Stern School of Business. MBA Spring, 2018 BSPA-GB.2305.20 Sustainability for Competitive Advantage Times: 2/5-5/7/2018 10:30am-11:50am Location: TBD Office Hours: Faculty: Professor Tensie Whelan ([email protected]) Director: Stern Center for Sustainable Business By appointment Teaching Assistant: Dara Kagan, [email protected] This course is designed to assist students in developing the knowledge, skills, and perspective they need to understand and address environmental and social challenges in business, so that as leaders they reduce risk, create competitive advantage, and develop innovative services, products, and processes, all while building value for society and protecting the planet. Due to a rapidly changing global ecosystem, businesses in the future will face fewer resources, greater demands for transparency, less available water, and a warmer climate. At the risk management level, leaders need to understand how these changing factors can impact their businesses, much as they do for civil conflict, financial panics, and political upheavals. But as is often the case, new risks create new opportunities: the business leaders who can meet such risks through effective innovation and collaboration will find solutions to these sustainability challenges that meet the needs of society while delivering returns to shareholders. In this course, students will develop an effective leadership perspective through pursuit of the following learning objectives: 1) to become familiar with the key environmental and social issues effecting business today, 2) to understand the evolution of corporate response—from compliance to engagement to innovation, 3) to develop some of the skills required for leading in this new social and political environment (e.g. multi-stakeholder management), 4) to explore the efficiencies and innovations being developed by corporate leaders in pursuit of sustainability, 5) to explore innovations in finance (true cost accounting, net positive value, social impact bonds), and 6) to become familiar with the latest consumer insight research on sustainability. In short, this course is multi-disciplinary, and seeks to integrate across the functions of the firm to arrive at an effective firm-wide leadership sensibility. The format of the course is a combination of lecture and discussion seminar. Class sessions will span a variety of activities, including: guest lecturers from the business community, discussion, in-class writing, role-playing, and other participatory exercises. These various activities will be designed and facilitated by the instructor in order to allow students to engage in reflective dialogue with each other. This course has an experimental learning component. Students will work in teams with an outside organization on a sustainability management project for the duration of the semester. A series of projects will be identified with the organization, all pertaining to sustainability, and students will serve as consultants. The final deliverable will be a presentation to the company in the last weeks of class. Course cases and readings will be posted on NYU Classes, and students are expected to come to class ready to reflect upon their meaning with respect to the topics addressed in that class session. The course proceeds cumulatively so that all themes, cases and readings inform subsequent discussions. Grading: Class Participation: 30% Attendance in this course is mandatory. The policy on missed classes is as follows. The first two missed classes are excused, provided you submit notice for your absence for illness or otherwise. A third missed class will not be penalized if the student writes a short paper (2 pages, double-spaced, submitted to the course TA) summarizing and analyzing the missed readings. After 3 missed classes, the overall participation grade for the course will be affected. Group presentations: 30% Students will work in teams with an outside organization on a sustainability management project for the duration of the semester. A series of projects will be identified with the organization, all pertaining to sustainability, and students will serve as consultants. The final deliverable will be a presentation to the company in the last weeks of class. , Course Paper: 40% At the end of the term, students will submit a 12-page, double-spaced, paper in which they perform an in-depth competitive sustainability analysis of a specific firm of their choice. The topic of this paper must be approved in consultation with Professor Whelan. INTRODUCTION Note: the course will have regular guest speakers from business and civil society, to be identified in December and January. The NYU Bookstore will carry the following required books:  "Green Giants" - Williams, E. F. o ISBN: 9780814436134 PDFs of chapters from other books or readings will be in the Resources section of NYU Classes. Module 1 Learning Objective: To introduce the course themes February 5 Readings: How are businesses approaching sustainability today and why?  Chapter 1: “Business Reality Reshaped,” and Chapter 2: “To the Desert and back” Embedded Sustainability: The Next Big Competitive Advantage, Chris Lazlo and Nadya Zhexembayeva, 2011 o Located in NYU Classes: Resources February 7 Readings:  Chapter 3: A Higher Purpose” from Green Giants by Freya Williams, 2015 Speaker: Alessandro February 12 Reading  Total Societal Impact: A New Lens for Strategy. Boston Consulting Group, 2017. https://www.bcg.com/Images/BCG-Total-Societal-Impact-Oct-2017-R_tcm9- 174019.pdf Readings: To look at the dark side: what causes companies to pursue the unsustainable path?  Joseph L Bower and Lynn S Paine. “The Error at the Heart of Corporate Leadership, HBR, May 2017 https://hbr.org/2017/05/managing-for-the-long- term#the-error-at-the-heart-of-corporate-leadership  How the Twinkie Made The Superrich Even Richer http://www.nytimes.com/2016/12/10/business/dealbook/how-the-twinkie- made-the-super-rich-even- richer.html?mtrref=query.nytimes.com&gwh=41FFC20EF4D5A4D30BFA0AEA0E8 F01E0&gwt=pay  Route to Air Travel Discomfort Starts on Wall Street: https://www.nytimes.com/2017/05/28/business/corporate-profit-margins- airlines.html?mcubz=0  “The Extraordinary Science of Addiction to Junk Food,” o Located in NYU Resources Module 2 Learning Objective: to provide an overview of the key environmental and social issues effecting business today February 14 Readings:  http://riskybusiness.org/site/assets/uploads/2015/09/RiskyBusiness_Report_WEB _09_08_14.pdf Pgs 1-23, 49-53  UN Sustainable Development Goals – click on each goal to read the background behind it. We will discuss each one as this provides a good road map for the sustainability issues confronting business and society. o http://www.un.org/sustainabledevelopment/sustainable-development- goals/  “The State of Sustainable Business 2017” Globescan and BSR, July 2017 o https://www.bsr.org/reports/2017_BSR_Sustainable-Business-Survey.pdf Module 3 Learning Objective: How to Map Material Sustainability Issues and Stakeholders In these two classes we will build materiality matrices and map stakeholders for sample companies. February 21 Readings:  Profits with a Purpose: o http://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Sus tainability%20and%20Resource%20Productivity/Our%20Insights/Profits %20with%20purpose/Profits%20with%20Purpose.ashx  Sustainability Materiality Matrices Explained o Located in NYU Classes: Resources February 26 (no readings due) Meet with sustainable fashion designers regarding potential team projects. Teams are formed. February 28 Readings:  Stakeholder Engagement Mapping https://www.bsr.org/reports/BSR_Stakeholder_Engagement_Stakeholder_Mappin g.final.pdf  CSB: Nespresso Stakeholder Case study: http://www.stern.nyu.edu/sites/default/files/assets/documents/Nespresso_Shared %20Value%20Case%20Study%208.29.16.pdf Module 4 Learning Objective: Learning Additional Sustainability Management Tools In these three classes we will study emerging business tools such as systems thinking, life-cycle analysis, standards, reporting and certification, and ecosystem services analysis. March 5 Reading:  CEO Guide to the Circular Economy o Located in NYU Classes: Resources  https://www.fastcompany.com/40425022/if-these-giant-companies-can-switch-to- the-circular-economy-so-can-anyone  CSB: Business Tools for Managing Water Resources and Risk: o http://www.stern.nyu.edu/sites/default/files/assets/documents/Water%20R eport%206.21.pdf Speaker: Kevin Eckerle, CSB Senior Scholar, formerly in sustainability at Accenture (confirmed) March 7 Reading:  The Business Benefits of Using Sustainability Standards o Located in NYU Classes: Resources  “The Corporate Ecosystem Review: Guidelines for Identifying Business Risks and Opportunities Arising for Ecosystem Change” World Business Council on Sustainable Development, Meridian Institute, World Resources Institute, 2012. o Download here:  http://wbcsdservers.org/wbcsdpublications/cd_files/datas/business- solutions/ecosystems_solutions/pdf/ESR- GuidelinesForIdentifyingBusinessRisks_update.pdf March 19 Readings: Systems Thinking (and Supply Chain Partners)  “Dancing with Systems,” Donella Meadows o http://donellameadows.org/archives/dancing-with-systems/  FabIndia, HBS case. o In NYU Classes: Resources  The Strategy of Sustainability: A Systems Perspective on Environmental Initiatives (optional) o In NYU Classes: Resources Module 6 Learning Objective: Understanding Sustainable Supply chains/procurement March 21 Readings:  Greening Supply Chains: From Blind Spots to Hot Spots to Action o Located in NYU Classes: Resources Speaker: Rachel March 26  “Kashi: Growing the Supply Chain for Organic Food,” Center for Sustainable Business Case Study 2017 o Located in NYU Classes: Resources Module 8 Learning Objective: how sustainable management is being used to fuel innovation March 28 Readings  Chapter 2: “Disruptive Innovation” from Green Giants by Freya Williams, 2015  CSB Case Study on Sustainability and Innovation in Nike: o http://www.stern.nyu.edu/sites/default/files/assets/documents/Sustainabilit y%20and%20Innovation_NIKE.pdf  Chapter 5: “Embedded Sustainability,” Embedded Sustainability: The Next Big Competitive Advantage, Chris Lazlo and Nadya Zhexembayeva, 2011 o Located in NYU Classes: Resources  Wanted: Fresh Solutions for Age-Old Problems o Located in NYU Classes: Resources April 2 Corporate showcase on innovation ( Julia Cohen, Bowery Farming, Jake Berlin, Rethink, Micah Kotch, Urban-X) Module 9 Learning Objective: Engaging today’s consumers in sustainability April 4 Readings:  Chapter 5: “Mainstream Appeal” from Green Giants by Freya Williams, 2015  “The Cost of Silence: Why more CEOs are speaking out in the Trump era” o https://www.washingtonpost.com/news/on-leadership/wp/2017/02/17/the- cost-of-silence-why-more-ceos-are-speaking-out-in-the-trump- era/?utm_term=.ad7b2e454b44  Edelman Earned Brand 2017 o https://www.slideshare.net/EdelmanInsights/2017-edelman-earned-brand  “Rethinking Consumption: Consumers and the Future of Sustainability” Globescan BBMG 2012 o https://globescan.com/wp- content/uploads/2017/07/Rethinking_Consumption_Consumers_and_th e_Future_of_Sustainability_The_Regeneration_Roadmap.pdf Speaker: Freya Williams Module 10 Learning Objective: To explore Sustainability and Employees April 9 Readings:  Tim Ryan’s Awakening o http://fortune.com/pwc-diversity-tim-ryan/  State Street’s gender Show o http://fortune.com/2017/05/23/state-street-women-gender-diversity- finance/  CSB Case Study “West Elm: Bringing Purpose to its Corporate Ecosystem Through Human Resource Practices” o Located in NYU Resources Speaker: Jennifer Gootman Module 11 Learning Objective: To Begin to Develop the Business Case for Sustainability In this class we will look at the drivers of financial performance resulting from sustainability initiatives and examine how to monetize them. April 11 Reading:  Watch Video First: https://hbr.org/video/5415413929001/whiteboard-session- the-business-case-for-sustainability  “The Comprehensive Business Case for Sustainability,” HBR, Tensie Whelan and Carly Fink o Located in NYU Classes: Resources  “How to Quantify Sustainability’s Impact on the Bottomline,” HBR, Tensie Whelan, Bruno Zappa, Rodrigo Zeidan and Greg Fishbein o Located in NYU Classes: Resources Module 12 Learning Objective: To understand ESG (environment, social and governance) investing April 16 Readings  “From the Stockholder to the Stakeholder: How Sustainability Can Drive Financial Outperformance,” University of Oxford and Arabesque partners, March 2015 o http://www.corporate- engagement.com/files/publication/20140915_FROM_THE_STOCKHOL DER_TO_THE_STAKEHOLDER.pdf  Schroders Global Investor Study: Global Perspectives on Sustainable Investing 2017 http://www.schroders.com/en/sysglobalassets/digital/insights/2017/pdf/global- investor-study-2017/schroders_report_sustainable-investing_final.pdf  CSB: Parnassus Case Study o Located in NYU Classes: Resources Speaker: Brace Young, Arabesque (confirmed) Module 13 Learning Objective: To explore innovations in financing aimed at mainstreaming sustainable solutions and investments April 18 Readings:  Manning, T. CSB. “Green Bonds” May 2016. o http://www.stern.nyu.edu/sites/default/files/assets/documents/Green%20B onds-%20May%202016.pdf  Manning, T. CSB “Financing Mechanisms to Support Sustainable Practices,” September 2016. o http://www.stern.nyu.edu/sites/default/files/assets/documents/Sustainable %20Finance%20Survey_NYU%20CSB_Final_9.20.2016.pdf  Investing with Purpose o Located in NYU Classes: Resources Bertrand Badré April 23 Readings  CSB Case Study: “Citigroup, inc.: Innovation in Energy Efficiency Financing” by Tom Manning o Located in NYU Classes: Resources  “The Conservative Case for a Carbon Tax” with Jerry Taylor o http://www.huffingtonpost.com/mark-tercek/the-conservative-case-for-a- carbon-tax_b_7214984.html  Defying Trump, these state leaders are trying to impose their own carbon taxes o https://www.washingtonpost.com/news/energy- environment/wp/2017/05/12/defying-trump-these-state-leaders-are-trying- to-impose-their-own-carbon-taxes/?utm_term=.ee9b037056ab  Financial firms lead shareholder rebellion against ExxonMobil climate change policies o https://www.washingtonpost.com/news/energy- environment/wp/2017/05/31/exxonmobil-is-trying-to-fend-off-a- shareholder-rebellion-over-climate-change/?utm_term=.8ac63b662c74 Speaker: Val or Davida Module 14: Learning Objective: To look at how Companies Can Pursue a Net Positive Future April 25 Readings:  Net Positive: the Future of Sustainable Business o https://ssir.org/articles/entry/net_positive_the_future_of_sustainable_busin ess  Change the World o Located in NYU Classes: Resources  Chapter 8. “A Business Plan for America,” The New Grand Strategy: Restoring America's Prosperity, Security, and Sustainability in the 21st Century, by Joel Makower, Mark Mykleby, and Patrick Doherty o Located in NYU Classes: Resources Module 15: Learning Objective: To conclude the course with presentations by the student groups to the companies April 30 and May 2 Reading:  The student plans and presentations May 7 Career panel. Discussion with Stern alums who have found work in the sustainability space. Final course wrap-up and feedback. PAPER DUE MAY 7 Students will complete one 10-12 page paper typed in 12-point font and double spaced with 1” margins. The topic of the paper will be written from the perspective of a management consultant performing an in-depth competitive sustainability analysis of a specific firm. The paper will require the use of various tools studied during the course, e.g. an ESG materiality matrix, stakeholder mapping, financial case analysis, etc. The topic of this paper must be approved in consultation with Professor Whelan. All students are required to turn their papers in using the Assignments tab in NYU Classes. Integrated in NYU Classes is an online plagiarism prevention and detection software – Turnitin – that enables faculty to compare the content of submitted assignments to data on the Internet, commercial databases, and previous papers submitted to the system. Additional information about expectations regarding academic integrity appears below Class Discussion Faculty as well as students are responsible for maintaining a positive and constructive professional atmosphere within the classroom. Each student must engage in discussion during every class session in order to perform well in the course. Class discussion will be assessed using the following rubric: Grade Criteria An excellent student comes to class prepared; contributes readily to the conversation but does not dominate it; makes thoughtful contributions that Excellent advance the conversation; shows interest in and respect for others’ views; participates actively in small groups.