India's leading business schools are grooming future executives in subjects related to environment, social and governance or ESG parameters as issues of carbon footprint, global warming, diversity and inclusion as well as ethical business practices are becoming increasingly important for business models in India and abroad.
IIM-Ahmedabad director Errol D'Souza says the institute has introduced subjects on carbon trading, environmental impact assessment, thinking through good governance, probity in governance and administration and accountability over the last 3-4 years.
"We are about to open a research centre on ESG centre sometime this year to forward this area of work. Most organisations are interested in ESG but frankly the last one year has made them introspect -- Can I ask that profit be put before purpose or is purpose before profit?" D'Souza says.
ISB has at least three electives now being offered around sustainability within its general management programme.
IIM-Lucknow started a sustainable management specialisation several years ago under which subjects like environment and social risk management, environment finance and human dimensions of sustainability are taught. Director Archana Shukla tells Business Today that students graduating from the course work in different industries like consulting, NGOs and energy.
"There have been some business institutions who tried to build programs around these subjects, but there were no takers in terms of the job opportunities for students," says IIM-Indore director Himanshu Rai. That's why B-schools need to advocate good practices instead of being merely reactive to the needs of the industry, he adds.
The Indore institute has an organic garden on the campus which students tend to. They are also expected to go live in a village for a week as part of a rural engagement programme.
Globally, there are two schools of thought -- build independent programs in executive education because they can be changed quickly and the feedback is also faster, or include them as part of every course, he says. "The right way ahead is to have a combination of both."
There is palpable investor interest, too, as mutual fund houses have begun classifying and ranking companies based on their ESG disclosures. Earlier this year, SEBI expanded the business responsibility and sustainability reporting (BRSR) standards to include environment and social disclosure for the top 1,000 publicly listed companies in the country.
However, the B-schools say that while there are some discussions with the industry about ESG, there is little consensus on the subjects. "Frameworks don't exist yet. How do you calculate risk from poor governance, for instance? For ESG, the question is how do you work them into each of the systems," says Bhavan's SPJIMR dean Varun Nagaraj.
The ESG requirements of companies from the curriculum are not as clearly defined as in the case of digital and technology requirements, says IIM-Bangalore director Rishikesha T Krishnan.
"Still many organisations don't have a separate vertical for ESG or appropriate reporting structures like a V-P Sustainability. Companies with independent departments hire them for those departments. Otherwise, they give them the responsibility of driving sustainability in the organisation," says IIM-Lucknow's Shukla.
While the institutes are waiting for a clear indication from companies, the companies are looking for government policies and laws. "The industry is predicated by government policies. If government moves into ESG in a significant way, the industry will have no choice but to follow. Then we'll be able to tell the campuses what we require," says consulting firm Deloitte India's partner and chief talent officer SV Nathan.
"Firms are not going to do it on their own. Some pressure from the investors is good, but that pressure will not be enough. The biggest push can only come from the government like it did with CSR," says ISB's associate dean Manish Gangwar.
Starting from the financial year 2014-2015, companies with at least Rs 5 crore net profit or Rs 1,000 crore turnover or Rs 500 crore net worth have to spend at least 2 per cent of their three-year average annual net profit on CSR activities in every financial year.
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