MBAs and the Triple Bottom Line

TopMBA.com looks at how the concept of the triple bottom line is changing business and MBA programs at business schools. 

The concept of the triple bottom line – or 3BL - is relatively recent in business terms. Coined in 1994 by British social entrepreneur John Pilkington, it attempts to shift business’ emphasis away from mere profit and towards a stakeholder model. It raises the prominence of corporate responsibility to communities of people, to the environment, to ethical practices and to sustainability.

Contrasting with the Milton Friedman economic model, which has profit as the single bottom line, (“The social responsibility of business is to increase its profits” – Milton Friedman, 1970) the triple bottom line has the three Ps, people, planet, profit, at its core.

There has been skepticism in some quarters that businesses are paying lip service to their social responsibilities, that really all they are doing is jumping on the bandwagon to serve the ‘real’ bottom line.  But the June 2010 conference held at the ESMT European School of Management and Technology in Berlin, where I represented QS’ TopMBA.com and the TopMBA Career Guide, left me with little doubt. There is an impressive, sincere and increasing cohort of business leaders, business school deans and professors, MBAs and other stakeholders that genuinely believes in change and is making every effort to lead and play a part in that change.

Scrutiny

The recent recession has shone a light straight in the eyes of the world’s business schools. There are accusations aplenty that MBAs caused the economic crisis, with high profile MBA alumni at Lehmann Brothers, Goldman Sachs, Enron and other publicly scrutinized businesses.

The recession, among more serious issues, gave business schools something of a PR headache as accusations in some quarters laid the blame four-square at their door. Lucy Kellaway (The Economist, November 2009) even went as far as to proclaim the death of the MBA in her well-written article. My response can be found here.

President Lars-Hendrik Roller of ESMT European School of Management and Technology in Berlin, acknowledges this view but demurs: “The financial crisis is far too complex to lay the blame only on business schools and MBA graduates. A lack of regulation and supervision, particularly in financial services, a too large appetite for risk, and the wrong incentives for managers were some of the main drivers. International business schools, especially those who have preached a shareholder value approach, played a part, but certainly not the decisive one.”

Dean of Melbourne Business School Jenny George echoes this. “To say that MBAs caused the recession is as futile as saying that humans caused it.” Paul Danos, Dean of Tuck School of Business at Dartmouth, New Hampshire, weighs in, saying that “one percent of MBA graduates in those great companies” can accept responsibility for the mismanaged credit problem that precipitated the crisis. He argues that blame is shared by “a relatively small group of people, including MBAs of course, at some financial institutions, politicians and various government regulators … and reforms are absolutely necessary.”

Movement to sustainability

In the QS TopMBA.com Applicant Research of 2009, the most recent figures available, the responses of thousands of MBA candidates showed that corporate social responsibility is high on their agenda. Unquestionably, according to a great many of admissions officers of top business schools that I talk to as part of the QS World MBA Tour, MBA candidates are pointing in a new direction. They increasingly want to know about a school’s corporate governance, sustainability or CSR credentials before making their decisions on where to apply. This makes deans take notice. This, in turn, makes recruiters take notice. Then the marketers realize that the population in general is asking the same questions and suddenly, ladies and gentlemen, we have ourselves a movement.

This kind of demand is ringing the changes in supply terms for business and business schools. The new generation cares about the community and the environment and is driving towards a new business landscape where the three Ps share equanimity. There is an awareness that profit needs to come first, to furnish business with the power and the money to make changes to the environment and the communities they operate in.

As Jagdish Bhagwati, a Professor at Columbia University, said at the ESMT conference: “Growth is a powerful way of increasing employment and reducing poverty. In the years since 1991 more than 200 million people [in India] have been brought above the extreme poverty line. In China it was 300 million. This is something to celebrate.”

Forward thinking schools are taking the issue seriously. There is even a ranking of business schools – the Aspen Institute’s Beyond Grey Pinstripes – that affords distinction to schools devoting more of their classroom time to ethics and sustainability.

Ethics

Schools all around the world, such as Spain’s IE and ESADE, are infusing their courses with ethical and sustainable practices. Dean Alfons Sauquets of ESADE says that rather than “create an ethics class for students to take or not, ESADE tries to bring in ethics across the board.”

Whatever the methods, business school deans and course creators are in a position to change course structures with the business leaders of the future. There are some schools who will, and there are some schools who won’t. However even Harvard Business School’s own appointment of a new dean, Professor Nitin Nohria, with a background in leadership and ethics (see here) suggests that even the great conservative dame of the business school world is paying attention.

Says ESMT’s Roller: “German business schools with an international scope such as ESMT in Berlin are now ideally placed to draw the right lessons and lead the way for a fresh approach in business education. They are new and they educate future leaders with a holistic view as business, society and politics become more and more closely intertwined."

To quote Darwin’s famous maxim of 1847: “It is not the strongest of the species that survive, nor the most intelligent, but the one that is the most responsive to change.”