Responsible Management Education at a Time of Crisis Lucia Reisch Professor CBS Center for Corporate Social Responsibility (cbsCSR) Higher Education at a Time of Crisis 29 June 2009 Copenhagen Business School

Founding Partner of The European Academy of Business in Society (EABIS) in 2002

2008 was the year in which a new global agenda was unveiled In the first half of the year we faced several global crises (energy and food), and the urgency concerning climate change was heightened. These crises point out to a new important and crucial fact: as a result of economic growth and the incorporation to the international markets of the emerging countries (Russia, China, India and Brazil), we are now facing the certainty of scarcity in the supply of natural resources in the world – in the areas of food, energy, water and climate.

2008 was the year in which a new global agenda was unveiled In the second half of the year, we witnessed the collapse of the credit system and a rapid spread of the biggest and most contagious economic recession in our lifetime. This crisis has presented the international community with some needs: a) design and implement global recovery, b) reform of the IMF to cope with economic distress in the developing countries, c) international financial regulation, d) reform of the international monetary system, e) diverse calls to rethink global capitalism (with more questions than answers)

This new scenario adds a note of urgency to initiatives like PRME PRME: a global call to change the curriculum, research and learning methods of management education, incorporating at the core of the vision, the tools and the skills taught, the values of the United Nations Global Compact

The Principles for Responsible Management Education As institutions of higher learning involved in the education of current and future managers we are voluntarily committed to engaging in a continuous process of improvement of the following Principles, reporting on progress to all our stakeholders and exchanging effective practices with other academic institutions: Principle 1: Purpose Principle 2: Values Principle 3: Method Principle 4: Research Principle 5: Partnership Principle 6: Dialogue

235 signatories Reporting: Sharing Information on Progress every 18 months. Growing number of activities (Anti-corruption, Poverty as a Challenge in Business Education, Climate Change, Travel Studies and Learning Methods…)

* 76% of senior executives say that it is important they have the knowledge and skills to respond to trends like resource scarcity, the low carbon economy and doing business in emerging markets * Fewer than 8% believe these knowledge and skills are being developed very effectively by their own organizations or business schools (Developing the Global Leader of Tomorrow, Survey - Matthew Grisham - PRME Global Forum) a) Are responsible companies satisfied with the average professional going out of the business schools? Two key questions

We are not apart from the decrease in trust and legitimacy of the financial sector We confront a big wave of change in the near future… b) Is it necessary to consolidate the legitimacy of management education? Two key questions

4 changes in the landscape… 1. At the end of the current crisis, CSR will probably be upgraded into something more holistic: a new definition of the nature and role of the private corporation (and its relationship to society and the common good). This will mean a transition to a new theoretical model of the firm reflecting the practices already in place, - a move from short term profit maximization to profit maximization under the constraints of long term growth (sustainability not just as an attribute of the companys operations, but as the core of the definition of the company itself). Implications: new basic research on the theory of the firm and new applied research in the field of public regulation and social regulation of the firm.

2. In the aftermath of the current crisis, we will probably see the rise and demand for a new approach to management: Managerial capitalism. Thus, while the agency theory and the share value theory (and the role they assign to managers) are being subjected to a revision, the role of management will crucially be to balance the interests of a diverse group of stakeholders, including workers, governments, shareholders and communities (New York Times, 3/29/09 How Crisis Shapes the Corporate Model). Implications: new approached to strategic management, both in basic and applied research. 4 changes in the landscape…

3. Introduction of new issues in business education: In order to accommodate new visions of the firm and of management, educators will have to incorporate into their teaching new substantive concerns and issues as the core of the new role of the firm, - drivers of wise risk management and sources of innovation and value: Human Rights and Labor rights Climate change, water scarcity, food security, renewable energy Transparency and anti-corruption Strategic philanthropy, social investment, shared value in the supply- chain, new business models and MDGs Implications: 1) overall effort to update all disciplines in management education. 2) Finances: risk management, valuation of assets and learning methods that instill a greater sense of responsibility as a future leader and professional. 4 changes in the landscape…

4. Integration of social and climate concerns: Finally, social and climate concerns will have to be integrated into one single new value proposition for responsible corporate behavior. The environment is not any more an add-on to the economy but two dimensions of the same reality, the greening of the economy towards a low-carbon economic structure is not an add-on to economic recovery, but a crucial component of recovery itself, and the green corporation is not something different from the new role of the firm in society. Implications: apart from some courses on sustainability, climate change has not been integrated into educational efforts in the curriculum of business schools. 4 changes in the landscape…

4 changes are needed…to be leaders of the sector a)Embrace the new vision of business, innovate the management model the teach, adhere to these new values/concerns and update their teaching to them, as the core of the DNA of the firm, and… b)…Do so through a collegiate and sustainable effort… c)Will become the innovators… d)and therefore the future leaders of the sector.