Smarter urban planning, making ethics part of all curricula and corporate-government relations

Sustainable cities

The world’s cities are expanding. Today’s urban population of 3.6 billion is expected to hit six billion by 2050. Providing basic services will be critical if city life is to remain liveable. Businesses need functioning cities if they are to operate efficiently and grow. No one wants urban basket cases ‒  but that’s the way things are going in many parts of the world.

Governments lack the will, money and managerial skill to provide the smart sustainable solutions necessary. All eyes are turning to the private sector, which has the technology (or the innovative capacity to develop it) that’s required.

This fascinating paper draws attention to some of the most exciting company-led responses currently unfolding around the world, with particular focus on the fields of electricity, water and transportation. The most convincing examples are the business opportunities around resource efficiency.

Take demand-response contracting. All urban electricity providers struggle with demand spikes when heat waves hit. Building additional generating capacity just to cover these infrequent events is prohibitively expensive. Instead, intermediaries such as Boston-based EnerNOC are cutting deals with high-energy users to reduce their consumption at critical moments. The participants receive regular “commitment payments” and the utility avoids the need for expensive investment, while consumers are spared power blackouts.

The paper also highlights the need for innovative “financial engineering”. Urban infrastructure doesn’t come cheap and is often risky (the cities that need such infrastructure most are often the most politically unstable and economically stretched). So municipal authorities are experimenting with innovative financing options, ranging from long-term senior bonds through to exchanging land for equity in the project promoter. Such approaches attract capital by offering different levels of risk and return as well as different cash flow priorities.

A final consideration for companies looking to offer services in the sustainable city space is which markets to choose. The biggest returns derive from the bigger, more chaotic cities where demand is highest and competition often lowest. To succeed in such “unsettled markets”, however, companies need specific capabilities. These include coordination skills, political savvy and strong vendor and customer relationships.

Macomber, J (July-Aug 2013), “Building Sustainable Cities”, Harvard Business Review, pp40-50.

Integral ethics education

The frequency of corporate scandals suggests that the message of ethics courses in management education is not getting through. Northern Illinois University’s college of business sought to set this straight with a teaching programme that integrates ethical issues throughout the curriculum.

Launched in 2006, the innovative approach educates students in four major ethical frameworks (utilitarianism, universalism, the theory of rights, and social precepts). It then encourages them to map these against their own values and challenges them, with the help of a practical application guide, to think through their responses to different ethical scenarios.

Where the aptly named Belief programme becomes very interesting for educators is in its attempts at impact measurement. It has two stated learning objectives: (1) increase students’ awareness of ethical issues, and (2) strengthen their decision-making ability when such issues arise. On both counts the students’ performance improved, with more than 99% recognising relevant ethical issues (up from around 83% before the course) and 92% making the correct decisions (up from 75% previously).

The authors identify three keys to success: integrating ethics teaching across all discipline areas, combining ethics education with active learning, and participation by professionals to create classroom materials (business participants provided data and funding for the programme). It’s a teaching example other management educators could learn from.

Dzuranin, A, Toppe Shortridge, R, & Smith, P (Summer 2013), “Building Ethical Leaders: A Way to Integrate and Assess Ethics Education”, Journal of Business Ethics, 115: 101–114.

Corporate responsibility: historical rejigging

Governments are dead. An over-statement, for sure, but it’s a conclusion one could legitimately draw from the corporate responsibility literature. For most theorists, corporate responsibility fills the governance gap when the state is either absent, under-resourced or inept. This challenging paper reminds readers that contemporary concepts of the state as regulator, standard setter, protector and adjudicator were preceded by its function as enforcer ‒ stamping down on labour movements ‒ and financier ‒ investing in research, innovation and other building blocks of the “corporate economy”.

This paper seeks to put these roles in context and interrogate the “implicit model” of corporate-government relations: the private sector pays taxes and lobbies on policy issues, while the state sets standards, protects property laws and provides public goods for business activities.

Particular attention is given to the US and its strong tradition of voluntarist corporate responsibility, with the author calling for a “more realistic” approach. Should government be subsidising certain kinds of research as a public good, for example? Or, if a company receives tax breaks, what should its social obligations be? Ultimately, corporate social responsibility implies a political relationship, the paper concludes. Greater clarity on the responsibilities of both business and government is required, therefore.

Marens, R (Summer 2013), “Calling in a Debt: government’s role in creating the capacity for explicit corporate social responsibility”, 118 (2): 143–169.

Campus news

Boston College is offering a two-day course – Gaining Executive Buy-in For Corporate Citizenship – on September 17-18 2013. This will be followed by a week-long Corporate Citizenship Management Intensive beginning on 30 September.

Aarhus University in Holland is to host the second International CR Communications Conference on September 18-20 2013.

Academic news  Business School Bulletin  Oliver Balch 

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