17.09.2024

After the signing of the Paris Agreement in 2015, the clock is ticking down to achieve carbon neutrality by 2050. Numerous companies are pledging Net Zero commitments, but their level of ambition and transparency varies greatly. These pledges are increasingly scrutinized by key stakeholders – consumers, investors, public opinion, and NGOs. Regulators are also becoming more vigilant against greenwashing practices, with the European Union and its state members at the forefront. The newly enacted Directive 2024/825 against unfair practices and improving access to information aims to empower consumers in the green transition. In the meantime, the number of climate-related litigation cases has been steadily increasing, while France even introduced penalties for corporate directors who fail to comply with the Corporate Sustainability Reporting Directive (CSRD).

Committing to carbon neutrality is straightforward, but taking hands-on action requires a deep understanding of the challenges, the necessary trade-offs, and the skills to lead a holistic business transformation and navigate the evolving regulatory landscape. Business schools, positioned as active social agents and pivotal links between research, companies, and global talent, should be equipping current and future leaders with the hard and soft skills necessary to tackle one of humanity’s most pressing challenges. Here are three compelling reasons why:

• Risks to business continuity. The effects of climate change pose significant risks to the continuity of companies and business-as-usual. Leaders must adapt their organizations to a changing environment influenced by natural, regulatory, and social conditions. For example, the International Labour Organization (ILO) predicts that by 2030, more than 2% of total working hours worldwide could be lost each year due to excessive heat or because workers need to slow down their pace. Regulations such as carbon pricing – that already cover around a quarter of global emissions – put further pressure on companies. Additionally, companies and financial institutions are increasingly facing the risk of assets being “stranded” due to the energy transition.

• Opportunities for innovation and entrepreneurship. While climate change threatens business-as-usual, the transition to Net Zero presents vast opportunities for value creation through innovation and entrepreneurship. Business leaders who can successfully navigate these challenges and innovate within their sectors will gain a competitive advantage. Equipping business leaders with the necessary tools to understand the problem, develop business transformation solutions, find resources to finance the transformation, and become agents of change is crucial for future organizational survival. Furthermore, climate change knowledge is increasingly relevant for all traditional business functions including strategy, marketing, finance, and corporate governance.

• Changing consumer and employee preferences. Citizens are becoming more conscious in their daily choices as consumers, investors, and employees, increasingly preferring to buy products with a lower environmental impact and work for companies with purposes beyond shareholder value creation. A recent survey by the IBM Institute for Business Value (IBV) demonstrated that 71% of employees and employment seekers find environmentally sustainable companies more attractive, and 50% are willing to accept a lower salary for more meaningful jobs. Academically, students are also choosing business programs that integrate climate change considerations, eager to redirect their careers towards roles with a positive impact.

Climate change education journey at HEC Paris

Recognizing these trends, in 2022, HEC Paris launched the five-week long Climate & Business Certificate program, which received the HEC Foundation Award for Teaching Innovation in the following year. Through a holistic approach, participants are familiarized with the big picture of the problem from scientific, economic, and political perspectives before moving on to finding practical solutions and financial resources to implement them. The program also includes hands-on experience with real business cases led by representatives of partner companies. The journey culminates in the HEC Climate Day, a flagship conference gathering prominent speakers from businesses, governments, and civil society. The program content is tailored to engage a diverse range of backgrounds, aiming to transform students into agents of change across their careers and communities. The creation of the Climate & Business Certificate together with the launch of the Climate & Earth Center is part of a broader effort to mainstream sustainability into the curriculum of the school, spearheaded by the Sustainability & Organisations Institute.

Photo: Logo of the Sustainability and Organizations Institute at HEC Paris

The importance of collective action

Collaboration initiatives play a vital role in amplifying the impact of climate change education. By pooling resources, expertise, and networks, institutions can create more comprehensive and effective programs. Recognizing the potential impact of academia, in 2021, eight leading European business schools, including HEC Paris, joined forces to launch Business Schools for Climate Leadership (BS4CL). BS4CL’s mission is to generate, disseminate, and amplify evidence-based research, actionable insights, and thought leadership for corporate executives, students, educators, and policymakers at the forefront of driving the climate transition.

It is important to recognize that businesses alone cannot drive the transition to a sustainable future. While companies play a critical role in innovation and implementation, the broader systemic change required to address the climate crisis demands smart and comprehensive policies from governments and international bodies. Effective policies create the framework within which businesses can operate sustainably, providing incentives, setting standards, and ensuring accountability. Conversely, without the active participation and commitment of businesses, policy efforts alone will fall short. Businesses are the engines of economic activity and possess the resources and ingenuity needed to develop and scale solutions. A synergistic approach, where policies and business initiatives reinforce each other, is thus essential for achieving meaningful progress.

Embracing the responsibility of business education

To truly address the challenges posed by climate change, we need a collective effort from all sectors of society, and education is the foundation of this effort. Sustainability education should not be seen as a dichotomy or a trade-off with business education. It is integral to it. Business schools must integrate climate change into their curricula to stay relevant and effective. They have a unique responsibility and opportunity to mold the leaders who will navigate this transition. By embedding climate change into their curricula, business schools can ensure that future leaders are not only aware of the challenges but are also equipped with the skills and mindset to drive sustainable innovation and transformation.

Now is the time for business schools to act. Faculty, administrators, and students must advocate for and embrace curricula that prepare future leaders to tackle climate change head-on. The stakes are high, but the potential for positive impact is even higher. The future is unwritten and – as Antoine de Saint-Exupéry said – “your task is not to foresee it, but to enable it.”

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