Julia Christensen Hughes is dean of the University of Guelph's College of Business and Economics.
Recently, I had the honour of addressing the United Nations General Assembly of the Global Compact, as it celebrated its 15th anniversary.
I was speaking on behalf of more than 600 signatories to the Global Compact's sister organization – the Principles for Responsible Management Education initiative. Within PRME there is a "champions group" of business schools noted for their commitment to "work collaboratively to develop and promote activities that address shared barriers to making responsible management education a reality." Three Canadian business schools are part of this important leadership group: Western's Ivey Business School, the Queen's School of Business and the University of Guelph's College of Business and Economics.
At Guelph, our vision is to "develop leaders for a sustainable world." Among other subjects, our undergraduate students study sustainable commerce, leadership and entrepreneurship. We even offer an MBA in sustainable commerce. But it's not just what's being taught that's being transformed; it's also how teaching is done and where students learn.
Classrooms are being redesigned to facilitate collaborative problem-solving. Students are also learning in the community, supporting social enterprise, completing tax returns for the economically disadvantaged, raising money for homeless youths and supporting micro-loans for female entrepreneurs in the developing world, through their own entrepreneurial ventures. Through such efforts, Guelph business students are learning first-hand about the power of entrepreneurship to help families and communities become self-determining.
At the UN, I had the opportunity to hear from business leaders who share the commitment to advancing business as a force for good. One spoke of doubling the wages of garment workers in the developing world. He observed that doing so would add only 50 cents to the price of a T-shirt sold in North America, while making a profound difference in the lives of the workers. Another shared how her global travel company was training all front-line workers to detect and respond to suspected child trafficking and "child sex tourism."
Others spoke of their commitment to engaging in fair trade across global supply chains and reducing negative environmental impacts. They said it's good business, since it supports a positive brand, enhances customer and employee engagement, and helps attract new talent. They said there is a paradigm shift underway, that we are at a "tipping point," that engaging in transformational change is essential to the survival of humanity and the planet.
As I reflected on these comments, I was reminded of an infamous article published in The New York Times Magazine in 1970. The title was The Social Responsibility Of Business Is To Increase Its Profits. The author, economist Milton Friedman, argued that advocating for social responsibility is "preaching pure and unadulterated socialism."
Citing his book Capitalism and Freedom, the Nobel laureate defined social responsibility as a "fundamentally subversive doctrine" and stated that "there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
This is the doctrine that has dominated much of business practice, and much of business-school education, for the past several decades. It's the unnuanced interpretation of Mr. Friedman's ideas that is being challenged by the Global Compact and its signatories.
Clearly, business has to make a profit. It's what keeps it in "the game." A business without profit would not meet the expectations of its shareholders, would not be sustainable. But what are the rules of the game and who gets to set them?
In our global economy, one can see any number of examples of managers, tempted by large personal bonuses, who have engaged in deception and fraud with little consequence. And companies that have picked up and moved their operations in order to exploit lax environmental and human-rights regulations. In contrast, signatories to the Global Compact are committing to the pursuit of a "long-term perspective," a "triple bottom line" or "shared value" – recognizing that profits, people and planet are inherently interconnected.
At the close of the UN General Assembly, it was acknowledged that while there has been progress on this front, much more is needed. My own contribution was to call for governments and university leaders to better support the curricular innovation that is under way. We also need help in challenging business-school rankings that place undue emphasis on graduate salaries, which plays into the "greed is good" agenda.
I encouraged Global Compact signatories to work more closely with their academic partners to ensure that we are producing the talent that these leading organizations require. And, within the academy, we need to do a better job of creating the curriculum, cultures and aligned systems in which all of this might thrive.
We especially need sustainably minded students to choose their institutions and courses wisely, to participate in university governance and to complete their course evaluations. We need student voices to be heard. We have begun this process, but much more is required if we are to truly develop the sustainable business leaders that the world so badly needs.