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The Bard MBA In Sustainability: Our Theory of Change

Changing the game of business is core to any sustainability strategy. Why? No matter how many minds we change through education, or how many rules we change through policy, at the end of the day it will be business that has to figure out how to get sustainability done.

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How do we get food on the table, keep the lights on, create global universal access to health care, all for nine billion people, in ways that radically—radically—reduce environmental impact? We need 90% cuts in all kinds of pollution soon—global warming emissions, toxic chemical emissions, impacts on biodiversity, plastics pollution. At the same time, business needs to reinvent itself to treat workers, communities, and suppliers with justice and with respect. Is this possible? Can business really change the game?

Reimagining business in service to sustainability is a  recent idea in political economy. Typically, business is seen as the problem, not the solution: companies pollute the environment, deplete resources and can sometimes exploit workers and communities. This pollution and exploitation are often viewed through the lens of “negative externalities” or “external social costs."  The argument goes that businesses are forced, regrettably, to impose these costs on society under the pressure of market competition.  Any business that tries unilaterally to address these issues will face higher costs and be driven out of business. The solution? Government needs to internalize those externalities through regulation and level the playing field, allowing all companies to do the right thing.  The road to a sustainable future under this theory of change runs through an intelligent and effective regulatory state. 

Globally, significant progress was and in places still is being made under this regulation paradigm. But in many regions of the world, including the US at the national level, political gridlock has limited regulatory solutions. Under these circumstances, sustainable business has emerged as a critical alternative pathway. The core idea is that through radical, often ecologically inspired design, companies can develop business models that both reduce pollution and promote social justice, making money while doing so. Sustainable business considers pollution and social exploitation to be technological and social design problems, rather than negative externalities. As such, these challenges can be solved through business model innovation. Rather than facing higher costs, the sustainable business view is that companies that creatively address environmental and social problems can actually lower costs, increase revenues, and outcompete dirty companies.

Changing the Game

This new view began to take shape in the 1970s.  Based on early ideas of Buckminster Fuller, Walter Stahel, and others, it was codified by Bard MBA Professor Hunter Lovins, Amory Lovins, and Paul Hawken in their 1999 book Natural Capitalism. The fundamental idea is that of a truly circular economy, in which all waste from one production process is an input for another.  The pathways include a rapid transition to clean energy for power and transportation, the adoption of radically more efficient technologies, and the widespread transition to reduction, re-use, and product-as-service business models.

This intellectual work unleashed a quiet revolution in business, now being carried out by an army of professionals. Embedded throughout the functional areas of corporations, working out of corporate sustainability offices, or starting their own companies, these entrepreneurs and intrapreneurs are refocusing business around social and environmental mission.

The big question: how far can the sustainable business revolution go? Is it really possible to solve the major environmental and social challenges of our time via radical new business models that profitably internalize what we used to think of as negative externalities? Put another way, might sustainable businesses just be nibbling at the edges of major issues at best, or at worst, simply greenwashing? The Bard MBA believes that much must and can be accomplished within this new sustainable business paradigm, and our graduates are committed to driving it as far and as fast as is possible.

Digging Deeper

By sustainable business, we mean companies that are organized for the purpose of solving social and environmental challenges. Of course, these businesses, whether for-profit or non-profit, must be financially successful. However, for these companies, profitable operation follows as a consequence of successful pursuit of mission, not as the primary goal of the organization. Examples from the energy field include the dogged pursuit by mission-driven entrepreneurs over the last few decades to develop competitive businesses in solar, wind, storage and electric vehicles. Consider Tesla. The company’s mission is to “accelerate the world's transition to sustainable energy”.  Unwavering commitment to this mission led to crushing success in the market, with the company stock value recently exceeding that of Exxon. Conventional car companies have recently followed the path pioneered by Tesla, and on a much shorter time frame then many imagined possible, the world is transitioning away from gasoline-powered cars.  The Tesla example is instructive, as it remains an imperfect company along many social and environmental dimensions, and has in particular faced charges of unfair labor practices. The journey from a profit-first company to a sustainable business is long and complex, particularly in a legal and regulatory environment that favors the former. [1]

From a governance perspective, Clif Bar provides a pioneering example. The company explicitly integrates five bottom lines:  Employees; Community (other stakeholders); Planet; Brand Integrity, and the Business (long-run profitability). For major decisions, managers in charge of each objective hammer out agreements that yield benefits for the entire company. This is not a “quintuple-bottom-line” strategy. Rather it is an integrated bottom line approach. The working hypothesis is that advancing all five goals is best for the long-run health of the company, and neglecting any one of the five will weaken it.

The "Integrated" Bottom-Line

There is a trap in thinking in terms of multiple bottom lines, traditionally, a triple bottom line of profit, people and planet. For businesses taking this approach, environmental and social concerns are separate spheres, bolted on to a core focus on financial performance. People and planet are still cost centers, to be jettisoned when the going gets tough. Figure 1 illustrates how the Bard MBA would be envisioned in the traditional triple-bottom-line format, and the limitation in doing so.  In the figure, key Bard MBA learning concepts are organized by the three traditional legs: Social, Environmental, and Economic. In the Venn diagram, three new categories emerge that describe the areas of overlap between two of the three legs; Social Return on Investment, Natural Capital, and Environmental Justice. In this Triple Bottom Line formulation, the fully integrated area is where all these perspectives come together in synergy: note it is a rather small intersection.

BARD MBA Toolkit-3The Triple Bottom Line Is Not The Integrated Bottom Line
Source: Goodstein and Richmond (2017) Creating a Curriculum for Mission-Driven Business Education, Bard MBA Working Paper

In the pre-sustainability days, the three spheres were assumed to be completely separate. “Economic concepts” underlay MBA education to run for-profit companies. “Environmental concepts” were the province of NGO’s and agencies working on environmental policy. And “social concepts” were taught to folks in the social service non-profit or government sectors.  Under a triple bottom line formulation, the circles do move closer together, and there is some common ground between business, environment and society.  But here still, the integrated business solution set is niche, and quite limited. Sustainable business in this formulation has only a small role to play in changing the future. 

In the real world, of course, the economy lies wholly within the circle of society, and society in turn lies within the circle of the environment. Bard’s MBA education is based on the idea that successful businesses understand this reality. At a time when human capital and natural capital are becoming the scarce constraints on production, investment in these areas will yield both economic and social returns. If business could once behave as if these three circles were separate, today the circles are merging fast, and the opportunities to pursue an integrated bottom-line are also expanding dramatically.

The Bard MBA curricular premise is that increasingly and at scale, businesses will profit by providing goods and services that yield “shared well-being on a healthy planet.”  The sustainable business paradigm is not a utopian vision. On the contrary, it has inspired thousands of companies to develop practical tools that are re-orienting capitalism towards real problem solving, and away from a focus on short-term profitability. Bard’s graduates are leading this revolution.

The Bard MBA in Sustainability

Bard's program was established in 2010 to offer deep training  in three key areas.

  • Sustainability Vision- how can businesses find profitable opportunities where others see environmental or social costs? 
  • Leadership—given the vision, how to get a team behind it?
  • Execution—the core MBA toolkit. With a vison and a team, how to deliver?

Experience-based learning is key, from our year long course in sustainability consulting to our individually-mentored, year-long capstone process.  All this is focused on getting Bard MBA graduates into good jobs soon, changing the game at scale, because we don’t have much time. To learn more about the work of our graduates, please see our Alumni LookBook. 

In its early incarnations, business sustainability focused mostly on solutions to environmental and human rights challenges in the supply chain. In recent years, it has become evident that “shared well-being” is threatened not only by an ecological crisis, but also and related, by global economic systems held back through their historical grounding in slavery, genocide and colonialism. Given this, sustainable business has begun to emphasize reducing systemic racism as a critical goal. The Bard MBA has formally committed to this work, beginning to integrate training for effective anti-racist leadership across our entire curriculum. In 2021, along with our prerequisite courses in economics and accounting, we have added a pre-req in DEI+Antiracism. For more on this, please see our statement on Justice, Diversity, Inclusion and Anti-Racism

Beyond Changing the Game

The fundamental role of Sustainable Business is to change the game: innovate new business models that radically cut pollution and that regenerate communities. However, to build a sustainable future we also need to change the rules through Policy, and change minds through Education. Learn more about the Bard Graduate program’s theories of change.

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[1] Tesla valuation, market dominance, and labor practices. The idea of an integrated bottom line was introduced by Hunter Lovins and Boyd Cohen (2012) The Way Out: Kickstarting Capitalism to Save our Economic Ass (Hill and Wang: New York)

About the Author

Eban Goodstein

Eban Goodstein

Dr. Eban Goodstein is an economist and the Director of the MBA in Sustainability and the MS and MEd programs at the Center for Environmental Policy at Bard College. He is known for organizing national educational initiatives on climate change, which have engaged thousands of schools and universities, civic institutions, faith groups, and community organizations in solutions-driven dialogue. Goodstein is the author of three books and numerous journal articles focused on climate change, sustainability and green jobs.