How corporate social responsibility managed to become big business

Despite a mergers and acquisitions goldrush that has seen the City's financial elite carve up a bonus jackpot of more than £8.8bn over the past year, with 4,200 high-fliers pocketing more than £1m each, there is little sign of the corporate excess and executive exuberance that has marked previous stock market surges.

Rather than "greed is good", today's corporate mantra appears to be "green is better". From calculating carbon footprints to drawing up corporate social responsibility (CSR) policies, businesses are thinking green and talking green – even if they are still far from being green.

All of which gives pause for thought for the MBA student. An MBA has, traditionally, been the badge of the up-and-coming capitalist, a certificate of one's drive and determination to succeed in business. But is the qualification compatible with a corporate culture that increasingly asks its executives to address the impact their products and services will have on the global climate?

And isn't it true, in the words of billionaire financier and self-confessed CSR sceptic George Soros, that CSR has "built-in incentives for hypocrisy" because when businesses face a conflict between making money and social responsibility, making money tends to prevail?

Patricia Park, who teaches CSR on the MBA programme at Southampton Solent University, disagrees. She believes many companies are trying to plan further ahead than next quarter's profit numbers.

"A growing number of public companies have come to recognise that sustainable corporate profit does not result from the single-minded pursuit of financial gain," says Park. She quotes Sir Mark Moody-Stuart, the former chair of Shell, a company that in the wake of Brent Spar and the execution of Ken Saro-Wiwa, invested heavily in CSR: "Without profits, no company can sustain principles; without principles, no company deserves profits".

Companies like Shell are investing millions of pounds to develop the CSR agenda. They see management education as key to this. Shell was a founding member of the European Academy of Business in Society designed to promote CSR across Europe. Now that crusade has gone global, with the launch of the UN's Principles for Responsible Management Education, a framework to help business schools advance the teaching of corporate responsibility.

Kai Peters, CEO of Ashridge Business School, one of only two UK schools that worked on a global taskforce to design the principles, believes the UN's intervention in the debate will lead to an important shake up for management education. "Business schools have a crucial role to play in promoting sustainability because of the influence they have in shaping the behaviour of business leaders," said Peters at the July 2007 launch of the UN principles. "More business schools need to pull their weight."

Ashridge took an early lead in this area when it established the Ashridge Centre for Business & Society in the mid-1990s. Other business schools are now scrabbling to prove their CSR credentials, aware that employers, and thus would-be students, increasingly rate this issue as key to their long term future. The biennial survey Beyond Grey Pinstripes found 54 per cent of the schools it surveyed require their MBAs to take one or more CSR-type courses, up from 45 per cent in 2003 and 34 per cent in 2001. Some business schools even offer specialist MBAs: Norwich Business School, for example, offers the world's first MBA in strategic carbon management.

Current thinking suggests the best way to approach CSR is not through a bolt-on module but by integrating sustainability into traditional finance, marketing and strategy subjects. This is something London Business School has been working on with EABIS for the past two years. According to Craig Smith, LBS senior fellow in marketing and ethics, companies are finally realising that CSR cannot be left in a public affairs ghetto and this needs to be mirrored by the way the subject is approached at business schools.

MBA students are increasingly receptive to the idea that there is more to business than next quarter's earnings or the size of their annual bonus.

"When we began to put these issues into our MBA 10 years ago, we got comments from students that this was a waste of time," says Matthew Gitsham, principal researcher at the Ashridge Centre for Business & Society. "That no longer happens. Students now see this as important."

This doesn't mean that MBA graduates are retreating from big business and big salaries. Their career destinations remain largely the same, with MBAs still bagging top jobs in management consultancies and the City. It is hoped, however, their CSR training will influence how they address issues such as carbon emissions when on the corporate frontline.

These are big issues to tackle. "There are no silver bullets or quick fixes," says Dr Angela Wilkinson of Saïd Business School, which has just launched a new programme designed to equip MBA students with the skills to tackle what it calls wicked problems, uncomfortable knowledge and clumsy solutions.

"The 20th century was about producing more, more efficiently but that does not work with some of these wicked problems of the 21st century," says Wilkinson. "We're not going to solve the problems of climate change and energy security. We are going to find better ways of coping with them."

The programme is designed to give MBA graduates a methodology to think about these big issues and their implications, both now and in the future. "This is not about CSR now but where it might be in ten years' time," says Wilkinson. "You may need to know about financial options calculations to get your next job but this kind of thinking will pay off for you over the lifetime of your career."

The CSR agenda isn't about relinquishing the profit motive or expecting MBAs to turn their back on big salaries with companies that invest in polluting businesses. Indeed, it is precisely these types of businesses that need bright MBAs who, in Wilkinson's words, have these issues hardwired into their DNA.

'You have to consider the impact on the wider community'

Andrew Hine studied for an MBA at Ashridge Business School and is now finance director of renewable energy company Trident Energy, which will test its wave energy device next year.

"I'm an accountant by training and I used to work in investment banks on the financial regulation and support side. I did the MBA to support a career change and the Business in Society module was a factor in picking Ashridge. Even though I had a personal interest in these issues, they weren't preaching to the converted. It did open my eyes to the fact that sometimes in a company you have to consider the impact you have on the wider community and local environment and if what you are doing is damaging those things, then you are not creating value but ultimately destroying value.

It's still an evolving subject but it is clear that the markets are increasingly looking at companies that have these policies in place. But even though we are a 'green' company, we still have to have a business model that works and build a commercially viable business."