/AIDS. Anglo estimates that 34,000 of its 145,000 employees are HIV positive. The company has a voluntary counselling and testing initiative, which has a 21% uptake. It has 2,100 employees on Anti Retroviral Therapy, with more than 90% adherence.2

Is Anglo playing this role to serve shareholder interests? I believe it would say ‘yes’ because of the lack of public health resources and the impact of a pandemic on the availability and productivity of its workforce. I suspect Anglo would also say that it is seeking to fulfill what Ian Davis of McKinsey calls a ‘social contract’ for its presence in the community.3

Shaping our understanding

What is happening at Anglo American and other global companies in their relationship with communities is shaping our understanding of the role of corporations in society. As such it has particular importance to business schools. There is a strong orientation to shareholder value in the Master of Business Administration (MBA) experience that comes through courses in corporate finance and strategy. This is complemented by a focus on what makes for the long-term success of organisations in terms of the way they set values, rewards and incentives. Students get to work through issues of business ethics and to see ‘business as a social system of responsibilities, commitments, relationships and purposes’, as an Australian Graduate School of Management (AGSM) course outline explains it.

Besides the course content, students have the opportunity to meet with CEOs such as Michael Hawker of Insurance Australia Group (IAG), who discussed why he has put such an emphasis on sustainability, including working with police and local government on crime reduction initiatives, or Leigh Clifford of Rio Tinto, who recently explained how doing the right thing to advance Indigenous communities in Australia—through training, scholarships and community foundations—has led to privileged access to resources with Indigenous communities in other countries. Students also attend lectures by overseas visitors such as the Scottish social entrepreneur and author of The Spirit of Success, Norman Drummond, who emphasises the moral dimensions of responsible leadership and the opportunity of managers to contribute to their communities.4

MBA curricula

Are these initiatives enough in an MBA program? Should there be specific courses in corporate social responsibility (CSR) and sustainability? Should there be an integration of sustainability and CSR perspectives across the curriculum? Should the leadership dimension of a business school education be strengthened to incorporate the social and environmental context? Are students demanding CSR courses and sustainability?

These are the kind of issues all leading business schools must address in their curriculum design. The way in which a school responds to these questions reflects its view of how best to design and deliver the MBA experience. Moreover, one can point to significant shifts over time in the demand for and supply of courses addressing the social context of business.

MBA curricula of the 1960s and 1970s paid scant consideration to the social context of business. In my MBA program the one core course that came close was called Conceptual Foundations of Business. It provided an outline of the corporation, shareholder interests and the foundations of a capitalist society. In 1978 a report on Harvard Business School by the then President, Derek Bok, criticised the School for the lack of a course on the role of the corporation in a free society. That criticism was subsequently addressed.

It’s only in the past decade that courses and research on sustainability, social responsibility and social enterprise have become common in business schools. In marketing courses there are case examples of companies such as the Body Shop positioning its brand as an ethical company. In finance courses, triple bottom line and balanced scorecard notions are taught, and there may be reference to the Equator Principles of the World Bank for lending by a number of global banks for dams and forestry projects. Research on social responsibility by AGSM Professor Timothy Devinney5 highlights the value consumers are prepared to pay for ethical products and socially responsible business practices. Research by Professor Devinney and Dr Giana Eckhardt explores how consumers rationalise ‘unethical’ purchase decisions.6

Last year a report on teaching sustainability in Australian business schools reached a conclusion that came as no surprise to business school deans. It was that the demand for such courses is limited. Students undertaking an MBA are seeking skills to advance their careers and most are of the view that another elective in finance, marketing or organisation will have more value than a course in CSR or sustainability. This may be a shortsighted view but it is one that comes into consideration in curriculum design. AGSM offered a sustainability course for several years but take-up was disappointing, with less than a quarter of students selecting it. Students are skeptical about whether many reported CSR initiatives are anything more than public relations—a view many journalists share. They have the opportunity to test this skepticism through discussions with CEOs and senior executives during the MBA program.

Changes in demand are afoot for executives who can develop the ‘social contract’ referred to by Davis. Learning and development executives are charged with developing greater strategic thinking and execution ability in their leadership ranks. Recruiters are attracted to students who have the ability to solve problems and get things done, especially where they have demonstrated capability in a social context. As corporations become better able to articulate how social issues fit into their strategies, they will be in a position to communicate the skills and perspectives needed in the managers they attract and develop. That in turn will encourage business schools to integrate the social context into leadership development and strategy thinking.

A shift towards CSR

The current orientation of business schools to thinking about social responsibility owes much to Peter Drucker. In his 1986 book, Frontiers of Management, he argued ‘the first responsibility of business (thus) is to make enough profit to cover the costs for the future. If this social responsibility is not met, no other social responsibility can be met.’ He then goes on to argue that the ‘proper social responsibility of business ....is to turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well-paid jobs, and into wealth’.7

This thinking has influenced other business school contributors on sustainability such as C Prahalad with the book, Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits.8 The Massachusetts Institute of Technology Media Unit’s $100 laptop initiative announced in January 2005 recently is also an example of this type of thinking.9

If we bring Drucker’s insightful views into the way we develop future business leaders we will be in a position to ‘do well and do good’.10

* Robert McLean is the Dean and Director of the Australian Graduate School of Management—a School of both the University of Sydney and the University of New South Wales.

Endnotes

1. Anglo American, ‘Presentation to Financial Community on Anglo American’s Sustainable Development Performance 2004/5’, 17 May 2005 at www.angloamerican.co.uk/static/uploads/SRI%20Presentation%20050517.pdf (9 Nov 2005).

2. For further details see <www.angloamerican.co.uk/corporateresponsibility>

3. I Davis, ‘The biggest contract’, The Economist, 28 May 2005, 69.

4. N Drummond The Spirit of Success: How to Connect the Heart to the Head in Work and in Life (2004).

5. T Devinney, P Auger, J Louviere and P Burke,P (2003) ‘What Will Consumers Pay for Social Product Features?’ 42 (3) J. Business Ethics.

6. T Devinney, G Eckhardt and R Belk (2005) ‘Consumption Ethics Across Countries’ 8(3) Consumption, Markets, and Culture.

7. P Drucker, The Frontiers of Management (1986).

8. C Prahalad Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits (2004).

9. The MIT Media Lab has launched a new research initiative to develop a $100 laptop, which will not be available for sale, but will only be distributed to schools directly through large government initiatives.

10. Drucker ascribes this credo to Control Data founder William Norris.


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