In this episode of Business Casual, our host John and his co-host Caroline, along with their guest David Marchick, the Dean of the Kogod School of Business, will discuss an interesting topic about sustainability from the perspectives of the corporate and academic industries, respectively.
The discussion will rotate on why companies are seeking out graduates with a strong understanding of sustainability issues and a commitment to social responsibility and why, naturally, this has led to an increasing demand for graduates with sustainability expertise, which results in many business schools responding by offering specialized sustainability programs and certifications.
[00:00:07.130] – John
Well, hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual. Our weekly podcast. We have a special guest today, the dean of American University’s Business School, David Marchick, who is head of Kogod School of Business. David actually joined the school as dean in August of 2022, so he’s a newbie. He spent quite a few years at the Carlisle Group in a senior position and has also assisted in two presidential administrations the Biden administration more recently, and the Clinton administration way back when. And of course, we have my co host Caroline Diarte Edwards, who is the former head of Admissions at INSEAD and the co founder of Fortuna Admissions. We want to talk about sustainability. This has become a very hot topic in graduate management education. There are a number of schools that are doing things in this area. And David just returned from a recent AACSB meeting where societal impact and sustainability were the key issues discussed. So, David, I want to start with you and let’s go to the basic stuff. Now, some of this may be obvious, but it may not be obvious to everyone. Why is sustainability so hot?
[00:01:30.810] – David
First of all, thanks for having me. It’s great to hear your voice on a podcast because I’ve listened to about 50 of your podcasts. That’s someone that didn’t come from academia. When I was approached for this role, I listened to everything basically as a study guide. So thank you very much for what you do, and I’ve become kind of an addict to your podcast. So thanks very much.
[00:01:50.320] – John
[00:01:51.040] – David
It’s interesting. I’ll just give you a little history. I started the sustainability program at Carlisle in 2008. 2009, I would say a bunch of I rolls and yawns. A lot of folks said, what are you doing? Why are you doing this? And we hired one person who was the first Chief Sustainability officer in the industry, and we put out our first sustainability report in 2009. Since then, this sector of the economy has kind of exploded. The Ft actually ran an article yesterday that said that business leaders cannot hire enough people in sustainability. There’s just not enough qualified graduates. And so I’ve been engaged in the sustainability movement for many years. And when I got to Kogod, I realized that we had a great program that was on the cusp of being even greater. So basically, companies are taking a much more holistic approach to their role in society, both the impact of their company on the environment and the impact of the environment on their companies. The issue of supply chain is a huge issue, both not only in terms of diversification, but also human rights in the supply chain. The issue of race, class, and gender and their products diversity are part of sustainability. And so companies are increasingly investing in this space. Their shareholders are demanding it, their employees are demanding it, and it’s going to become a much larger part of the ecosystem in businesses going forward. So that’s why it’s important.
[00:03:26.850] – John
Do you think business schools have lagged in adopting more coursework and embedding in the current world sustainability issues? Have they lagged business?
[00:03:39.690] – David
I think yes. I think academia moves slowly, as you and Caroline know. My sense is that the industry and investors are way ahead of academia, and academia is running hard to catch up. At Kogod, actually, we’ve had a sustainability program for ten years, so it’s part of the DNA of American University. We were the first carbon neutral campus in the country, and so I think we were a little ahead of the game. But I know that based on the discussions with Deans last week, this is a hot topic, and Deans and business schools all across the world are focused on catching up, and there’s student demand for it, and there’s employer demand for it. So business schools, like any other organization, respond to demand signals. Then there’s demand.
[00:04:27.510] – John
A lot of the demand is coming from the younger students because they are deeply concerned about climate change and the fact that governments don’t seem to be doing enough. So maybe the leverage point is, in fact, the corporation, which could actually take more progressive and faster leads than the government agencies have been willing to pursue. Do you agree?
[00:04:55.870] – David
I think that progress in the government level has been slow up until about two years ago, I think, obviously the United States President Biden and the Congress passed a landmark law investing in climate this year. Europeans have done the same. The SEC and European regulatory authorities are now pushing to require companies to disclose their carbon footprint. And so companies and auditors are investing and stepping up their game. I do think that and one of the themes at American is that business can be a force to create a more sustainable world. And I know that different types of businesses approach it differently. A consumer facing company approaches it from a customer perspective. Their customers are demanding greener products. Walmart, for example, gives out shelf space to greener products. And so consumer products companies are adjusting. In the technology world, it’s an important issue, but the most important issue is that employees are demanding young people demand to be working in a place, and they’re much more likely to go to a place that has strong commitments to environment, to social justice, to the values that young people are embracing. I see that with my own kids. I have a 21 year old and an 18 year old, and it’s very important to them, and I see it with students both at Kogod and also I taught for several years at the Tuck School of Business, and there was a big theme up there as well.
[00:06:25.130] – John
Caroline, I’m sure you’ve noticed a greater interest in this topic among your applicants, right?
[00:06:30.590] – Caroline
Yes, absolutely. I went to business school 20 years ago now, and it was sustainability and environmental concerns came up, but it was more peripheral and it wasn’t really sort of a core element of my business education. And actually, I remember a year or so after I graduated from business school, my husband was offered a job as head of sustainability at a big multinational and he turned it down because he said it’s not something that they particularly care about, right. So I would not be a key decision maker in the business. So that has changed so much, as you say, that’s become something now a function that is really critical and strategic for businesses. And actually, now he’s an investor in climate tech, so he’s got back into that. But yes, I mean, I’ve seen having been reviewing applications at INSEAD starting in 2005 and then Fortuna over the last ten years, 18 years ago, when I first started reviewing applications, it wasn’t something that came up that frequently, right? Sometimes candidates had a particular interest, perhaps they were working in the field or they had an interest through their extra curriculars in environmental concerns, sustainability and so on.
[00:07:49.990] – Caroline
But it was not something that came up that frequently. And now it’s absolutely core for the latest generation. I think it’s not easy for business schools to keep up with that, right? Because as you said, David, business schools are not the fastest to embrace change and it’s not easy. And often faculty are quite entrenched in the way that they do things and the things they teach. So I’m curious, what are your thoughts about how business schools are adapting? Because I’ve seen how difficult it can be to drive change in an institution where faculty have their own domains and their own ways of doing things and aren’t necessarily keen on changing. So how do you think the business schools are responding to that? And what can they do to respond more to the demand from the younger generation?
[00:08:52.330] – David
By the way, the experience of your husband is very consistent with my own private sector experience. I mentioned that I started the program in 2008, 2009, to Yawns, and now Carlisle has it in its DNA and they have 15 to 20 people. And every single investment that Carlisle makes has an ESG lens on it, every single one. And part of that was because we had investments where all of a sudden a factory was underwater because of a flood somewhere due to climate change. So I think it’s very mixed among business schools. There are some schools, I’ll give you an example, berkeley, Anne Harris and the dean there. We’ve spoken. I think they’re doing great work in this space. She was just reappointed in her announcement. She said, One of my top priorities is driving sustainability through our curriculum. I’ve been really pleasantly surprised and at the embracement of this at the Kogod school. So every single department at Kogod now has incorporated sustainability into both teaching and research. So we have five departments the traditional departments accounting, It Management, Marketing, Finance all of them have embraced it and they all are driving sustainability both in their teaching they develop courses and in their research. So I’ve been very pleasantly surprised and maybe that’s because we have a great program both at the graduate and undergraduate level and we have growing demand and so we respond to demand signals. Some schools are still scratching their head. At the AACSB conference there was discussion among some schools of what’s sustainability? What does that mean? So I think the trend is in the right direction and there’s mixed adoption.
[00:10:34.990] – John
Yeah. And I think, David, you’ve also hired faculty in who are experts in this subject or who have a passion or interest in it. So on one level that’s another solution. If you have entrenched faculty who don’t really want to move you can always bring in newbies who have seen the light, I guess. How do you teach sustainability management? So you have an Ms in this topic and I know that as a new dean a key part of your strategy is to make your school a center for sustainability. But how do you actually teach it?
[00:11:16.670] – John
So great question. We’ve incorporated into each of our departments. So basically we have students that, for example come to us and they’re experts in environmental issues and they need to learn business or they’re experts in business and they need to learn environmental. So we have a core curriculum which includes five courses social Sustainability, Managing for Climate Change a marketing class about marketing with sustainable outcomes. And then we have lots and lots. We have over 40 classes that we offer for electives which include sustainable investing. Our board of directors, just to show you the commitment at American University has allocated 1% of the endowment for students at the cognitive school to recommend funds to invest their sustainable funds. And so our students go through, they hear pitches and they do a recommendation to the investment committee of the board as part of that class. Supply chain is a very, very hot topic in sustainability. You look at what Apple is dealing with in terms of supply chain in China but also focus on green supply chains, efficient supply chains. And also companies have had real problems with human rights problems in their supply chains. Entrepreneurship is a big area of focus in sustainability.
[00:12:35.810] – David
This is one of the fastest growing areas for venture capital. Venture capital fundraising doubled last year for sustainable funds to 64 billion. That’s a lot of money in venture capital that needs to be allocated. And then we have courses that we offer with other parts of American University the Law School on sustainable reporting and disclosure. One of our actually grizzled old veteran accounting professors, a wonderful guy, he’s like a kid in a candy store. He’s teaching a new course this semester called Sustainable Reporting and Outcomes and it’s all about measuring sustainability. How do you measure environmental outcomes. How do you measure social outcomes? And we have some wonderful guest lectures in the class from Ernst and Young and PwC and a lot of the big firms and financial firms as well. So it’s a broad based curriculum, and we’re developing new courses every semester.
[00:13:32.050] – John
And that’s crucial. I mean, Peter Drucker once said, what gets measured gets managed, and what doesn’t get measured managed. And it’s really so true. Now you have an Ms and sustainability management. I hear that it’s quite popular, that in fact, you have had a 100% increase in applications. Is that right?
[00:13:54.320] – David
That’s right. I’ve listened to many, many of your podcasts about challenges in graduate enrollment and the MBA programs in particular. And sometimes I need to get a tissue listening to you and Caroline. But in our sustainability program, the demand is extraordinary year over year. At this point, we’re 100% up in applications. We’re not going to take we’re not going to grow our class, obviously, so we’ll be much more selective. We’ll grow some, but we’re not going to grow 100%. And the quality of students is just extraordinary. It’s much more domestic, which is interesting. So our MBA program and other parts of our graduate programs very much reflect the trends that you talk about all the time. Heavily international, declining domestic students in this program, it’s 70 30 domestic, and the domestic student quality is just extraordinary. It’s interesting. I became really excited about this, in part because I had a conversation early on with a bunch of students where it went like this I’m a new dean. How’s it going? Why did you come here? And the students said, well, it’s the best sustainability program in the country. And I kind of said, okay, right, I got it.
[00:15:05.990] – David
Where else did you apply? And they said, Duke, Columbia, Northwestern, et cetera. And I said, I didn’t get into some of those schools either. They said, we got into all those schools. We wanted to come here. And so I thought, we have something here that is special. And I’ve approached my new role like a business, which is basically doing assessment of our strengths, and we’re going to invest in our strengths, and this is one of them. So actually, let me just add one thing. You mentioned new faculty. This year. We’ve hired two that started in the fall, two new faculty, one tenure track, one non tenure track who’s a sustainable entrepreneur. We just hired a new person from UNC, got his PhD in sustainable finance. He starts in the fall. We have one more position open for an industry executive. We have an executive and residents position open. We’re very close to hiring that person. And then we’re going to try to hire a very senior tenure track professor next year. So we will have hired, in a three year period, five new faculty members of sustainability and executive and residents. And so we’re we’re investing heavily.
[00:16:12.620] – John
I also think that, you know, given the public policy implications of sustainability that studying it in Washington DC is a really good idea.
[00:16:20.600] – David
100%. I mean, part of this is just intuition, which is I taught at Tuck. They are great at what they do and if you want to go to McKinsey Bain or BCG Tuck, it’s a great place. Wharton is going to be fantastic at Finance Stanford for an entrepreneurship coming to the nation’s capital. Being an American university with the strength of our policy school, our law school, our international school, it’s tied up into our DNA and there’s so much of a policy, public affairs, communications and regulatory posture to sustainability work. It’s basically an external facing function in businesses. It just makes intuitive sense that a school like American would be good at it and invest in it.
[00:17:12.250] – John
Now, what’s the case for doing a specialty degree like a Master’s in Sustainability Management as opposed to the MBA? Because I think of the MBA as sort of a Swiss knife but you can apply it in many different ways and if you go for a master’s in a specialty you pretty much better know that you want to be in that field and you want to be in that field for most of your career. Isn’t that true?
[00:17:38.370] – David
It is. The average work experience of our sustainability students is about six years. So they’re 28, 29. They know they want to do this. I’ll give you a couple of examples of student profiles that are interesting. So we have a fabulous student who works at a major transportation company. She is head of communications, sustainability communications for one of the largest transportation companies. You know, it I can’t say the name. She’s wanted to go into their operations part of the business, manage their green fuel, manage their supply chain, create more efficient operations. She has not been able to get in and the COO basically said if you get more of a business exposure, business background, I’ll hire you. So she’s getting a sustainability agreement with us. We have a wonderful student from India who worked for Ernst and Young. Ernst and Young, one of their fastest growing parts of their business is their sustainability advisory business. She wants to go back to Ernst and Young and work I think it’s called CCAs, the center for Climate and Sustainability at Ernest and Young. And then we have a young man who came up through the Forest Service. He’s a forestry expert and he wants to go into climate investing, carbon investing as the carbon markets develop. He wants to become an expert in that space. And so he felt that he needed the finance and the business fundamentals and understanding sustainable measurement in order to be effective in that space. So those are kind of a few student profiles and they’re coming to us from top schools in the United States and abroad. And the quality of students is just extraordinary.
[00:19:16.050] – John
Yeah, that’s amazing how much Broadway is there on this? In other words, I’ll ask the delicate question and one where the answer may be obvious, but still our listeners need to hear it. Is this a fad?
[00:19:31.030] – David
It’s a good question. We have discussed and debated that. We don’t think it’s a fad. If you asked me three or four years ago, I might have said it could be a fad. But I’m on the board of an asset manager where this is a big issue. And if you look at fund flows from investors in the last 18 months to two years, the fund flows have been extraordinary. So I guess what I’m saying is, like Caroline’s husband 510 years ago, I would say the rhetoric was ahead of the fundamentals of business, and now the business is ahead of the rhetoric. So I don’t think it’s a fad. I think that if you look, there’s, obviously political pushback in Florida and other states, but businesses are running hard, and we started a sustainability speaker series at Kogod. We have eight CEOs coming from entrepreneurs like Seth Goldman, who founded Honesty, to the CEO of Marriott, from small companies to big companies that are embracing I’ll just give you one example. Marriott’s CEO, they have eliminated all those great shampoo bottles that I’ve always stole from hotel rooms. I have a ton of them. Flashlights. Maybe you all have stolen, too. I’m seeing Caroline nod. They eliminated those. So I asked them. All right, so what’s the big deal? All right, John, you’re a smart guy. How many bottles do you think they don’t put in landfills a year by eliminating those and putting the pumps into showers? Okay, millions. Millions? Millions. Okay, Caroline, you have a guess.
[00:21:11.130] – Caroline
Yeah, I would say it’s in the millions as well. I don’t know. I will say 20 million.
[00:21:16.730] – David
Okay, 500 million a year.
[00:21:19.400] – Caroline
Oh, my God.
[00:21:20.280] – John
Oh, my God. Really?
[00:21:22.490] – David
Okay. So that’s good for the environment. It’s also good for Marriott’s, bottom line.
[00:21:28.170] – John
Yeah, but now I take the shampoo away.
[00:21:31.310] – David
I know. Actually, when I talked to them about this, I told my wife, I said, Where are all those shampoo bottles we stole? And they said, they’re upstairs next to the flashlight. So I went up and took a picture of them and sent them to the Marriott people. I said, Sorry I took all these from you.
[00:21:48.850] – Caroline
At least they did end up in landfill.
[00:21:52.470] – John
One element of your program, incidentally, and is very common in many graduate management education programs today, is experiential learning. Can you comment on what kind of projects your students are doing in the Ms and sustainability management?
[00:22:07.920] – David
Okay, so we have a great experiential learning component to this. Not only internships in Washington, DC, which is one of the reasons that people come to Washington, DC. But we also have a program abroad. For the last number of years, we’ve taken all the students to Scandinavia, Denmark, Sweden, et cetera, and we work with businesses to work on real problems. So sustainable fashion, making products from more sustainable inputs, sustainable packaging, and making packaging much more efficient. Actually, I have a great story from Carlisle days. We owned a shampoo company and we wanted to make it a green company. And part of it was getting more shelf space at Walmart. And so we reduced packaging waste, we improved the ingredients, we improved disclosure, and the company doubled in sales and sold to Johnson Johnson because it got a lot of green shelf space at Walmart. So obviously, offshore wind has been a big area. Electric vehicles. Europe, as Caroline know, just passed regulation that said no more gas fired vehicles in 2035. Real estate is a big issue. Companies and multifamily property investors are trying to figure out how do we put more infrastructure in for EV charging because their clients are demanding it. And so our students get to work with these great companies throughout Scandinavia during the summer on wonderful experiential learning opportunities where they’re dealing with hard problems, and then they also get great internships in Washington, DC.
[00:23:50.950] – John
Caroline, you think sustainability is here to stay?
[00:23:54.200] – Caroline
Yes, I do, because obviously the problems are here to stay, unfortunately. Right. And that is the key driver here, is that we’re in a tickle and unfortunately it’s going to take many years to resolve this and hopefully we’ll be able to. But thank God the younger generation is embracing this issue and getting involved because it’s going to be a critical challenge for the younger generation and it’s going to take decades to sort out. I think it’s going to only become more important rather than less important.
[00:24:33.430] – John
Yeah, that’s really true. Climate change isn’t going away. It’s getting worse. Implications of it are getting more horrible. I mean, we’re witnessing tragedy after tragedy in the world because of it. And Lord knows we need real action. And corporations need people who have both the passion and the skills to make a difference in this area. And David, I’m sure you agree because you are doubling down on sustainability at your school.
[00:25:06.450] – David
We are. We’re investing. Let me just give you one other thing we’re doing which tees off your focus on corporations. So we put together an advisory committee, which we’ll announce in the next 30 days or so. So I thought, okay, let’s put together an advisory committee. And you’ve been around schools. Some of these advisory committees are a little sleepy. Some of them are not so sleepy. So I went out and these are folks that are mostly unaffiliated with American University. So we have a 25 person advisory committee. It includes ten CEOs. Ten CEOs. It includes the top executives that either run, have run, or supervise sustainability at major firms like Starbucks, JPMorgan, KKR, folks that are on big boards like Twitter. Well, one of them was on Twitter before Elon Musk bought it, but Alcoa Warehouse or Rockefeller Foundation. So we’re getting very, very senior people that want to be involved in helping a leading sustainability program take it to the next level. And we have a meeting in two weeks. And one of the topics on the table is what’s the future of work? So if you asked me, going back to Caroline’s husband’s example, if you asked me in 2007 what was the future of sustainability, I never could have predicted it. Never. And so 15 years later, it’s totally changed. We want to get from these folks what’s it going to look like in ten years and so that we can stay ahead of the curve and adapt our program to help students deal with problems that they’ll be dealing with for the next ten or 20 years and not just the next two years.
[00:26:50.150] – John
Right. Well, David, thank you so much. It’s been a real pleasure to have you. We’ve been listening to David Marchick, our guest today. He’s the new dean at American University’s Cogn School of Business, who had served as a managing director at the Carlisle Group for twelve years and has been involved in two presidential administrations. David, one last question for you. You are not an academic, you’re a kind of a corporate type. What is it like for a corporate type to go into an academic environment and lead a business school?
[00:27:25.650] – David
That’s a great question. You should ask the associate Deans that suffer from my 05:00 A.m. Emails and lack of understanding of why something will take two years instead of two months.
[00:27:41.250] – John
David, there are that many of you out there.
[00:27:45.350] – David
Actually, it’s been great. I feel blessed to have had different types of careers and I wanted to do something where I could give back and help young people. And so when I left Carlisle, started teaching a tuck and I loved it and then I’m really enjoying it. I’ll give you the positives are it’s mission oriented, the faculty are great, the students are great. Yesterday was the first warm day in DC. And just walking around campus with the backpacks and the kids out on the quad, it was just fun. And invigorating academia moves slowly. It moves much more slowly. I actually pulled this chart the other day together, which one of my team members did which. I said give me the top ten companies in the world by market cap in the year 2000, and of those ten, only one from 2000 is still on the list Microsoft. Otherwise nine of the ten have been replaced. And I said, give me the top ten business schools in the country from 2000 appeared today and all of them are the same except for one. And basically Duke dropped to like eleven and Yale came in as now number eight. This is in US news. So academia moves very slowly and I fear that the people that work with me are suffering a little from my pace, but I’m learning from them and hopefully they’re learning from me.
[00:29:13.950] – John
Well, David. Thank you.
[00:29:16.190] – Caroline
Business people like you, Dave.
[00:29:19.410] – John
There you go.
[00:29:20.120] – David
Thank you. Hopefully it works out. And like I said, like we used to say in Carlisle, when we made a new investment, asking five years how it goes. So hopefully it works out.
[00:29:30.050] – Caroline
We’ll check in then.
[00:29:31.970] – David
Thanks for having me. And thanks for everything you do.
[00:29:34.340] – John
It’s been a pleasure. This is John Byrne. Poets and Quants. You’ve been listening to Business Casual, our weekly podcast.