Sustainable MBA Programs Look To Provide Entrepreneurial Solutions to the World’s Social Woes

As part of her MBA coursework at New York University, Jennifer Tsai is spending time in India to improve nutrition among pregnant women. If this doesn’t sound like the traditional MBA path, that’s the point.

“This is a dream come true for me,” says Tsai, who, before enrolling at NYU, spent five years as a public health consultant to nonprofits. “I saw a gap in business acumen in my field. I felt I could do things better if I had business knowledge.”

Not so long ago, pundits blamed business schools for promoting the “Greed is good” philosophy that contributed to the worst recession since the Great Depression. The Times of London even suggested that a Harvard MBA now stood for “Masters of the Business Apocalypse.”

But a quiet revolution has been unfolding at business schools over the last decade, as students have flocked to courses in subjects like corporate social responsibility, environmental sustainability, social venture capital, microfinance, and global poverty alleviation.

“It reflects a generational shift in thinking,” says Sandra Navalli, director of the Social Enterprise Program at Columbia Business School. “In 2000, maybe 50 students in the whole business school were interested in this area.” Today, she says, 45 percent of Columbia’s 1,400 full-time students are taking classes that aim to apply the strategies of profit-making to achieving social goals.

“Ten years ago, people were still questioning, ‘Why should companies think about sustainability or corporate responsibility?’ ” says Navalli. “I think the question has really changed from ‘Should companies do it?’ to ‘How do companies do it?’ ”

The new wave in social enterprise programs grew up with the boom in sustainability, or “green,” MBAs. But David Berdish, manager of social sustainability at Ford Motor Company and a lecturer at the University of Michigan’s business school, complains that the initial sustainability programs produced some truly green graduates.

“I get frustrated when schools say they have a sustainability curriculum, but it’s really only an environmental one,” says Berdish. “My biggest frustration is that students don’t know more about basic human rights, international tensions, and some of the problems in the supply chain regardless of whether the product is green or not.”

For instance, Berdish points out that the automobile industry has been pressed to produce cars powered by lithium batteries, but there hasn’t been corresponding pressure on lithium-producing countries like the Congo and Bolivia to clean up corruption, harmful mining operations, and dangerous working conditions. Companies can make a difference in these areas by insisting on positive changes, he argues, but MBA programs need to train students to look beyond topics like carbon footprint reduction to consider the human dimensions of sustainability.

“Sustainability is more than environmentalism,” he says. “Even though you’re working on green technology that reduces ozone and greenhouse gas emissions, if people are being exploited, then you’re not exactly sustainable. There’s a direct correlation between product quality and workplace health and safety. I can’t put an actual dollar figure to it, but I know it gets us something.”

Putting Ideas to Work

The name “Social Enterprise” was chosen for Columbia’s program, explains Navalli, because “we really mean using the business or management-leadership skills to achieve social or environmental outcomes. There are thousands of great ideas, but actually very few of them are implemented well.”

Perhaps the most successful social venture to come out of Columbia was started in entrepreneurship classes. RecycleBank is a seven-year-old company that rewards people for recycling by giving them coupons for local businesses. Co-founded by Columbia MBA graduate Ron Gonen, the firm now services two million households in nine states. Municipalities like Philadelphia, Houston, and Cherry Hill, New Jersey, are paying RecycleBank to help divert waste from landfills and incinerators. The company also gets paid by recycling plants for the recycled materials.

“The goal is to create systems in which it’s financially attractive for people to follow the proper behavior,” says Gonen, who now teaches at Columbia and also invests in other sustainable businesses. “I want people to recognize that ‘eco’ is as much a part of ecology as it is a part of economy, and that the smart environmental decision is also the smart economic decision.”

RecycleBank began with the help of $100,000 in seed money from Columbia. The school has done well on its investment, Gonen says. “They recently sold half of their equity for over $600,000, and they still have half of their equity left in the company.”

Columbia has also invested in Ecovention, a food-packaging firm co-founded by recent MBA grad Jennifer Wright. The company attracted a lot of media attention for its Green Box, a cardboard pizza box with a top that breaks down into serving plates and a bottom that converts into a storage container. (One client is Whole Foods.) Like Gonen, Wright used her Columbia course time to develop a business plan. “From the day I finished classes, we were up and running,” she says.

These businesses occupy a sweet spot for social ventures, where what’s good for the company’s bottom line is also good for the environment. But social enterprise programs also try to put people into existing corporations and government agencies, which have more resources, and consequently a bigger impact, than social start-up ventures.

Today’s hot recruiters on campus, according to Navalli, are the firms that promote core values involving the building of communities and sustainability.

“When GE recruited on campus 10 years ago, they found it difficult to attract people because it was considered just a very stable company,” Navalli says. Then the company announced its “Ecoimagination” initiative to promote clean energy, such as wind power. Student interest promptly grew, she says. “It’s not that all students are going to work for Ecoimagination initiatives. It’s a statement that the company has these core values, which is attractive. That’s in a sense what MBA schools are attracting in droves right now: people who care about social and environmental topics and want to apply them to a career pathway.”

Public initiatives by corporations can be tricky, of course, because they also serve the purpose of supplying good publicity. Berdish says some Green MBA programs have been criticized for corporate “greenwashing,” or supplying fig leaves to environmentally irresponsible companies.

Yet many firms are now genuinely thinking entrepreneurially about the environmental impacts of their businesses—even some that would not normally be considered socially aware. Wal-Mart, for example, has long drawn criticism for its labor practices. But when company CEO Lee Stuart unveiled a plan in 2005 to reduce packaging and introduce low-energy lightbulbs and organic milk, “the impact they had on the supply chain was huge,” Navalli says.

For Profit, or Not  

At NYU’s Stern School of Business, the Social Innovation and Impact specialization was launched three years ago, after students there requested classes in corporate social responsibility, forensic accounting, and financial statement fraud. “We never focused on green or energy, because that hasn’t been the primary interest of our students,” says vice dean Kim Corfman.

The specialization now offers 20 courses. Corfman is especially proud of new classes on international social impact strategies and entrepreneurship incubation, in which students travel to India as what she calls an “on-the-ground complement” to classroom studies. Working with both for-profit and nonprofit firms there, the students focus on two of India’s main problems: the decline of agricultural yields due to drought and a low per-capita concentration of doctors. “The whole idea was: get to know a major social problem really well, and then think entrepreneurially about it,” says Corfman. Returning students will put together business plans that can be funded and monitored. Corfman hopes similar courses will one day send students to Africa and South America.

Tsai and her project partner, Matthew Edmundson, want to build a prenatal vitamin business in India, where up to 80 percent of expectant mothers are iron-deficient. Making a profit, Tsai believes, will make their venture more sustainable. Edmundson adds that developing a business plan has “enhanced aspects of all my classes,” because he can anchor the lessons to his startup model. NYU is paying for the students’ return trip to India this summer.

Both NYU and Columbia estimate a full-time MBA student will pay about $80,000 for an academic year, including room and board. Spending that kind of money to work with the world’s poorest populations, or to study nonprofit management, might seem to reduce the economic value of an MBA to that of an MFA, but this misses the point, says Corfman. Some graduates have accepted corporate social responsibility jobs at major corporations, she says, but “we’re having more and more students go into the public sector or not-for-profits.” NYU fields a consulting corps to assist local non-profits and minority businesses, and the competition is intense among students to participate in the non-credit program.

“You’re not going to make Wall Street salaries,” acknowledges Navalli, “but there are many sectors in the economy that don’t pay Wall Street salaries.” A lot of students have returned to school after stints in finance and consulting, she says, and are looking for more rewarding work. Some refugees from the financial industry, for example, are exploring impact investing, a strategy to create financial returns while positively affecting society and the environment. This week, JPMorgan is sponsoring an impact investing competition among several MBA programs.

In the areas of impact investing and consulting, “you’re seeing some salaries that are pretty much on par with what our students are normally going into,” insists Jill Kickul, the director of NYU’s social entrepreneurship program. But students Tsai and Edmundson both say they’re taking the long view. “Among my friends and colleagues, it’s less about making the most money possible than it is about doing something that you like and you’re passionate about,” Edmundson says.

Ultimately, the realities of getting a job and paying back loans will no doubt lead many social enterprise MBAs to go down the more traditional tracks. But then, those traditional spots will be occupied by people who think differently and are open to change.

That’s a good thing, says Berdish, who believes schools like Columbia and NYU are right to push human rights training with the new environmentalism. “If I had an opportunity to hire someone who got their degree from Columbia, I’d take him or her.”

Unfortunately, he adds, Ford is not hiring.