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.”
