Exciting Case Competition with Final Round in Davos 2016

Decarbonize Norway’s sovereign wealth fund
in this year’s Business for a Better World MBA case competition

Team registration is now open for the third-annual CK-Schulich Business for a Better World case competition, a partnership between Corporate Knights magazine and York University’s Schulich School of Business.

With a prize pool in 2015/2016 of $10,000, the final round of this MBA competition will see three top teams present their case analysis in front of a live panel of high-profile judges in Davos, Switzerland, coinciding with the World Economic Forum in January.

Student teams will be asked this year to decarbonize the holdings of the Norway Government Pension Fund Global, the largest sovereign fund in the world with a value of $940 billion (USD). Managed by Norges Bank Investment Management, the fund is commonly referred to as The Oil Fund because it has been built from the surpluses of Norway’s petroleum income. Teams will have four key objectives:

• Minimize the carbon footprint of the fund;
• Reduce risks that might strand assets;
• Maximize returns and engagement impact with companies;
• Position the fund to thrive in and drive a world that does not exceed an average 2-degree temperature increase.

Throughout this competition, students will have access to a tool, designed by Corporate Knights, which will help them assess the carbon profile of the fund’s holdings and allow them to watch this profile change as the holdings mix is altered.

“With our first two competitions, teams were asked to broadly improve the sustainability performance of a case subject. This year, apropos to the lead-up of the Paris climate summit in December, we’re taking a different approach targeted strictly at carbon,” says Tyler Hamilton, editor-in-chief of Corporate Knights. “The case subject will be a sovereign fund worth nearly a trillion dollars. The MBA team that can show the best returns with the lowest portfolio carbon footprint will take the top prize, and send a strong message to investors around the world.”

For more details or to register a team, visit http://www.corporateknights.com/affiliates/2016contest/

The registration deadline is October 16. Case details will be released on October 2, so teams that register early will have an advantage.

Contacts:

Toby Heaps, CEO, Corporate Knights, toby@corporateknights.com

Dirk Matten, Professor, Schulich School of Business, DMatten@schulich.yorku.ca

Julia Shtopel, Schulich MBA student and event organizer, julia.lev1103@gmail.com

About Corporate Knights Inc.

Founded in 2002, Corporate Knights Inc. is a Toronto-based media, research and financial products company focused on clean capitalism. Corporate Knights, the company’s quarterly magazine, was named “Magazine of the Year” in 2013 by the National Magazine Awards Foundation. It is distributed in Canada as an insert inside the Globe and Mail and in the United States inside the Washington Post. With a circulation of more than 120,000, Corporate Knights is one of the most widely read publications devoted to business and sustainability issues. Corporate Knights Inc. is proud to be a certified B Corporation. Visit: www.corporateknights.com

About the Schulich School of Business

Known as Canada’s Global Business School, the Schulich School of Business is ranked among the world’s leading business schools by a number of global surveys. Schulich’s MBA program has been ranked #1 in the world by the Aspen Institute and on the Corporate Knights Global Green MBA Ranking. In Canada, the school has been ranked #1 by Forbes, The Economist and others. The Schulich School is based out of Toronto's York University. Visit: www.schulich.yorku.ca

Danger due to: ethics

John Dalla Costa, the renowned business ethics writer and consultant teaches with us at the Schulich School of Business. He's also an occasional blogger at his site www.ceo-ethics.com. We love the piece he's just posted on the dangers of thinking that because you're doing ethics, you're going to be more ethical. With his permission, we're reposting it here since its a conversation we agree that needs to happen.

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Are ethicists more ethical than their peers in other disciplines? It’s an interesting question. A recent study published in the journal Metaphilosophy provides a limited data point, but the news, at least if you’re an ethicist like me, is not good. Comparing how university professors engage students, the researchers found no difference between ethics professors and other faculty. Even though the ethics experts set an ideal, and acknowledged that not following through on that standard was morally wrong, in action, the experts in ethics were indistinguishable from fellow academics.

Are you surprised? I’m not. But I am distressed.

I’m not surprised, because if ethics were truly relevant, or if we really understood them to be effective, we’d be invoking them with much more frequency and rigor. Canada is knee-deep is scandals, with Senators whitewashing expense reports, the Prime Minister’s Chief of Staff paying for the white paint, and the Mayor of Toronto careening from one violation of the public trust to another. Ethics are AWOL, and no one seems to be missing them.

The same is true in business. Ethics have become IKEA-like contraptions for compliance. All the imagination and enquiry have been purposefully engineered away, so that all ethics and compliance officers need to do is follow the illustrated instructions, and assemble the pre-cut pieces.

Before Lehman Brothers and Bear Stearns imploded in 2008, I managed to download the codes for ethics and conduct from their respective websites. It turns out that they were derived from a boilerplate, following numerically identical categories, and using mostly similar jargon, with only one or two cosmetic flourishes reflecting idiosyncrasies of corporate history. It would inconceivable for these global finance behemoths (or their peers) to use Quicken to do their taxes. But that’s basically what they did for their ethics – adopting a four-page template, in the name of the Board of Directors, to set the terms and scope for their ethicality. Not surprisingly, both companies got full return on their investment.

There is a good reason why we’ve talked so little about corporate ethics since the financial crisis: most corporations had already subscribed to compliance projects pre-2007, and nothing has changed since.

I’m distressed because ethics-without-ethicality repeats the diminishment of restraint and responsibility, which led to previous market failures and economic crises.

As bad as were the deceptions perpetrated by Enron, it was much worse that these accounting lies were intentionally papered-over by its auditor, Arthur Anderson. Similarly, as irresponsible as were mortgage tactics and securitizations floated by the banks in the run up to the financial crisis, it was much worse that the ratings agencies, like Standard and Poor’s, assigned Triple AAA credit value to derivates that their own in-house experts considered junk-grade. When sentinels sell-out, when they simultaneously over-estimate their virtue and under-deliver on the promise they are entrusted to uphold, bad things happen to everyone.

In his book, Confronting Vulnerability, Jonathan Schofer reminds us that moral laws and ethical rules need continuous replenishment. His point is that, while established as bulwarks against human vulnerability and exploitation, ethics are themselves vulnerable and exploitable. We fall-back on ethics as if on auto-pilot, with such doctrinaire rigidity that we cease using any critical thinking as we apply them in life’s complex ambiguities. Or, perhaps worse, we take them for granted until they become easy take-over targets for other ambitions or motivations. Principles share with practitioners the fragility of our human finitude. The most unethical thing is often denying our personal limitations for seeing what is right, and deciding what is true.

We don’t know if this research confirms that ethicists too have ceased being reliable sentinels. But it is the question that should distress and challenge us – ethicists and non-ethicists alike.

John Dalla Costa

www.ceo-ethics.com

Photo by blind dayze. Reproduced under Creative Commons licence

Unilever and responsible capitalism: a "licence to lead"

Over the past two days, we've had the good fortune to hear up close what Paul Polman, CEO of Unilever, has to say about responsible capitalism and the role of Unilever in making the world a better place. Polman has been in Toronto speaking in the Bata Lecture Series on Responsible Capitalism hosted by the Schulich School of Business. And from what we've heard, Polman is in a different league to most of the other identi-kit CEOs out there. He really gets that business has to do things differently if its to succeed and prosper in the future. And so far, he's been backing that vision up with real progress. That's not to say that Unilever is anywhere close yet to being a truly sustainable company, but few CEOs of global multinationals can match Polman's grasp of the challenges ahead. And more importantly, few can match his visioning of where he wants to get to.

Polman says that what we need to do is change the conversation about social responsibility from one about a "licence to operate" to one about "a licence to lead". The former is about meeting your basic legal and ethical obligations. The latter is about building for the long term based on "growing our businesses in line with the needs and aspirations of the communities we serve". OK, he's hardly the first to talk about long term goals and win-win opportunities. But what's interesting about Polman is that when he talks about the long term, he really seems to mean it. Talking about a resource constrained planet, global hunger, infant mortality, and the like, Polman sees plenty of opportunities in bringing people out of poverty and giving them the products they need to live better lives. But he's not just thinking about the 7 billion inhabitants of the planet who are already struggling to get by, but the next 2 billion that will be born in the decades ahead. As many people know, under Polman's leadership Unilever has embarked on its hugely ambitious Sustainable Living Plan with, among other things, a goal to source 100% of its agricultural products from sustainable sources, and a plan to double their revenue whilst reducing their absolute environmental footprint by 2020.

As Polman made clear in his talks, much of the company's impact comes not just in Unilever's own business but in their value chain and among their consumers. Getting people to wash at lower temperatures and to shower for 2 minutes less can radically reduce the carbon footprint of their products in ways that far outweigh operational efficiencies. And who better to change consumers' behaviour than the marketing experts at Unilever? If they can make us buy a bunch of stuff that we don't really need (and let's be honest, a lot of what they still do is exactly about that), then they can certainly get us to burn less energy when we're doing it.

What was inspiring about Polman's vision though is not so much the big goals they've set, but the framework they're trying to achieve it within - radical transparency, collaborative action, and brands that all have a social purpose. To you or me, it may look like a bar of soap, but to Polman, "we're not in the business of making soap, we're in the business of saving lives" as he said about their Lifebuoy product which aims to improve hygiene in the developing world.

Of course, getting a licence to lead is not just about getting a renewed licence from customers, but also from shareholders. A long term vision doesn't often sit well with short term focused investors  Polman moved quickly on this when he was first appointed CEO of Unilever in 2009 - within weeks he had stopped offering quarterly guidance ("I figured no one would fire me in my first month" he quipped). And trading investors they didn't want for those they did want - i.e. those with a little more patient capital - has been a critical element in Unilever's transformation.

So far it is clearly bearing fruit - progress towards the many goals of the Sustainable Living Plan has been good and the performance of the company is better than ever. Polman appears to be well on the path to finding the holy grail of matching economic growth with social prosperity. But as he acknowledges, the path will not be easy one, and Unilever won't be able to do it alone. As he said, even if Unilever meets its ambitious goals, it won't have succeeded unless other companies have joined them. "We're just a pimple," said the leader of one of the world's largest packaged goods companies.

  

Minefields and Mining

What a couple days we had! First a Royal Wedding watched by half of the Globe. Then Obama’s capture of Osama. And finally, for us here in Canada, an election with a scary winner.

Welcome to the world of ambiguity. Wills & Kate look like a nice couple and less fake than most of what has been on display by the British Royals in the last decades. But all this pomp, glitter and archaic ceremony? It’s 2011,folks, wake up! But we still preferred the ecstatic crowds Friday a week ago in London to those in Washington last week Sunday night. A middle-ages inquisition ceremony could not have been jollier - or should we say - barbaric. Osama bin Laden? Certainly a person that has some things to answer for. But do we buy Obama’s ‘brought to justice’ rhetoric? After all, according to many Bin Laden and his movement was largely an American creation in the first place. And then the Canadian election: the Bonsai-George-Double-U Stephen Harper has now a solid majority. He will ‘Americanize’ the country further until it can just apply for becoming the 51st state of those ‘South of the Border’. The same election though gave us also the victory of the centre-left NDP winning the biggest number of seats in history. A bit of pyrrhic victory though.

All in all a minefield for the ethicist. Which provides some space to talk about – why not – mining. In fact that industry has taken our attention here in our School in Toronto over the last couple of months. As it turns out, Schulich will launch later this year a specialization in ‘Mining and Minerals’ on the MBA program. A core topic for this new program in fact will be the social responsibilities and ethics of mining.

Now, that’s a minefield in itself. Our school prides itself on being the leading school in the world in integrating environmental and social issues into business education. How does this go together with getting into bed with the mining industry? An industry which has a fairly dubious legacy with regard to ethics and social responsibility as the main focus of a school focusing exactly on these issues? There was some debate among faculty about this.

For us, this question gave rise to some thinking, too. As academics, we can stay, as one of our colleagues sometimes put it, ‘small and clean’ – or one can get out there, engage with issues, actors and industries which are of big importance and get the hands a little bit dirty. For the time being, the latter approach seems to be more intriguing and rewarding. In the sense that our research and teaching might in fact have an impact on the real world.

Of course a closer engagement with mining surfaces the rather complex nature of the industry. On a recent visit to some goldmines in Turkey we were able to witness these issues from closer up. We visited the area around Canakkale, 3 hours southwest of Istanbul, where currently some substantial explorations in gold mining are taking place. On the one hand, mining can in fact have substantial positive impacts on economic and social development of communities. This of course assumes that mining companies (in this case Australian and Canadian firms) share employment, infrastructure and profits with local communities. The effect can be rather substantial as often mines are located in otherwise not very developed regions. On the other hand, the disruption of the environment and the pollution around mining operations are huge.

The push for responsible mining, as we witnessed on site, is challenged by a number of characteristics of the industry. First, mining in the early, exploratory stages is still pretty much a gamble. Hundreds of millions investment is needed before even the first drop of oil or the first ounce of gold can be mined. This puts a rather tight budget and intense investor scrutiny on the companies and will make extensive voluntary expenses on environmental or other social responsibility issues rather difficult to justify. Second, unlike the big mining MNCs such as Rio Tinto, Glencore or AngloAmerican, the majority of companies are rather small, especially in the early stages of mining. They often simply lack the resources, often also the awareness of managers who mostly have science/engineering backgrounds with little understanding of wider social impacts of mining. Third, and finally, mining predominantly takes place in contexts of rather poor governance and regulation where the immediate pressure on companies to avoid harm to the environment and local communities is rather weak.

This is certainly an educational challenge. One executive we spoke to mentioned, just as an example of the dimensions of social responsibility, that the manager of a large mining project he was involved in in Papua New Guinea is now more or less in charge of half of the GDP of this country. This entails responsibilities beyond just the immediate profitable management of the extracting operations (which is a 24/7 job to begin with). Those managers inevitably assume – whether they know it or not – wider responsibilities for economic, social and environmental development and welfare of a country. We consider this a stark challenge – in education, research and engagement with the industry and their many critics in civil society. We might talk more about mining in this space!

Ratan Tata: corporations in the developing world have to be more paternalistic

In the last decade, the business case for CSR (i.e. that attention to social issues needs to make sound business sense) has become something of a mantra for corporate responsibility advocates. Deviation from this script is rare. So it was refreshing to hear Ratan N. Tata, the leader of India's largest conglomerate, Tata Sons Ltd, mark his first public engagement in Canada by speaking eloquently last night of his commitment to a different approach to responsible business.

Speaking as the guest of honour at the inaugural event of the Thomas J. Bata Lecture Series in Responsible Capitalism , hosted by our own Schulich School of Business here in downtown Toronto, Tata make it clear that in his view, the developing world presented a different type of challenge for corporate responsibility. "Building schools and hospitals," he argued, "is something you have to do" in countries like India that lack basic government provisions. For corporations, he suggested, this meant that they have had to adopt a "more paternalistic" approach than that required in the developed world.

His own company, the Tata group, has become something of an icon in the responsible business world. Sure, they've had their run-ins with environmentalists, unions, and community groups over the years, most recently with the launch of the Tata Nano. But few could deny the contribution the company has made to social and economic development in India. And despite a rapid global expansion over the past two decades that Ratan Tata has been at the helm, the company has managed to combine its business success with an impressive commitment to business integrity and community service. Last night, as he reeled off a string of successful community engagement projects pioneered by the company, Tata claimed that, "with all of this, there's been no business gain for us. Yes, it creates goodwill that no advertising campaign will ever achieve, but it's not why we do it".

Tata's emphasis on the moral case for CSR perhaps makes sense when considered in the context of his particular company, which is 66% owned by philanthropic trusts. However, his comments were also echoed by his fellow business leaders on the responsible capitalism panel, Ed Clark the CEO of TD Bank and Jacques Lamarre, the former CEO of the global engineering firm SNC Lavalin. Clark, for instance, was keen to emphasise the importance of a values-based approach to responsibility. Citing his company's sponsorship of Toronto Pride, the annual gay and lesbian festival, Clark suggested the bank had lost business from customers upset about the advocacy of LGBT issues. But, he insisted, the bank was committed to diversity and "had to stick to its values".

Of course, all this talk of corporate responsibility beyond the business case could just be only so much hot air from corporate leaders keen to spin the image of capitalism away from its "greed is good" reputation. But in a world where, as Doug Miller, the chair of Globescan commented from the audience, the public had increasingly lost faith in capitalism, it was good to see that a new way of talking about "responsible capitalism" might at least be possible.

How to integrate responsible business into the MBA

This week saw the release of the Aspen Institute's biennial 'alternative ranking' of business schools. Rather than the usual focus of b-school rankings on criteria like how much MBA students manage to increase their salaries by, what proportion of students get employed after graduating, or how well networked the student body is internationally, the Aspen institute looks at how well the school does in integrating social, ethical and environmental issues across its MBA curriculum and faculty research. "Our mission" they say, "is to spotlight innovative full-time MBA programs that are integrating issues of social and environmental stewardship into curricula and research."

The list of top schools includes a lot of the world's leading business schools - names such as Yale, Stanford, Michigan, and Berkeley consistently feature in the top 10. But there, right at the top, in number one spot, is our own school, the Schulich School of Business at York University. For two professors who spend day-in, day-out working on responsible business issues, this is a source of some pride for us. So we hope you'll forgive us if for a moment we bask in the reflected glory of our school's achievement, and take the afternoon off to sink a glass of celebratory champagne.

But we're not writing this blog just to boast. Well maybe we are. But what we've noticed since we've been here, and especailly in the last few days, is that along with the congratulatory messages, we've also received a lot of requests from faculty at other schools to provide insight into Schulich's secrets of success. After all the school has not been out of the top 5 since the Aspen ranking was launched in 2001. This may be our first time at no.1, but Schulich has been ranked no.3 for the last two cycles, taking us back to 2005 (before that, the ranking only grouped top schools but did not give specific placings).

So as far as we're concerned, being at the top also means we have a certain responsibility to help disseminate good practice. The Aspen Institute has traced a strong trend towards increasing integration of responsible business in business schools over the years, and part of the reason for celebrating good performance is is that it prompts others to respond and emulate these successes. B-School deans in general respond pretty well to the incentives offered by rankings, so they can be quite a force for change in the sector.

So what then accounts for Schulich's success? As relative newcomers to teh school (we joined Schulich in Jan 2007), we can't say we have all of the answers. Nor, certainly, can we claim all the credit. As it goes, we can't even claim much of the credit, which is a point we'll explain a little more in a minute. But we do have a pretty good view of what's going on here and what seems to be working (and what isn't). We've also benefited from working at other top schools in the area, especially the University of Nottingham, which is no.1 in the UK. So, here goes for a very unscientific analysis of the top 5 critical success factors for bringing responsible business into the MBA curriculum and research:

1. Start early and take the long view
Schulich started on this path way back, long before most other business schools even thought about social, ethical and environenmental issues as relevant for mainstream business education. By the time we arrived, the school was already well advanced; responsible business was widely embraced across the school, not just by a few dedicated faculty. This takes time to achieve. Success won't come overnight, however much money and other resources you throw at it.

2. Create a virtuous cycle
Related to the above is the very real fact that success in this arena breeds success. Schools that are high in the ranking attract students committed to responsible business who then demand even more courses and events - and even better ones - which keeps us constantly on our toes. Success in the Aspen rankings also attracts faculty who work on responsible business issues, who then go on to produce yet more research papers, and introduce even more specialized courses related to their own particular area. We now have almost 40 faculty members that spent at least some of their time on responsible business issues. Features like this introduce a 'built to last' competence in the area

3. Don't build a CSR ghetto
Most schools now have a centre or unit for CSR or something like that. This is great. But it can also pose a danger to real integration across the school. Sometimes it can be just a little too much fun to play in your own sand pit, and not get out there and build up competence across the entire faculty. Success in this field requires a huge team effort, not just one or two stars. At Schulich, the current ranking reflects some 162 separate MBA courses and 54 research papers during a two year period. Crane and Matten have been busy, but not that busy. So centres are good, but they have to work in a way that inspires and galvanises the school, and doesn't simply take over the CSR agenda.

4. Encourage innovation
OK, so it sounds obvious, but lots of schools are not too innovative when it comes down to it, and various systems and turf wars over the MBA curriculum can stymie real change. Faculty and students involved in responsible business are often very ambitious and entrepreneurial ... and typically have something of a mission behind them too. So they need to feel that they can start new courses and projects rathe than having to fight with administrators all the time just to get started. Give em enough room and they'll start swinging some cats for sure.

5. Gain commitment from the top
Anyone who's been involved in this field knows how important it is for senior management to be leading the agenda - this is as true for business schools as it is for businesses. At Schulich we've been lucky enough to have a Dean that is as committed to this stuff as we are. Never a speech goes by that he doesn't mention the importance of the triple bottom line and a multiple stakeholder orientation. It's an important part of the school's positioning. If you don't have that kind of support, it's going to be a whole lot tougher to get any real traction across the faculty.

We can think of a whole lot of other factors that can play a role in achieving success, but these 5 at least capture some of what we regard as the main reasons, at least here at Schulich. Of course, it helps to have resources, to be a relatively large school, and to have some decent management systems in place, too. But those can be good things to have whatever it is you want to achieve as a school. Integrating responsible business in the b-school represents a unique set of challenges. We're not saying we've got there yet; there's still a long way to go before even the schools at the top of list really get responsibility at the very heart of the MBA. But we'll worry about that next week. For now, it's time for that champagne....