A U.N. initiative to promote business ethics is readying a set of principles. It could change the way B-schools operate
In July, 2000, the U.N. launched the U.N. Global Compact, an initiative to encourage responsible business practices worldwide. The program developed principles for responsible investment and now has more than 3,800 participants, including more than 2,900 businesses in 100 countries.
Recently, the Global Compact decided to expand its efforts to the academic community and is in the process of developing a set of Principles for Responsible Business Education. In January, Angel Cabrera, president of Arizona-based Thunderbird School of Global Management was named senior adviser to the Global Compact and is heading the task force developing the principles, which are to be presented at a meeting in Geneva in July.
Members developing the principles envision that business schools will reassert their commitment to teaching business ethics and address issues of human rights, labor, environment, and corruption.
Last month, Cabrera and Manuel Escudero, the head of global compact networks and academic initiatives met at U.N. headquarters in New York to fine-tune the education initiatives. There, they discussed the project with BusinessWeek.com reporter Janie Ho. Edited excerpts of the conversation follow:
More than 150 academic organizations are already part of the Global Compact, in places ranging from the U.S. to Nigeria. What role will they play with the new principles?
Cabrera: Lots of business schools want to be part of this movement with the Global Compact, but when you read those Principles for Responsible Investment, it's meant for policing companies. Business schools would have to be pretty creative to violate human rights issues, child labor, or even environmental issues. Maybe some money issues.
It's to have a clear commitment to ensure that their graduates joining the ranks of companies around the world understand that.
So B-schools would have to change their curriculum?
Escudero: Yes, exactly.
Cabrera: We want to make it clear: Your very mission as an educational institution must ensure that business leaders understand their social responsibilities. You must be committed to integrate that kind of thinking into your subjects—MBA, undergrad, research. You need to be listening to the companies that you serve. Then you need to make this progress public. Just like the companies do. If you're going to sign up with these principles, you need to publicize what you do.
How many academic partners do you hope will sign on these new principles, if adopted?
Escudero: We have participants from all over the world. It's not limited to those 150-plus schools that are already involved with the Principles for Responsible Investment, aimed at companies. We're aiming at a wider participation in the Principles for Responsible Management Education. We're trying to create change throughout business schools all through the world.
Who else besides business schools are to follow these principles?
Cabrera: First we need to figure out who influences academic institutions, how we can ensure that academic institutions do this. The U.N. can influence them by publishing this report.
So you want accrediting bodies such as the Association to Advance Collegiate Schools of Business (AACSB) to try to help instill these principles or make this part of the accrediting requirements?
Cabrera: Ideally, we want to be co-conveners of this project. They have not agreed yet to make this part of the accreditation. It may take a few years to agree to incorporate it into their accrediting process.
Would cost be a factor such that smaller schools may not have the resources to adhere to these principles?
Cabrera: Well, it could be. Some of those things are more a question of attitudes.
Escudero: I'd like to add that the U.N. does not work on our own. We act as facilitators of this initiative, the same way that the Principles for Responsible Investment have been facilitated by the U.N. Here, we are not only working with academic partners, but also these big institutions. The AACSB, the European Foundation for Management Development, and the Academy of Management have shown interest in exploring these principles. This is who business schools respond to. They look at requirements on the list and if they don't do it, they lose their accreditation.
Do media rankings have any role?
Cabrera: The influence of BusinessWeek, Financial Times, The Wall Street Journal rankings have a huge impact on these guys. Suppose that in a couple of years these publications require progress in ethics. It's already happening with the Aspen Institute and Beyond Grey Pinstripes, which measures and ranks social responsibility practices of business schools.
What bureaucratic challenges, if any, are there in working with an international organization like the U.N.? Would companies or business schools see a big barrier to entry?
Escudero: What we are putting forward is not a model of excellence. We are talking about an engagement model—the conviction to start a transformation. The process of becoming a responsible business school takes time. So it's a model with no entry barriers. It only takes the conviction and the commitment of the dean and the board to participate.
Cabrera: You do not have to pass an expensive test. You have to make a public commitment. Many business schools will not take that step until they're ready to. But that's the role that the U.N. will take. Schools might react against it initially, but when more schools, organizations, and businesses sign up, we hope this basically becomes mainstream.
A lot of people say you can't teach ethics. How would you respond?
Cabrera: Until now, we have avoided the whole topic of business ethics. People say, you cannot teach ethics, they are adults…. Well, the Aspen Institute ran a study measuring the values and beliefs of business students before they started their MBA and after they finished. Their beliefs changed dramatically.
Give me an example of how a company needs ethically trained business students.
Cabrera: I had a lunch yesterday in Chicago with a CEO of a major corporation that produces agricultural products throughout Latin America. They had an issue of child labor in Latin America. They knew that their farmers were using children in the production and they did not want to deal with this liability. Their solution was to quit.
They turned to the business schools and said, "We've given them the tools as managers to do complex international finance deals, marketing strategy. But we have not given them the skills to figure out how to deal with a child labor problem."
Escudero: Even in finance, responsible behavior is not valued. They do not take into consideration the conditions under which their business is generating. That's why this is not about an ethics course or corporate social responsibility. It's a whole curriculum change in operations, strategy, and marketing and so on. And that is only going to happen gradually.
Will it require many resources for these schools to invest in ethics?
Cabrera: It's not a question of putting more money into a school. It's a question of allocating your current resources. Imagine that new cases can lean toward a more responsible way of conducting business. It will take time. Also, even today a faculty member says to the dean, "I want support to run a project in international marketing in China," and the dean says, "Fabulous, we want to be in China." Everybody wants to be in China. But now say: "I'm going to do research about violation of human rights by manufacturing companies in Southeast Asia." Now, we're not sure about the value of that….
With these principles, if a professor applies for tenure, they would have to show how much research they've done. Are you going to value this type of research as much as you value traditional research? Are you going to require that they incorporate these things in their courses? So it's a change in attitude and mind-set.
Are you looking to instill this at the undergraduate level as well? Far more college students take business courses at that level.
Escudero: We are talking any academic institution involved in the education of future mangers or current business leaders. We're talking undergraduate, postgraduate, executive education, schools involved with public management, public administration, national relations, law schools that are training corporate lawyers. Of course the core is the business schools.
What is the consensus on opening business programs to international scrutiny?
Cabrera: It's a pretty significant change for a school. In fact, some institutions won't even sign it.
Escudero: That's why we're discussing the levels of participation. You don't need to have the whole school or university participate. Even a department could be a participant. And we'll work from there.