As a guiding principle for business, sustainable management puts everything to the test – business models, company processes and cultures. Patrick Bungard, Director Center for Advanced Sustainable Management at Cologne Business School, told us in our interview why companies can only remain competitive through sustainable management and what challenges the education of Master students in “General Management – Sustainable Management” offers.
CBS: As head of the Center for Advanced Sustainable Management you are intensively involved with CSR and sustainability. How do you define sustainable management and why is the topic relevant for companies?
Patrick Bungard: “Sustainable management” follows the basic idea that it is not possible to manage the “sustainability” of a company – but a company can be managed “sustainably”, i.e. it is profitable and competitive in the long term. In the face of the enormous global challenges of the 21st century, such as climate change, this can only succeed if a company’s business model is designed to minimise its negative impact on the environment and society while at the same time maximising its positive impact. Developing business models that are profitable because they make a real contribution to solving the global challenges of our time is at the core of sustainable management.
Sustainability is highly relevant for two main reasons. On the one hand, sustainable companies are increasingly more successful than those that do not put sustainability on their business agenda. Numerous scientific studies provide impressive proof of this. Whether it is a question of recruiting specialists and managers, the attractiveness of the financial market or a look at market and sales figures. Sustainability issues have reached the core disciplines of business administration and are increasingly making the difference there. On the other hand, the topic is of the highest relevance at the social level. If companies don’t give in quickly and turn from problem-causers into problem-solvers, planet Earth will reach its natural limits in the not too distant future. Climate change is just one of many issues that are making this urgency ever clearer.
CBS: In an article for FAZ Magazine “Verantwortung” (“Responsibility”) you described that the time of sustainable business models had come. How do you assess this?
Patrick Bungard: The general economic conditions for companies have changed completely in recent years: While companies used to be able to externalize the costs of their negative effects on the environment, today they bear the costs of global problems both directly and indirectly. They are directly confronted with global problems and are forced to question their business models holistically. Otherwise, there are incalculable business risks, some of which endanger their very existence. Conversely, however, undreamt-of potential and new opportunities also arise. If a company successfully adapts its business model to the new framework conditions and thus contributes to solving global problems, it will profit economically from this.
Numerous aspects can be used to explain this assessment. The following three are particularly important from our point of view at CASM: (1) Increasing insight into realities – Global challenges such as climate change are a direct threat to life on Earth. Many companies have finally understood that they can only operate and exist sustainably in an intact society and environment. The times in which profits were made ruthlessly and at the expense of the environment or human rights are morally and economically completely unacceptable. (2) Increasing political pressure – The increasing influence of the political sector is a second major driver for greater sustainability in the core business of companies. The automotive industry is a good example of this. New regulations, such as the electric quota for cars in China, the introduction of car-free zones in city centres worldwide or the recently adopted EU resolutions on stricter emission limits for passenger cars, are encouraging automobile companies to play an active role in shaping the already massive and far-reaching changes in markets and business models.
(3) Up-and-coming stakeholder interests – A change in the way other interest groups think about environmental and social sustainability can also be observed. Numerous studies show that more and more customers in almost all sectors are demanding real sustainable product alternatives, and that investors are now reacting to the issue of sustainability with progressive investment behaviour. Sustainably positioned companies are also significantly more successful in the increasingly important strategic challenge of attracting specialists and managers in times of “war for talent”. It would go beyond the scope of this interview, but this list of interest groups and examples could be continued page by page.
CBS: What should companies consider if they want to initiate a transformation process towards sustainable management?
Patrick Bungard: From our point of view, it is fundamentally important to understand that “sustainable management” is not an off-the-shelf concept that you can apply 1-1 to any company. Rather, it is a matter of thinking “sustainable management” individually in terms of one’s own corporate circumstances. The design depends to a large extent on the corporate culture, the industry, the locations and other factors.
Furthermore, we consider it indispensable to adopt sustainability as a business issue. In many companies, sustainability is still understood as a “Nice-to-Have topic” in order to improve the company’s reputation. This phase has long been overcome – for a successful transformation it is essential to start from the very beginning with the core business of the company and from procurement to sales as well as in the supporting functions to win and systematically involve the employees for the topic.
Sustainable management is not a goal, but an ongoing process – a continuous management task. It is about implementing a new management paradigm in the company. A paradigm that understands sustainability and profitability in harmony. This paradigm shift begins in the minds of company executives and this is precisely where the transformation must be initiated. If the people in the company do not stand behind the topic, the project is doomed to failure. Here it becomes already obvious why we at the CBS have long since integrated the topic fully into the training of future managers.
CBS: At our university you educate our students to become managers with CSR mindsets in the Master’s programme “General Management – Sustainable Management”. What do you attach particular importance to?
Patrick Bungard: You can’t “teach” a mindset. We see the role of lecturers in the field of sustainable management as inspiring students to critically reflect on long-established management theories on the basis of current global developments and to point out the design possibilities. At the CBS, specialists and executives of the coming management generation are educated. This generation faces enormous, but also exciting challenges for which we would like to prepare them. During the study programme we attach particular importance to offering students a space in which they can develop their own individual mindset and management profile.
We want to create awareness for sustainability issues and work with students to develop current and future challenges for managers. From our point of view, this can only happen in the discourse between the students, with the lecturers and, of course, with pioneers and experts from business practice. Practical relevance, application orientation and open discourse are the central cornerstones of our understanding of teaching. Of course, we also attach great importance to conveying the most important theoretical concepts of sustainable management. Another important aspect is that the subject of sustainability is not dealt within the framework of individual subjects on sustainability. The CBS is a leading business school when it comes to integrating sustainability topics into the overall education from the beginning of the course. Good controllers, personnel managers, procurers, sales people or supply chain managers will increasingly have more to do with sustainability topics. You need to be prepared for this in your studies.
CBS: At our Open Campus Day on 6 July, you will also give a lecture on “Sustainability”. What can the guests look forward to?
Patrick Bungard: First of all, I won’t be giving a lecture. I am very much looking forward to the guests and would like to enter the discourse with the participants from the very beginning. I am sure that the different backgrounds and perspectives of the participants on the topic will bring great added value for everyone. In this way, I hope to give the participants a feeling for how the CBS understands the topic of “sustainable management”, what the basic character of the lectures and the specialisation looks like. I would particularly like to inspire the participants for our specialisation sustainability in the Master’s programme. We will offer it for the first time in September at the CBS.
Patrick Bungard will answer questions on the German Master’s programme “General Management – Sustainable Management” at the Open Campus Day on 6 July 2019, closing his discourse from 13.00h-14.00h in the room “Los Angeles”. Please register for the Open Campus Day at: https://cbs.de/en/advice-admission/dates-events/