Today, as consumers demand more sustainable products and more responsible practices, INSEAD is working to stay ahead of this trend and equip our graduates with the knowledge and tools needed to lead in the 21st century. The Hoffmann Global Institute for Business and Society was launched in 2018 with a goal to integrate sustainability into activities schoolwide. Today, sustainability is embedded deeper than ever into INSEAD research and education. The “Lessons in Sustainability” series aims to show how sustainability features in the research and teaching activities of each of the nine INSEAD academic areas. Each blog post will focus on a specific discipline, starting with Economics and Political Science.
Economics and Political Science
The study of economics has always examined topics related to sustainability covered under the UN Sustainable Development Goals (SDGs). The renewable energy market, the global regulatory framework for emission reductions, and impacts of inequalities from gender to geography have long been considered by economists, including INSEAD professors. Economics provides a lens to understand market and non-market forces, which can inform decisions in operations, strategy, marketing and more.
The Economics and Political Science academic area studies macroeconomics, microeconomics, trade, policy implications and the relationship between governments and business. With sustainability influencing all these areas, it is important to examine how INSEAD integrates sustainability into academics.
Insights from the Interview
To understand how sustainability is embedded into the Economics and Political Science academic area, the Hoffmann Institute team sat down with Professor Pushan Dutt, Area Chair and The Shell Fellow of Economic Transformation. He provided some insights into how economics considers sustainability and how it is taught at INSEAD.
Why is it important for future business leaders to learn about sustainable development practices?
Pushan Dutt: By teaching today’s business students about market failures, negative externalities and how policy will create and shape markets, tomorrow’s leaders are better prepared to deliver value. One thing we are seeing now is an increased demand from business for systemic understanding to navigate changing markets.
Many of our graduates will go on to operate a company in industry or lead a team of people as a manager. These tasks often have a narrow focus. Right now, we see shifts in trade and technology, changes in environmental risk and climate policy. We see a need to broaden the focus of leaders and the need for a new generation of managers that are sensitive to new issues.
What does sustainability mean to you in the context of business education?
Pushan Dutt: Economics and Political Science is an academic area that looks at the intersection of policy and business action, seeking to understand the market and non-market environments that affect business outcomes. We study markets, how they work and why they fail. The non-market environment includes study of how regulations, new technologies and social change resonate in business decisions and bottom lines.
So, we have been working on sustainability issues for 30 years or more. Economists have examined inequality for a long time, within and across countries, and asking important questions. Why are some countries rich and others poor? What policies drive inequality and what policies reduce it? We consider climate change as a negative externality and carbon market policy as a way to internalize costs.
In the context of business education, it is important to understand how economics and policy design are related to inform strategy and operations decisions.
How do you teach sustainability in your academic area and what are the main topics?
Pushan Dutt: Sustainability is embedded in our core MBA curriculum. INSEAD offers a core course on Business and Society organized entirely around this topic, one of the few MBA programs to do so. This course covers climate change, inequality, gender, wage gaps, automation, globalization and more. For example, we examine which policies are effective in meeting global climate goals – regulation vs. taxation of carbon. We look at the feasibility of different policies and how businesses deal with environmental and social policies. Climate change is one issue featured in other courses as well.
In the Price and Markets core course, where we first define negative externalities, we look at missing markets in carbon and see how economies and firms may react. In our Macroeconomics course, we examine the impact of climate change on growth and the economic consequences of climate change.
Economics and Political Science integrates SDG-aligned issues into our MBA teaching. Right now, my colleagues Tim Van-Zandt and Philippe Aghion are also retooling the Business and Society course to focus completely on sustainability for our Master’s in Management students.
Sustainability Across the Academic Area
The interview explored the ways sustainability features in the core MBA curriculum and the new MIM programme. The Hoffmann Institute also surveyed Economics and Political Science area professors to understand how they bring sustainability into their electives, executive education and engagement.
Sustainability features in several electives that allow students to gain a deeper understanding of specific topics according to individual interests and ambitions. An Economics and Management in Developing Countries elective provides a global perspective. Healthcare Markets and Policy examines the economics of health and well-being. And an elective on Income Inequality and the Future of Business shines light on the implications of extreme wealth and resource disparities.
Sustainability is also a subject of discussion in executive education. Economics and Political Science professors tailor shorter sessions in senior leadership programs to cover specific sustainability issues and meet specific learning needs. This gives executives tactics and tools to address their sustainability challenges.
Sustainability in Economics and Political Science academics is seen in the cases area professors write and their engagement. Area Chair Pushan Dutt authored a case on The Rise of Inequality, which is used in multiple executive education programmes. Professor Mark Stabile has written sustainability cases on topics from how energy costs affect climate change goals and tax reform for our global, digital world. Professor Alexandra Roulet often publishes on gender and inequality. Professors Maria Guadalupe and Lucia del Carpio also research gender issues and explore new ways of working.
Area professors are engaging widely on these topics as well. As Academic Director of the Hoffmann Global Institute for Business and Society, Professor Stabile was invited to join the Columbia University Dean’s Lecture Series on Inequality and Opportunity to discuss the benefits of structuring taxes for children’s healthcare. Professor Dutt is a longstanding guest on Channel News Asia’s Money FM radio show and Professor Fatás frequently appears on CNBC. Professor Aghion analyzed climate change, increasing inequality and the pandemic’s impact at the Schumpeter Lecture in 2022. Several of the area’s professors connect with alumni at reunions to discuss topics from inequality to inclusion.
The economic landscape is changing. Firms today want a better systemic understanding of the economics of sustainability. Shifts in trade and technology, environment and climate, and government and media require a broad understanding of economic drivers. Leaders must be sensitive to new issues, new risks and new realities. The pandemic, increasing extreme weather and geopolitical instability puts a spotlight on our interconnected and vulnerable global economy.
The study of Economics and Political Science helps leaders explore policy and market solutions with potential for equitable and sustainable economic and social outcomes. As this series moves to other academic areas, this first story provides a framework to better understand the forces that influence and impact business and society.
The Hoffmann Global Institute for Business and Society Lessons in Sustainability series highlights lessons learned from integrating sustainability into all nine INSEAD academic areas. Look for more Lessons in Sustainability stories in the weeks to come.