Sustainable Business

David Fribush

by David Fribush, Erb MBA/MS Class of 2010

The focus of the Erb Institute is to address environmental problems through the enlightened application of the power of business.  As such, the majority of our focus is on how we can apply what we learn about business to environmental issues.

However, we rarely take what we learn in our environmental studies and apply it to our study of business.

Take, for example, carbon dioxide.  The tremendous environmental, economic, and social problems we face with CO2  emissions are a testament to how small our world has become.  Carbon dioxide is pollution we cannot get rid of.  There is no smokestack high enough for us to make it someone else’s problem.

Similarly, the recent financial crisis is a testament to pollution we could not get rid of.   “Toxic” assets turned out to be just as poisonous to the institutions who created them and dumped them into the river of investment as they were to those downstream who fished them out.

Natural ecosystems, however, do not create pollution.  “Waste equals food,” so the saying goes over at the School of Natural Resources. And while it may not be a conscious effort on the part of the flower to create pollen to feed the bee and, in the process, spread its seed, the fact is that the fate of one element in an ecosystem is highly dependent on the fate of another element in the ecosystem.

At its core, a study of the environment has taught me about the realities of interdependence, and that we do not live in isolated silos.

Yet business school still teaches us that we do live in silos. There is perhaps no better example of  silo-like thinking than the foundational assumption I have heard in several of my business school core classes:  “We will assume for the purposes of this class that the goal of the manager is to maximize shareholder value.”

While this claim was always followed by a disclaimer that there may in fact be other goals a manager might pursue, there was never enough time in our classes, save for one case discussion in our strategy core, to have a genuine talk about what those goals might be.

Instead of taking a step back to try and understand the whole system in which business operates, we plunge head-on into the minutiae of frameworks, formulas and Excel models that define the business school learning experience.  Indeed the action-packed b-school lifestyle is quite antithetical to taking a step back and trying to see larger landscapes.

Last spring, in response to the financial crisis, there was a discussion on the Harvard Business Review webpage entitled “Are Business Schools to Blame?  How to Fix Business Schools.”   A poll taken showed that out of about 300 people, 48% felt that business schools deserve some of the blame, 18% most of the blame, and 34% none of the blame for the current economic crisis.  A number of people posted thoughtful commentary on the question in what was a refreshingly philosophical discussion for a business school context.

While I think it is a bit simplistic to blame business schools for the crisis (my sense is that business school, like politics, tends to follow the marketplace rather than lead it), I do think they perpetuate this notion that we can, in the name of shareholder value, put aside our responsibilities as conscious members of an ecosystem.

At the very least, we should have the discussion.  A look into the natural world will also make us question other fundamental business tenets, such as that perpetual growth – which always seems to be an assumption buried in Excel models – is good or even possible in any ecosystem.

These are discussions we need to start having, and business programs should be a venue for having them.  “Green business” will have to evolve to be more than making products more sustainable.  Rather, it needs to be a true reconciliation of business practices with the realities of ecosystems.

Erb students in particular are in a unique position to help foster that reconciliation.  And it can start by taking more of what we learn at the School of Natural Resources into the business school classroom.

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