Vol. 5, No. 2: Fall/Winter 2009
Sustainable Enterprise
by Jeremy Shere
Kelley School of Business students act as corporate sustainability consultants who balance the drive to increase profit with stakeholders’ demand for environmentally sound business practices.
Imagine that you’re the CEO of McDonald’s (the real CEO is Jim Skinner), busy cooking up schemes to increase market share in China, when your Blackberry buzzes with a note from the VP of media relations. Something about Greenpeace planning to raise a fuss over the fact that, apparently, around five percent of the soybeans McDonald’s buys to make corn feed for the chickens it processes into McNuggets comes from deforested land in the Brazilian rainforest.
What do you do? After all, McDonald’s is only one of dozens of food companies importing soybeans from deforested parts of Brazil. And it’s only a tiny percentage of all the soybeans you buy. Plus, until this moment, you weren’t even aware that that McDonald’s soybeans had any connection to the rainforest. So it makes sense to ignore Greenpeace, right? After all, what can those tree-hugging hippies possibly do to the world’s largest and most powerful fast food company?
On the other hand, nongovernmental organizations (NGOs) like Greenpeace are nothing to sneeze at. Beneath the long hair and tie-dyed tee shirts and torn jeans, those tofu-eating whale lovers are pretty savvy. They’re battle-tested, willing to do crazy stuff like chain themselves to trees and tractors, and they know how to work the media. Look what they did to Apple, forcing Steve Jobs to stop using allegedly toxic chemicals in iPods and other Apple products. And now, it seems, they’re coming after you.
So what do you do? That’s the kind of open-ended, many-faceted sustainability question—one touching on both environmental-ethical and business concerns—at the heart of Sustainable Enterprise: The 21st Century Corporation, a class in the Department of Business Economic and Public Policy (BEPP) at the Kelley School of Business, taught by clinical assistant professor Steve Kreft.
“In business today you can’t just focus on internal stakeholders,” says Kreft, who’s also the faculty advisor for the Kelley School’s Environmental Business Club, which became a chapter of the national environmental organization Net Impact in 2008. “You’ve also got to think about external stakeholders like NGOs, governments, and local communities.” Sustainability doesn’t just mean looking out for the environment, Kreft says. In the past few decades, sustainability has become an important factor in the calculus of profitability. Corporations today have to balance the drive to increase profit with the fact that their customers, as well as NGOs and government institutions, won’t stand idly by when the bottom line runs roughshod over the rainforest or other irreplaceable features of the environment.
Kreft developed Sustainable Enterprise, which was first offered in Spring 2008, to introduce students to the new, environmentally conscious context in which companies now operate. “We looked around and saw that there weren’t many similar courses in other business schools, despite growing interest on the part of students,” Kreft says. “We realized there was a niche that needed to be filled.”
The course, which meets one evening a week, has so far attracted a mix of students, many interested primarily in environmental issues, but a good number who are skeptical of environmentalist arguments. Whatever their ideological leanings, Kreft expects students in Sustainable Enterprise not only to assimilate facts and figures but also to actively engage in discussion and argument. “We brainstormed and decided that we wanted the course to focus totally on strategy, as in ‘here are issues that corporations have faced [like the McDonald’s soybean conundrum], let’s have a debate about what they should do,” Kreft says.
To that end, Kreft presents his students with numerous case studies—true stories of companies faced with tough decisions concerning sustainability. The cases include all the relevant facts but withhold what the company in question actually did. The point, Kreft says, is for students to role-play by putting themselves in the position of a CEO facing off against Greenpeace or some other angry NGO. To come to sensible conclusions, students must see things not only from the company’s perspective but also from the point of view of an NGO or community group.
For Kelley senior Tyler Liese, learning to consider sustainability from various angles led to important insights. “I learned that when a company comes out with a sustainability project, you have to be very careful to make sure you’re not doing what’s called ‘green washing,’ which means making the company look good for the media but not really helping the environment,” Liese says. “The problem is that NGOs will go after companies that green wash and expose them, which can destroy your brand image.”
Many students, like Kelley senior Mallory Downing, don’t consider themselves environmentalists, but have come to appreciate sustainability as good business. “It’s important as a long-term strategy,” Downing says. “I’m not a huge environmentalist like Al Gore, but I’m convinced that a company won’t be profitable in the future if it doesn’t incorporate sustainability into its overall plan in some form.”
Students site Kreft’s ability to foster discussion as one of his outstanding strengths. Although the course’s two and a half hour running time lends itself to lecture, Kreft concentrates on dialogue, encouraging students to form an opinion and back it up. To challenge some students’ prejudice against environmental NGOs, he shows video clips of protestors dressed in chicken suits and chaining themselves to roofs. “And you’re sitting there watching these people and thinking, ‘that’s absurd,’” says Kelley sophomore Alexis Suskin-Sperry. “But then we see how the protestors get free media coverage and how they use it to get stakeholders to start questioning what the company’s up to.”
Because the class meets only once a week, Kreft requires that students participate throughout the week in an online discussion. Handing students a cold case study and expecting them to discuss it in class is a nonstarter, Kreft says. But online, “they’re in their pajamas, searching the web, reading the case, forming opinions, and trying to convince themselves and others of a position,” Kreft says.
Since some students are shy and not confident in the classroom, posting a thought online and having six other people agree gives them more confidence for the next classroom discussion—discussion that can get pretty heated. “Most nights,” Kreft says, “we agree to disagree.”
Kreft’s students have taken to the online discussion. “It’s great to get away from the normal class setup where you sit there and listen to the teachers talk for 50 minutes,” says Liese. “Doing things online is more of what you might find in a real business setting. Professor Kreft has told us that many things we say online and in class are things he hasn’t thought of. So we’re all learning together.”
Throughout the semester, students work in groups to produce an end-of-term project—a 20-minute presentation on an actual company facing a real-life sustainability issue. The students’ goal is to act as sustainability consultants and make realistic, doable recommendations. One group presented an analysis of how Tyson Foods should deal with the fact that their “All Natural” label doesn’t jibe with the less-than-natural reality of how they process chickens and other animals. Another group considered how Toyota can build on its success as a maker of environmentally sensitive cars.
Watching the presentations, it’s clear that Kreft’s students have not merely absorbed rote lessons but formulated complex perspectives on sustainable enterprise. It’s not difficult to imagine them in the near future speaking to board members or speaking as CEOs about how and why to make sustainability a central part of any business plan.
For his part, Kreft is confident that Sustainable Enterprise helps students get a leg up on an issue that in many ways has come to define business in the 21st century. “We take a very open-ended, strategic look at sustainability,” Kreft says. “Here’s a new issue we’re all facing. Let’s get our heads around why we’re thinking about it now, and how we can make optimal decisions about sustainability within a business framework.”
Jeremy Shere is a freelance writer in Bloomington.
