The social and ecological costs of modern economics and business has created a debt rivaling that of the U.S. budget deficit. Richard Mattison of TruCost claims their data shows that in 2017 "the natural capital cost generated by the largest global companies is nearly two times higher than their net income." (State of Green Business 2018). And Constanza et al estimate "the loss of eco-services from 1997 to 2011 due to land use change at $4.3–20.2 trillion/yr".
With each passing year, though productivity, wealth and GDP grow, we liquidate more natural resources, imperil ecosystem services and endanger human health and expand inequality. The Millenium Ecosystem Assessment in 2005, which involved 1,300 scientists from around the world, showed that over 60% of global ecosystems are in some form of decline. This is the natural capital and base ecological infrastructure not only of all life, but of all business.
Their is no single cause of this effect, no one convenient villain. But we can safely say that business has played a large role (and consumers have been accomplices). Many of the people running these businesses have been taught in our business schools and departments.
Business, The Most Popular Major
There are more business degrees granted in the U.S. than any other degree. In 2013-14, 370,000 undergraduate business degrees were awarded, almost twice as many as the second highest number of degrees: health professions. In fact, adding together the second and third highest (health professions and social sciences/history respectively) would equal the total number of business degrees. (National Center for Educational Statistics).
And these business students are put in charge of an 18 trillion U.S. economy with a global reach into natural capital and ecosystem services that in 2011 were valued at $125 trillion/yr (in 2007 dollars).
I remember when my son was preparing to earn the right to drive. He had to complete a certain number of hours of driving in different conditions. We practiced the dreaded parallel parking. And he passed and got a license.
But we currently give business students license to operate businesses at unsafe speeds and on a planet whose rules and resources we have largely ignored in most business schools. "Here's the keys to the economy," we seem to be saying, "have a good time!"
This won't end well. Unless we begin to prepare business students differently.
Business education has a big footprint
Educator and author David Orr famously states in his essayWhat is Education For?, “All education is environmental education.” We can say the same thing about business education. By what is taught, and what is left out, all business education is sustainability business education.
If we teach that the only purpose of business is to make money. That is what we get. If we teach that the purpose of business is to provide goods and services to people. That is what we get. And if we teach that the purpose of business is to provide goods and services while making the world a better place. That is what we will get.
What do we do about this? How might we update business education? That is the grand adventure for Smeal College of Business and many business schools around the world. We will need to address some core issues:
how do we appropriately build on business fundamentals? I have seen programs that have departed from the fundamentals and produced passionate students with little grounding in reality or in fundamentals like calculating ROI, NPV, how to read financial statements, customer segmentation, and effective communication. We need what Ray Dalio calls "practical idealists" not dreamers.
which specific skills and knowledge are needed in each major? There is only so many credit hours and room in the curriculum. We will need to be precise in our focus and supply the right experiences in and out of the classroom. This will require closely working with industry to understand our different roles. Their on-boarding processes and professional development programs will provide learning. We will providing learning as well. Who is going to do what, when and how? Is it possible to consider the full sequencing of the student-to-graduate experience in business education for sustainability?
what general knowledge and values are needed across majors? Depth and precision will be critical but so will breadth. Too much focus on the major-specific topics will miss important information. For example, we could educate supply chain students about closed-loop supply chains and the circular economy. But if they lack a basic scientific understanding of climate change, we have not equipped them for success or for responsible management.
Reinventing Business Education
Business education for colonists started in the Americas almost immediately. The Plymouth Colony hired a school teacher to teach the casting of accounts. Bookkeeping was the earliest business course taught in public schools and was offered in Boston in 1709 and in Philadelphia in 1733 (Encyclopedia.com).
The business education of the colonists fit their circumstances much like our renewed curriculum will fit ours. They had few people and vast resources. We have vast people and fewer resources. If the business course of the early 1700s was bookkeeping, perhaps that of the 2000s is Natural Capital Accounting.