Mark Cohen has seen the interest in sustainability and climate change initiatives among business leaders grow in the past few decades. In 1993, Cohen, a professor at Vanderbilt Owen Graduate School of Management, worked as part of a small group around the country that started to teach professionals about sustainability. At the time, 15 to 20 students attended his classes.
Compare that to 2022, when about 50% of all students in the Vanderbilt Master of Business Administration (MBA) program took Cohen’s courses about sustainability and corporate strategies for environmental, social, and governance issues (ESG).
Cohen said learning about ESG allows leaders to better prepare for a future where sustainability is central to everything a business does.
“Understanding that big picture allows you to say, ‘Well, what does that mean for my business unit and my business position?’ What you are going to find is that sustainability permeates the entire organization,” Cohen said. “So, everybody needs to understand enough about it that they can figure out what their role is from their line up to the corporate level.”
Faculty Expertise
Cohen is the Justin Potter Professor of American Competitive Enterprise, Emeritus, and Professor Emeritus of Management at Vanderbilt University Owen Graduate School of Management. He focused on climate change and environmental sustainability issues. He has taught at Vanderbilt since 1986.
He is considered a leading expert on environmental regulation and disclosure policies, as well as corporate crime and punishment. During his long career in academia and the private and public sectors, Cohen has published more than 100 articles and books. Topics include the impact of community right-to-know laws on firm behavior, a cost-benefit analysis of oil spill regulation and enforcement, whether it “pays” to implement green business practices, and the judicial sentencing of individuals and firms convicted of corporate crimes.
He also has served in positions with the federal government and as a consultant with major corporations.
He teaches on a variety of topics, including Corporate Strategies for ESG, Financial Analysis of ESG Data, The Future of Energy Markets in a Low Carbon Economy, Law and Business of Climate Change, and Doing Business in Israel.
He also will be teaching in the new, online Global Certificate in Corporate Sustainability program, a 10-week program offered in partnership between Vanderbilt Owen Graduate School of Management and UBC Sauder School of Business.
What is Sustainability?
Sustainability refers to the practice of meeting present needs without compromising the ability of future generations to meet their needs. It involves the balance of economic, environmental, and social considerations to ensure long-term viability and well-being.
Cohen said environmental sustainability came to the forefront in the 1980s and early 1990s because of catastrophic incidents, including the Exxon Valdez oil spill in Alaska in 1989. As a result, people put more pressure on companies to become transparent about their “green business” efforts, leading to the start of sustainability reports.
Modern businesses typically consider sustainability as part of ESG. Environmental sustainability emphasizes the responsible use and protection of natural resources and ecosystems. It involves practices that minimize negative impacts on the environment, such as reducing greenhouse gas emissions, conserving water and energy, protecting biodiversity, promoting renewable energy sources, and adopting environmentally friendly technologies and practices.
Social sustainability focuses on fostering equitable and inclusive societies that promote well-being, social justice, and quality of life for all individuals. Governance involves transparency in operations, as well as promoting business leaders (including boards of directors) who best reflect the diverse consumer base that a business tries to serve.
Common Aspects of Sustainability Programs
Sustainability is now a strategic issue for companies, which is a big change from the past. For example, Cohen pointed out that some companies have instituted bonus structures that take sustainability into account. This is accomplished by using sustainability metrics corporate-wide and having them account for a percentage of annual bonus performance.
“I had a student presentation by MBAs who are looking at a company that does very innovative things. And what they did was say, ‘Look, we have an annual bonus structure and we’re going to start to put sustainability metrics division wide and corporate wide and it’s going to be worth 30% of your annual performance bonus,’” Cohen said.
Sustainability efforts involve the entire lifecycle of a product. This includes issues such as where a company sources its materials and if the product is recycled. ESG are now issues considered by companies when choosing suppliers and other business partners along the value chain.
Companies look at suppliers’ sustainability in part because of the risk involved. If some type of environmental damage occurs because of a product, it is typically the larger company, not the supplier, that takes the blame. This has led companies to become more careful about who they select as suppliers and partners.
Sustainability also is important for investors, who increasingly consider ESG when making decisions about where to allocate capital, and employees, who want to work for companies that focus on sustainability.
“I see it with my MBA students. They care about who they work for… When you have a choice of jobs, at the margin, we’re seeing more and more pressure coming from employees, not just from external stakeholders,” Cohen said.
The Focus on Sustainability
Many are surprised to learn that some of the companies that focus most on sustainability are those in oil and gas, heavy manufacturing, and automakers. Cohen said these industries became early adopters of sustainable practices because they were hit the most by concerns from nonprofits and environmental groups.
Industries considered latecomers to sustainability did not face the same pressures. Cohen cited healthcare, which did not emerge as a sustainability leader because the industry did not face pressure from investors, consumers, or their supply chains.
“They haven’t had stakeholder pressures to worry about sustainability. That’s changing a lot, but they are latecomers,” Cohen said. “Sustainability is not really core to their business. It’s making people better, healthier, and fixing problems.”
Corporate Sustainability Program Outcomes
With the new online Global Certificate in Corporate Sustainability, professionals benefit from a series of ambitious student outcomes.
Outcomes include learning what sustainability means at a corporate level, as well as the drivers behind the movement. Individual employees learn how it impacts their job, specifically in areas such as marketing, operations, supply chain, and manufacturing. Students also learn about aligning incentives of organizations with sustainability.
Cohen also said corporate mid-level managers can benefit from the program, which allows them to consider how sustainability relates to their corporate strategy. Some may still think that sustainability is an issue for engineers or environmentalists. The Global Certificate in Corporate Sustainability program will teach students that in the modern world, sustainability requires incorporation into overall business strategy.
Once professionals start to consider how sustainability interacts with traditional business such as marketing, strategy, competitiveness, consumer demographics, and costs, they increase their chances of a more profitable and sustainable future.
“One of the things I hope [students] get out of this is a sense of community. In the sense that, once [they complete] this program, [they] will be able to speak across different divisions of the organization, understanding what sustainability means for the organization as a whole and how each piece fits together. Having that common language is really valuable,” Cohen added.