MBAs Want to Make an Impact

Scores of business school students want to learn how to make profits in the business world. That’s a given. But the way in which they want to profit is changing: they want to do good. Impact investing programs, which combine social consciousness with financial returns, are popping up at universities around the world.

“Social entrepreneurship programs have exploded in business schools across the U.S. and Europe,” says Suzanne Biegel, chief executive of Investors’ Circle, a San Francisco-based impact investment group. Wharton, Stanford, and other leading business schools have launched social impact initiatives.

U.S. News & World Report recently reported on MBA programs that invest in social good. It pointed to Cornell University’s Graduate School of Management and the Kellogg School of Management at Northwestern University, which hosted the first International Impact Investing Challenge this year. The challenge awarded more than $40,000 in prizes for innovative impact investment vehicles. Students pitched their ideas to institutional investors, including endowments, pension funds, and family foundations. (The winner was a real estate investment trust called The Grain Fund Depot, which rented storage space to small farmers in India.)

The business school trend is important because it foreshadows what types of investments will drive the financial world in the future. In the Washington area, there are regular impact investing “meetups” for students and investors alike. They host happy hours, and discuss career opportunities, as well as investing ideas. The meetups are sponsored by the Calvert Foundation, DC Net Impact Professional Chapter, American University, Georgetown University, George Washington University, Johns Hopkins University, and the University of Maryland, among other groups.

In addition to graduates focusing on business plans that incorporate social welfare, 88.3% of graduating MBA students say they’d take a pay cut to work for firms that have ethical business practices, according to a survey of 759 students in North America and Europe. The researchers, David B. Montgomery of Stanford University and Catherine A. Ramus of the University of California, Santa Barbara, suggest that the finding should be seen by the public as a hopeful sign for the management profession.

Over the next decade, you can bet that ethical companies and businesses operating to solve social and environmental problems will be all the rage. It’s the future. And we can all benefit from investments that do more than turn a financial profit.

Source: web.hbr.org, http://www.marketwatch.com

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