CESR Thought Leadership

Ethan Poskanzer on Democratizing Innovation

Anonymous — Fri, 15 Mar 2024 16:23:21 +0000

Ethan Poskanzer on Democratizing Innovation Anonymous (not verified) Fri, 03/15/2024 - 10:23

Julie Waggoner

Every year, CESR gives out awards to recognize research excellence and enable new research projects related to environmental sustainability, DEI, and ethics. Ethan Poskanzer is an assistant professor of strategy and entrepreneurship at the Leeds School of Business, and his recent paper Through the Front Door: Why Do Organizations (Still) Prefer Legacy Applicants?, co-authored with Emilio Castilla at MIT, was recognized with CESR’s 2024 Highest Impact Paper Award.

We recently sat down with Ethan to talk about the big questions he’s trying to address in his research, how inclusion and sustainability come into his teaching, and how gatekeepers of all kinds can make access to opportunities to innovate more inclusive.

CESR: How would you broadly describe your research? What big questions are you trying to answer?

Ethan Poskanzer: I’m interested in innovation, and I’m motivated by this idea that our innovative capacity as a society is under-utilized because you need a lot of resources and training to take an idea and make it into a reality. It’s difficult to get access to those opportunities for certain people based on their identities and the inequalities that exist in our society. Now I’m working on a project in Ghana where the opportunities to get advice and funding for an idea are incredibly limited. I’m conscious of the fact that most people on the planet live under those conditions.

"I’m motivated by this idea that our innovative capacity as a society is under-utilized because you need a lot of resources and training to take an idea and make it into a reality."

-says Ethan Poskanzer

CESR: Could you please share a little bit about your research on legacy admissions? What inspired you to look into this topic, and what did you discover?

EP: We wanted to examine why colleges enact legacy preferences given the amount of hostility that these preferences engender publicly. I also think that legacy preferences are a relatively curious practice, which made us wonder – why would colleges do this? We tested three possible reasons, which are the reasons that colleges publicly state they consider when admitting students in general.

Universities say that they aim to admit the students that merit it, or the most qualified students, that they aim to admit a diverse student body, and that they aim to admit students who will be financially supportive of the institution. Being financially supportive of the institution means many things, including students who are less likely to need financial aid, who are more likely to matriculate when admitted, and who are more likely to contribute philanthropically in the future.

We tested which of these objectives legacy preferences support. We find that legacies are not any better qualified, so they didn’t merit admission more. The data show that legacies are actually less diverse than the rest of the student body. However, we see that legacies are much more financially supportive of institution in a variety of ways. They are less likely to need financial aid, more likely to matriculate, and more likely to come from families that are flagged as potential donors.

CESR: What are the implications of your findings?

EP: These findings are important because, for better or for worse, who gets to an elite college is very determinative of career outcomes in the United States and the world. There’s a lot of research showing this. It’s predictive of earnings, of the opportunity to go to certain grad schools, and to pursue certain careers. Legacy considerations mean that family connections are predictive of who gets those spots. As a society, we need to decide if that’s how we want to choose who will get these scarce spots.

It's also important because the legacy advantage is really big. I want to commend the college we worked with for letting us investigate this. Legacies have almost double the chance of being admitted to these elite schools. At Ivy Leagues it’s a particularly big deal because the schools are smaller and they have been around for a long time, so they have a lot of legacies and a smaller number of spots.

CESR: How do you see AI and automation impacting innovation and access to innovative opportunities for diverse groups?

EP: Overall, AI and automation are difficult to generalize, because they are blanket terms that cover lots of tools that have different effects. We’re doing a study on code contributions to a larger software infrastructure. Code is fairly objective, in that a machine can evaluate its quality. This tool summarizes the quality of the work and gives that evaluation to a human reviewer. When that tool is there, there’s no difference between how likely they are to accept men’s and women’s code contributions. Without that tool, there is a gender gap where men’s contributions are more likely to be accepted than women’s. This tool can reduce gender inequalities in terms of which contributions are accepted.

We think this is because of time and attention. It takes a long time to read code blocks, so when there is no tool, the evaluator will use the coder’s identity to make a determination about the code’s quality. Whenever there is uncertainty evaluators will use the creator’s identity as an indicator of quality. This is also true when evaluating something requires more resources than the evaluator has at hand.

"I think it’s counter-productive that sustainability is so often seen as a political issue. I use sustainability to talk about the opportunity for new technologies that are cleaner and better. It doesn’t have to be about your political views."

-says Ethan Poskanzer

CESR: What big trends are you seeing in innovation and in equity/inclusion?

EP: I’m curious about what colleges will do after the recent U.S. Supreme Court case that limited the use of race in admissions. College admissions officers are now in a very unknown position because race has been a factor for a very long time. It will be very interesting to see how colleges will navigate the new legal landscape. I would love to have one volunteer for a study. There’s a lot of uncertainty about what is OK to do.

CESR: Have you found opportunities to bring topics of equity, inclusion, or other aspects of sustainability and/or social impact into your teaching?

EP: In my teaching, I talk about inequality in the frame of lost contributions to innovation. Regarding sustainability, I think it’s counter-productive that sustainability is so often seen as a political issue. I use sustainability to talk about the opportunity for new technologies that are cleaner and better. It doesn’t have to be about your political views. I talk with students about how inventions that allow us to produce the same amount of stuff with less pollution are better for everyone.

I take this approach because it’s better if we are using all of our innovative capacity and having as many people working on sustainability as possible. The politicization of sustainability makes fewer people want to be involved. When things enter a two-party political sphere, we end up with two views on every concept. For a problem like this that would benefit from innovation from everyone, the less it enters a politically divisive realm, the better.

CESR: What can leaders and investors do to encourage innovation in an equitable way across diverse groups?

EP: We see that designing standardized evaluation processes can reduce biases. In other research I’ve done we see that how an evaluation is framed can affect the degree of gender bias. When there are evaluations that are communicated as participatory, there’s less gender bias. When things are framed as being higher stakes, people get really risk-averse and lean on the person’s identity more to evaluate quality. When there is more risk, people will choose the highest status option because there is less personal risk to them. Framing innovation as “Failure is OK,” can help to break people out of that cognitive rigidity.

For entrepreneurship in science where innovation is a long process, having advisers is really important. Because you learn tacit knowledge from someone over time. Having diversity in the adviser roles is supportive of diverse mentees. We see that people tend to form stronger relationships with people who are similar to them. When the advisers are representative of mentee population, everyone has the same opportunity to bond with advisers who are like them.

CESR: What is one piece of advice you would like to share with current and future business leaders?

EP: Failure is a healthy part of the innovation process. In a lot of ways, larger processes that produce the best ideas have a lot of failures along the way. Early in an idea’s life, it’s really hard to tell if it’s good or not. Innovation processes where people are not penalized for failure when a good faith attempt is made are more likely to produce great ideas. The best process for innovation would allow multiple ideas to grow and be tested before culling them and choosing which ones to select.

Learn more about CESR’s research prizes on our website, and read about other sustainable business research on our blog.

Ethan recently spoke with ��Ƶ Boulder Today about another project that found people will knowingly support falsehoods when they align with their personal politics.

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Tony Kong on Social Sustainability and Transcendence

Anonymous — Wed, 15 Nov 2023 22:43:22 +0000

Tony Kong on Social Sustainability and Transcendence Anonymous (not verified) Wed, 11/15/2023 - 15:43

Julie Waggoner

We’re proud to share that we have more than 50 Leeds faculty members from across all seven academic divisions who are CESR Faculty Affiliates, joining us as we re-launch this program. We invited these faculty members to join because their research and/or teaching relates to sustainability and ESG. We will be highlighting some members of this group and sharing insights from their work through our marketing channels as we strive to represent the great work being done at Leeds.

Dejun “Tony” Kong is an associate professor in the organizational leadership and information analytics division at Leeds. He is a 40-under-40 best business professor named by Poets & Quants. His research has won multiple best paper awards from the Academy of Management’s Conflict Management Division (e.g., the Most Influential Article Award in 2023 and the Best Conflict-in-Context Paper Award in 2022) and other academic associations. Through his research, he seeks to address how to enable ourselves to be more cooperative and prosocial, such that we can reach the greater good and be more productive collectively.

We recently sat down with Tony to talk about his research interests in social sustainability, how he integrates ethics and DEI into his teaching, and advice for effective leadership. This conversation has been edited for length and clarity.

CESR: How would you broadly describe your research? What big questions are you trying to answer?

Dejun “Tony” Kong: The word I use to sum up my research is “transcendence.” Transcendence is a virtue related to gratitude, humor, hope, trust, appreciation for excellence, and authenticity. What I do is about building trust and a positive and healthy culture and trying to connect people. It also involves trying to elevate workplace gratitude and appreciation. These are positive psychology topics, which fascinate me. I also look at humor, which many people use as a stress coping mechanism, but it also serves to connect and bond people. Besides gratitude and appreciation, I also study other moral emotions, including compassion and moral outrage. My findings can help me better understand how to promote equity and inclusion of a diverse workplace. As a minority scholar with an international background, this endeavor is personally meaningful. Ultimately, I’d like to use my research to address the big question: how can we be more pro-social and cooperative, such that we can be more productive collectively?

"Change agents should focus on leading people to find meaning and joy in making or supporting social and environmental change, through influence tactics such as consultation and collaboration,"

- says Tony Kong

CESR: Tell me more about how you see the intersection between ethics and DEI (diversity, equity, and inclusion) and some of the topics you’re thinking about in this space.

TK: Every culture may promote different ethicals principles. For example, our Leeds school promotes care in our culture building. However, not everyone has the same understanding of the promoted ethical principles. I want to encourage more intercultural conversations. This is what I have been doing as a Daniels Fund faculty fellow. The issues we face related to global conflict and migration are all related to ethics. They raise important questions for us as a society. Our attitudes and beliefs drive our behaviors and solutions. How do we approach our social responsibility to create a sense of comfort safety and belonging for people from diverse cultural backgrounds? How do we build a multicultural environment where we celebrate cultural diversity?

Socioeconomic diversity is important as well. This relates to the imposter syndrome that we often talk about, sociocultural adjustment, and integration. Workplaces tend to have a middle-class or upper-middle-class culture, so people from lower or lower-middle classes may not feel like they belong. All of this relates to social responsibility.

All these ideas tie to the broader theme of social sustainability which includes human sustainability and systemic sustainability.

"Ultimately, I’d like to use my research to address the big question: how can we be more pro-social and cooperative, such that we can be more productive collectively?"

- says Tony Kong

CESR: Leaders today need to operate in a highly uncertain environment where issues like inequality and the climate crisis are impacting their organizations. How do you think about training leaders to operate in this environment when you approach your teaching?

TK: In my teaching, I talk about self-awareness. We focus too much on ourselves and forget about the other people around us. I talk about private self-awareness (accurately understanding yourself), and public self-awareness (accurately understanding others’ perceptions of you). Although the vast majority of people think they are self-aware, only 10% of people are actually self-aware. This is a big issue for leadership.

To be an effective leader, people need to understand their own strengths. Being self-aware can shift their focus to their strengths rather than fix their attention to their weaknesses. Such a focus shift can also allow leaders to use their vulnerabilities to connect with other people and build trust.

I always ask students what characteristics are missing in leaders now. Many of them say transcendence and courage. I’m glad to hear their answers. Courage is missing in a lot of leaders now; they know what is right, but they don’t act because of fear, or comfort with the status quo. It’s important for students who aspire to be leaders to understand what is worth pursuing or fighting for and how to pursue the worthy cause wisely. We need more courageous leaders who also are self-transcendent and understand how to provide meaning to people and help people with diverse backgrounds leverage their strengths.

I also want to emphasize that a lot of problems related to DEI require creativity and conflict resolution because people want and need different things. So, besides leader character, negotiation skills, problem-solving ability, and creative skills are very important to leaders.

"Future leaders need to know how to analyze big data for problem solving and creativity, besides having a nuanced understanding of various social and human issues,"

- says Tony Kong

CESR: What is one piece of advice you would like to share with current and future business leaders?

TK: Learn data analytics, and appreciate big data. Our human brain is not evolving fast enough to deal with our complex world. We have lots of biases because our brain is not able to process so much information. Future leaders need to know how to analyze big data for problem solving and creativity, besides having a nuanced understanding of various social and human issues. They don’t need to be data scientists, but their leadership should be evidence-based. That’s what I tell my MBA students. A leader who knows how to do this and makes good decisions based on data will have a competitive advantage.

"It’s important for students who aspire to be leaders to understand what is worth pursuing or fighting for and how to pursue the worthy cause wisely,"

- says Tony Kong

CESR: We keep hearing from ESG and sustainability practitioners that influence is key to driving positive social & environmental change. The topic of influence seems closely tied to your work on trust and motivation. What advice do you have for professionals who are seeking to use influence to create change?

TK: My research on trust tells me demonstrating trustworthiness is critical to negotiation and leadership. Influencing others in the area of social and environmental change definitely requires trust-building and influence. One influence tactic that shows trustworthiness and helps trust building is consultation. It’s important for change agents to seek others’ thoughts and respect those others’ perspectives. Another influence tactic that demonstrates trustworthiness and helps trust building is collaboration. It’s important for change agents to provide information, integrate different perspectives together, find agreement on certain issues, and solve problems together. Including people as much as possible in discussions and decision-making helps build trust. Other influence tactics may backfire. For example, pressuring others to accept social and environmental change may undermine those others’ sense of autonomy.

A related point I want to make here. Change agents should focus on leading people to find meaning and joy in making or supporting social and environmental change, through influence tactics such as consultation and collaboration. What change agents should cultivate in others is called autonomous motivation, which is a key concept of self-determination theory, my favorite motivation theory. In order to foster people’s autonomous motivation, organizations should create a work environment that supports people’s psychological needs (autonomy, competence, and relatedness). When people’s needs are satisfied, people will thrive and contribute. These needs are “nutrients” and are culturally universal. So, this advice works in various cultures.

Tony's research has many practical applications for leaders. His work about how companies can maximize the effectiveness of raises and performance-based pay was recently featured in ��Ƶ Boulder Today, and he shared insights on trust, empathy, and leadership in the latest issue of Business at Leeds magazine.

Learn more about the CESR Faculty Affiliates program here, and other insights in the Thought Leadership section of our blog.

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Mobile money serves people in poverty - up to a point

Anonymous — Sat, 08 Jul 2023 03:27:31 +0000

Mobile money serves people in poverty - up to a point Anonymous (not verified) Fri, 07/07/2023 - 21:27

Mobile money, a type of digital currency that enables secure storage and long-distance transfers at a low cost all managed via text message, has been a game-changer for people in the developing world without access to banking infrastructure. Research from Leeds faculty members David Drake and Gloria Urrea shows that the technology is effective, but its impact and feasibility start to break down as poverty increases, arguably in the situations where it is needed most.

“We wanted to understand how this business model was impacted by the pervasiveness of poverty in an area to test its fundamental purpose: to help those at the base of the pyramid,” said Drake, an assistant professor in the Department of Strategy, Entrepreneurship and Operations Management. “We found that the business model does very well up to a point. Demand for the service initially increases as the pervasiveness of poverty increases. This is what you hope to see in a base of the pyramid business model. However, we also found that as poverty becomes more extreme, the business model starts to collapse.”

Learn more about this research and its implications for poverty alleviation in this recent article from ��Ƶ Boulder Today.

Drake and Urrea's paper study, “The Impact of Poverty on Base of the Pyramid Operations: Evidence from Mobile Money in Africa,” received CESR's 2023 Highest Impact Paper Award. Learn more about other high-impact ESG research from Leeds here.

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Investor Policy, ESG Contracting Influence Firms’ Sustainability Performance

Anonymous — Thu, 13 Apr 2023 19:35:53 +0000

Investor Policy, ESG Contracting Influence Firms’ Sustainability Performance Anonymous (not verified) Thu, 04/13/2023 - 13:35

Julie Waggoner

Most large investors take the approach of influencing firm behavior through one-on-one meetings and private messages.

These tactics are both invisible to the public and labor-intensive to enact.

Large investors have more efficient options for getting firms to do what they want, according to research from Andrea Pawliczek, assistant professor of accounting at Leeds. Her recent studies within the field of corporate governance have focused on ways that investors try to influence a firm’s ESG (environmental, social and governance) performance, and the effectiveness of those tactics.

“Investors can have a voice without necessarily having those individual meetings. They have the ability to influence firm behavior by setting policies, and firms are following those policies,” Pawliczek said. “From an investor’s perspective, this is much more efficient.”

BlackRock’s Dear CEO Letters influence firm behavior

Pawliczek studied the impact of BlackRock CEO Larry Fink’s “Dear CEO” Letters by looking at their impact on disclosures like press releases and quarterly reports from portfolio firms. She published these findings in the paper A New Take on Voice: The Influence of BlackRock’s “Dear CEO” Letters, which won CESR’s 2022 Best Paper Award, co-authored with Nikki Skinner from the University of Georgia, who will join the Leeds faculty in the fall, and Laura Wellman from Pennsylvania State University.

“The more important piece we see is that for those firms that adopt ESG contracting, we do see improvement in ESG scores and performance,”

- says Pawliczek

“In the ESG space, people have differing perspectives on how things will impact profitability,” Pawliczek said. “BlackRock didn’t think that firms were factoring in climate change appropriately in their business models. Their perspective is that climate change will impact profitability in the future, and that future profitability should impact stock prices now.”

Pawliczek and her co-authors hypothesized that if firms were listening to these letters, their subsequent disclosures would include the same topics as the letters. They found that firms were more likely to address the ESG-related topics that Larry Fink identified as relevant in his “Dear CEO” Letters in the months after they came out, and this impact was larger in firms where BlackRock had a larger ownership stake.

BlackRock paid attention to whether or not firms responded to these preferences as well. BlackRock was more likely to vote against management in shareholder meetings for firms that did not include the topics from the “Dear CEO” Letters in their disclosures, the study found.

“It’s just another signal to managers that shareholders are watching, and if you’re not understanding and responding to their preferences, that can have consequences,” Pawliczek said. “It can lead to a lower share price or even management turnover in more extreme cases.”

ESG contracting and “Say on Pay” laws

Countries and states are increasingly passing “Say on Pay” laws that allow investors to vote yes or no on executive compensation. In another study, Pawliczek analyzed whether or not ESG contracting, the practice of basing part of an executive’s bonus on performance related to ESG metrics like achieving diversity outcomes or reducing greenhouse gas emissions, is an effective method for improving ESG performance.

“There’s a lot of questions as to how effective that is for a variety of reasons,” Pawliczek said. “One, it’s only a small portion of the compensation. There’s also some concern that firms that were already planning on doing good ESG stuff and already had the priorities in place just add this in as a showpiece.”

When “Say on Pay” laws are implemented there tends to be an increase in ESG contracting, which indicates that on average investors support this tactic, according to the findings of Pawliczek and her co-authors Mary Ellen Carter at Boston College, and Rong (Irene) Zhong at the University of Illinois at Chicago. These findings are outlined in their paper Say on ESG: The Adoption of Say-on-Pay Laws and Firm ESG Performance.

“The more important piece we see is that for those firms that adopt ESG contracting, we do see improvement in ESG scores and performance,” Pawliczek said. “So we see that when you are paying an executive to prioritize ESG performance, we do see those outcomes.”

Aligning investor and firm beliefs for effective relationships

Pawliczek noted that investors and firms are likely to be most satisfied if they have shared beliefs about topics such as climate change. For example, if a firm wants to build a plant on the Gulf Coast, investors who are concerned about climate change will think that plant is going to be off-line in the future as hurricane frequency increases, so they won’t see that investment as profitable. Investors who don’t assess climate change to be serious might see that as a profitable investment.

“Even beyond beliefs, what you think about climate change can affect your cash flow forecasts, which is what business is all about,” Pawliczek said. “That’s how you make investment decisions, that’s what we teach our students: you invest in positive-NPV (net present value) projects. But if I’m trying to forecast what cash flows a project is going to generate 20 years out, in a lot of instances my views on something like climate change are going to impact those forecasts.”

Going back to the Gulf Coast plant example, the manager who sees the impacts of climate change as serious is not going to invest in that plant. If an investor doesn’t agree with the assessment of those impacts, they may see not investing as a bad decision and won’t be satisfied with decision-making at the firm.

Pawliczek noted that simply screening investments based on ESG performance may not be an effective way to create change. This is true because those screens only include firms that are already performing well on ESG, and firms care more about the opinions of shareholders than non-shareholders. One alternative perspective to aligning values of investors and firm managers, is that the way to influence firm behavior is by becoming a shareholder and voting, to create change from the inside. Regardless of the strategy for change behind its deployment, money is more impactful when moving in groups.

“The money in the ESG mutual funds is growing, so putting more money there does make the voice come together and have more of an impact,”

- says Pawliczek

“Investing in funds and managers that are in alignment with your values gives those managers more voice on the margin, because that gives them more ownership,” Pawliczek said. “The money in the ESG mutual funds is growing, so putting more money there does make the voice come together and have more of an impact.” In the current environment investor perspectives on ESG are becoming more polarized on both sides, meaning the pricing signals for marginally better or worse ESG performance are less clear. Interest is increasing in pro-ESG funds at the same time as anti-ESG Republicans are working to outlaw ESG considerations in the investment of public pension funds and divesting from investment managers like BlackRock.

Politicization and anti-ESG sentiment

The way that some states are choosing to penalize BlackRock for their ESG investing decisions indicates a paradigm shift to Pawliczek.

“I didn’t view BlackRock’s positions as too pro ESG, but rather a reasonably balanced approach,” Pawliczek said. “They were saying that climate change is important, and they did some activism with the other Big 3 Investors (State Street and Vanguard) in terms of board diversity. In my view, I didn't see anything BlackRock was doing as extreme, so to see a backlash against them is a shift.”

Previously two perspectives existed, those who thought that ESG factors were important in investment decisions, and those who had a purely financial focus and thought ESG factors weren’t relevant. Now, some investors and politicians see considering ESG performance in investment decisions as actively negative. This means it will be harder for firms to stay neutral.

“I’m very interested in the anti-ESG space [for future research], and seeing the continuum of how firms navigate through increasing controversy, especially firms that have wide sets of investors and wide sets of consumers,” Pawliczek said. “It seems easy to stake out a space if you’re REI and seeking to attract people who are very concerned with the environment, but it’s less tenable to choose a side as a firm like Target selling to everyone.”

Pawliczek is curious to see what will happen with this polarization, both what next steps anti-ESG politicians will take and how firms will respond.

Learn more about ESG research from Leeds faculty, including topics like DEI, ethical leadership and environmental sustainability in these related articles.

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Leeds focuses on the economic opportunity of solving the climate crisis

Anonymous — Tue, 06 Dec 2022 16:32:19 +0000

Leeds focuses on the economic opportunity of solving the climate crisis Anonymous (not verified) Tue, 12/06/2022 - 09:32

Julie Waggoner

Faculty, staff and alumni are taking action to solve the climate crisis, and flipping the script on the role of business.

Business is often seen as the cause of climate change, but it’s also a powerful force to solve this pressing issue.

At the Right Here, Right Now Global Climate Summit, CESR hosted a panel featuring sustainability leaders from major corporations, including VF Corp, Deloitte, McKinstry and Microsoft.

Watch CESR's Business Commitments to a Sustainable Future panel and learn how companies are taking action to support a world where future generations can thrive.

Here are a few perspectives on how business can take the lead.

“We are going to see a lot of change over the next decade, especially as companies integrate sustainability—including climate and diversity, equity, and inclusion considerations—into their core business strategies. For business students, it’s an incredible time to learn about the issues and identify innovative solutions.”
– Kathryn Wendell, Executive Director of CESR

“Entrepreneurs create for-profit ventures that can address climate change in a way that government and activists cannot.”
– Jeff York, Professor of Entrepreneurship, Chair of the Social Responsibility and Sustainability division and Research Director of the Deming Center for Entrepreneurship

“Many people think of climate change as a geopolitical issue. We look at it as an economic issue. Even if regulation were to help solve this problem, that regulation would require action among companies—so we’re going straight to the companies to help them do business better.”
– Tim Weiss (MBA ‘16), co-founder and CEO of Optera, a sustainability software company

Learn more about how Leeds sees business as a driving force for tackling climate change.

The climate crisis is both a huge challenge facing humanity, and the greatest economic opportunity of our lifetimes. Develop skills to drive change in any organization with the Climate Action for Business executive program from Leeds.

Business is often seen as the cause of the climate crisis, but it’s also a powerful force to solve this pressing issue.

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Corporate ESG Policies Respond to SCOTUS

Anonymous — Mon, 18 Jul 2022 16:16:02 +0000

Corporate ESG Policies Respond to SCOTUS Anonymous (not verified) Mon, 07/18/2022 - 10:16

Justine Roberts

"Business leaders can't avoid decisions that have direct social and environmental impacts, some of which are highly contested. This is where the 'G' of 'ESG' really becomes important--and challenging. Executives are being put into the position of needing to make politically-contentious environmental and social decisions." - Joshua Nunziato

At CESR, we focus on helping shape future business leaders who have the skills to consider Environmental sustainability, Social impact and Governance (ESG) as a core component of corporate strategy. The past few weeks have shown why that is so important as the US Supreme Court (SCOTUS) has issued judgements in two cases, West Virginia v. EPA and Dobbs v. Jackson Women’s Health Organization.

West Virginia v EPA

Reguating Emissions vs. Reporting Standards

Despite the SCOTUS ruling last week limiting the authority of the EPA to regulate greenhouse gas emissions, we are seeing a continued push for increased transparency around carbon reporting. Last week, the European Parliament voted to approve the Corporate Sustainability Reporting Directive (CSRD)’s work to expand reporting to cover an additional 40,000 companies, a nearly 4x increase.

Proposed SEC rules currently under review in the US also focus on disclosure, not target setting or regulation. While they will certainly be headed for a legal challenge, some believe their limited focus is likely to survive in court.

“Because climate risk is widely recognized as being inseparable from financial risk, the proposed SEC rule may be seen by courts as falling squarely within the purview of the SEC's mandate to ensure corporate transparency, thereby enabling informed decision-making by investors,” Joshua Nunziato, Assistant Teaching Professor, Social Responsibility and Sustainability says. “In other words: the West Virginia decision does not necessarily doom the new SEC climate disclosure rule.”

In the meantime, large audit and consulting firms like EY and Deloitte are investing in sustainability and ESG teams, betting that demand for strategy, data collection and reporting will continue to grow.

The Clean Energy Transition is not Slowing Down

Additionally, companies that had begun transitioning away from coal under the now defunct Clean Power Plan are unlikely to change direction. Nunziato believes businesses will continue to do so for market reasons. “The exponential decrease in the per unit cost of solar photovoltaic cells increases the speed with which new non-renewable power plants will become stranded assets,” he argues.

The Sierra Club has documented the closing of 357 US coal-fired power plants, with 173 remaining in production and the Environmental Integrity Project has calculated that US coal production fell to 21.8% in 2022, exceeding the target set by the Clean Power Plan of 27%. The reasons for this have been well documented by Leeds faculty Jeff York and David Drake in their paper, Kicking Ash: Who (or What) is Winning the “War on Coal”?.

All of this suggests there is increasing understanding that businesses have a responsibility to a low carbon future at the same time that the demand for renewable energy to increase capacity, and ultimately offset fossil fuels, is on the rise.

Dobbs v. Jackson Women’s Health Organization

Companies Respond to Stakeholders

After the leaked draft of the Dobbs v. Jackson Women’s Health Organization decision earlier in the year, the public has been bracing for SCOTUS’ overturning of the 50 year old Roe v. Wade case which legalized the right to access abortion in the United States. Quickly after the draft was made public, companies began to announce new policies that protect their employees’ access to comprehensive women’s health care. A number have explicitly linked these announcements to their values, their commitments to their workforce, and to their business strategy.

Yelp, one of the first to make this kind of policy announcement, has said that their interest is both “safeguarding employees’ right to health care, but [also] what it means as a brand to stand up for this right.”

Levis' statement calls attention to the strategic business importance of women’s access to health care and reads "access to reproductive health care, including abortion, has been a critical factor to the workplace gains and contributions women have made over the past 50 years.”

Conde Nast CEO Roger Lynch said, in a memo published in part by NPR, “the most powerful way for us to respond to what’s happening right now is through our brands. . . Our values are clear in the content and journalism we produce.”

Corporate Value Statements have Measurable Impacts

Sabrina Volpone, associate professor in the Organizational Leadership division at Leeds, recently presented research at Purdue University’s Dismantling Bias conference series (with coauthors at the University of Texas at Arlington and Wake University) analyzing the statements organizations and leaders made in response to racial social justice in early 2020. Vopone says “making such value statements can have a positive impact on a number of organization-focused outcomes, such as the commitment that employees have to addressing diversity in their own workplaces.”

However, Volpone notes that her research also underscores the importance of companies behaving consistently and not sending mixed messages that can undermine their sincerity and stakeholder trust. For example, she notes, “if the organization makes a social justice-related values statement, yet their political donations signal that they support values that are at odds with that statement, what does that say to internal and external stakeholders?” In such cases, Volpone cautions, “the impact of value statements may not have the intended impact that the organization thinks that it will.”

ESG is a Strategic Imperative

While greenhouse gas emissions and abortion access are in some ways very different issues, they are both areas where businesses must think about how their environmental, social and ethical decision making impacts their business strategy and viability. Increasingly, businesses understand that doing good can be a catalyst for doing well. At the same time, individual companies are experiencing political pushback for their corporate policies. For example, Disney is at odds with Ron DeSantis, and Citibank has had its contract with the federal government brought up for review. These conflicts underscore the way in which business decisions that have social and environmental impacts are often inherently political.

Investing in pro-social and environmentally sustainable practices builds loyalty and a sense of belonging among employees, reduces turnover and burnout, and enhances operating consistency and predictability. It also appeals to consumers who want to view their purchasing behavior as participating in a larger ecosystem that lifts individuals and communities up through economic activity. Moreover, by tying ESG to sustainability, businesses can consider the positive impacts they have as part of their business value, set goals, and use those to help drive innovation and market leadership.

For Nunziato, the question is whether these benefits are enough to confer legitimacy on executives who need to make tough decisions in an uncertain political and regulatory environment.

How will executives persuade the relevant stakeholder groups that they do, in fact, have political legitimacy to make the environmental and social decisions they can't avoid facing? And, given that business is inevitably political, can we--should we--make it more directly democratic?

Joshua Nunziato

It is likely that individual states will enact stricter abortion laws over the next several months that will impact businesses and there seems to be a push from some political leaders to resurrect fossil fuels, or even to make the transition to a cleaner grid more expensive and complicated. It is unclear how companies will navigate these challenges if they become destabilizing to their financials. We will be watching how they will assess the risks of not aligning with political pressures, compared with the risks of compromising on ESG commitments.

Developing Ethical Business Leaders

Anonymous — Mon, 28 Mar 2022 17:41:22 +0000

Developing Ethical Business Leaders Anonymous (not verified) Mon, 03/28/2022 - 11:41

Justine Roberts

I want to prepare students to deal with small issues of integrity, honesty and transparency, and prepare them for the kind of leader they will be when they assume responsibility for teams. - Joshua Nunziato

Dr. Joshua S. Nunziato, an Assistant Teaching Professor in the Social Responsibility and Sustainability division (SRS) and Director of the Daniels Fund Ethics Initiative Collegiate Program at Leeds, teaches undergraduate, MBA and executive MBA students to think deeply about the direction their companies are heading and the contributions they are making to the stakeholder ecosystem. As a philosopher, Joshua’s research focuses on contemplative practices as a catalyst for shaping ethical behavior in the world of business.

“In an age where the shift to sustainability is becoming more urgent we need to give a lot more thought to the sacrifices we are making,” he says. “Contemplation is a powerful tool for equipping people to think in that way.”

We interviewed Joshua about what he wants students to take away from his classes, the role of philosophy in a business school, and the responsibilities of the business sector in the current political, economic and social global moment.

Why does philosophy belong in a business school?

I see philosophy as a catalyst for shaping everyday decision making and professional leadership. It is a privilege to work with students who are very practical and pragmatic but also empathetic and passionate about making the world a better place. I am grateful for the chance to engage students with my thinking on how we can connect the everyday ways we comport ourselves, together with the visionary moments by which we chart our life. It really matters that those levels are not allowed to just float in isolation but are brought into some kind of cohesive, intelligent whole.

What is the one thing you want future business leaders to learn from your classes?

Businesses are not simply impersonal tools. They always encode our values and ethical commitments–sometimes for good and other times for ill. By focusing on ethical leadership I am asking students to think about alignment or misalignment between their personal values and the values embedded in the systems they are choosing to become involved in. My courses emphasize the importance of recognizing how the places they choose to work give them room to express their values and make the kind of change they want to see in the world.

What would you tell a student who was considering working for a large, legacy company, for example in an extractive industry? We can’t leave them behind if we want to be successful at a global scale.

I don’t want students to feel powerless to change the structure. They might have more opportunities to make a difference at a big, more traditional company than at a smaller one that is already doing an amazing job and has lots of low hanging opportunities. But they also need to be aware they could get swallowed up by a culture that is misaligned with their values. I want students to have at least some expectation they will have an opportunity to make a significant impact.

For our students, there is a sense we have to take action.

Joshua Nunziato

Industries as varied as automotives, grocery and apparel have begun to combine sustainability and innovation in the same role. Do you see this as part of a trend toward acknowledgement of the importance of a values-driven framework to the core of business strategy?

I am encouraged by what I see as a rapid and pronounced shift away from a model where the impact you have is extrinsic to core strategy, and toward a more holistic approach in which sustainability considerations are baked into a company’s DNA and vision. It is the moral commitments that influence and frame all of the environmental and social impacts that a company has, as well as their strategy for change going forward.

My research focuses on sacrifice because we always have to make trade offs. Instead of thinking about sacrifice as a private, or corporate loss, I am interested in how we can reframe sacrifice as an offering for the common good with a goal of helping the community flourish. We are all in this together whether we want to be or not, and we need tools for thinking through the broader set of responsibilities that focus entails.

What philosophy is good for is helping you learn how to ask really good, far-sighted questions that are also informed by a sense of purpose and personal values.

Joshua Nunziato

We often talk about making the business case for sustainability. You seem to be arguing for a different approach.

To me, Ethical, Social, Governance (ESG) means the ability to respond to the real needs and wants of a broad stakeholder ecosystem with compassionate pragmatism. So it means looking comprehensively at the net impact, for good or ill, your decisions are having and trying to manage what you can measure as well as the important things you can't measure, like ethical responsibilities.

There is a lot of innovation happening in how to capture environmental, governance and social performance so we can report out on it. But it's a both/and situation. We need to ask what are we measuring, what are we not measuring, and what are the ethical commitments we have that we cannot quantify but need to acknowledge in our decision making. You need a different set of tools to manage those facets of sustainable leadership.

What about those early in their careers? What kinds of ethical dilemmas do they face, and how can people not in positions of authority contribute to the conversation?

Ethical issues students are likely to face early in their careers include things like cross generational communication. I want students to reflect on how they navigate differences in expectations when it comes to the workplace, especially when it comes to relating to each other constructively and critically. Cultivating this on teams takes a lot of emotional intelligence, sensitivity, and awareness of those around you.

I want students to learn principles of open-hearted ethical leadership that form cultures that are high integrity.

Joshua Nunziato

There can be marginal and small-time cheating and corner cutting plus cultural pressure to float along with those problems. Other common problems include managing and reporting time, harassment, discrimination and microaggressions, expense reports and travel compensation. It is important not to exclude larger systems-level questions that they will have an opportunity to address as they earn greater seniority, but they also cannot neglect the more everyday stuff. It is one leadership formation journey with different stages.

Has the pandemic impacted how you think about, and teach about, sustainability?

As we emerge from the crisis mode of the pandemic there is a lot of change and uncertainty. Business leaders must understand the forces driving those changes and then apply that knowledge to provide high-integrity, forward-looking leadership.

We must ask what we, as communities, businesses, and neighbors, care about: what are the values that can gather us in joint efforts? We are just beginning to ask, and we need to know the right questions before we can work together to figure out the answers.

Learn more about Joshua Nunziato’s research and teaching

Augustine and the Economy of Sacrifice: Ancient and Modern Perspectives by Joshua Nunziato
Ethical Leadership for Corporate Directors with Joshua Nunziato on the Innovation in Compliance with Tom Fox podcast
Apogy Change Leader Insights - Dr. Joshua Nunziato, Leeds School of Business, a conversation with Jessica Crow, change management consultant and yoga teacher, on practices for cultivating greater compassion amongst business leaders for more sustainable management
Joshua S. Nunziato and Ronald Paul Hill, “Perfectionism and the Place of the Interior Life in Business: Toward an Ethics of Personal Growth,” Business Ethics Quarterly 29, no. 2 (April 2019): 241–68

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Climate Crisis, Meet Entrepreneurship

Anonymous — Sat, 27 Nov 2021 16:00:00 +0000

Climate Crisis, Meet Entrepreneurship Anonymous (not verified) Sat, 11/27/2021 - 09:00

Turns out, small businesses can create big impact on the most urgent problem of our time. According to new research from Jeffrey York, entrepreneurs promoting environmental protection may be more effective at addressing climate change than sweeping policies or legacy companies trying to go green. These findings could help rethink how we address climate change in the future.

Read the interview in ��Ƶ Boulder Today.

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Gloria Urrea Wins Best Humanitarian Paper Award

Anonymous — Mon, 20 Sep 2021 01:29:27 +0000

Gloria Urrea Wins Best Humanitarian Paper Award Anonymous (not verified) Sun, 09/19/2021 - 19:29

Virtual volunteers help organizations make social impact through the use of online volunteering platforms, scarcely studied until now.

After decades under the radar, the practice of online volunteering really hit its stride with the arrival of the COVID-19 pandemic. Before COVID, most people thought of volunteering as giving their time to soup kitchens or animal shelters. But with the pandemic’s restrictions of in-person activities, many turned to online volunteering platforms of humanitarian organizations (HOs) to help with sustainable development challenges around the world.

Until recently, there had been little tracking of best practices with these online platforms. But Gloria Urrea, an assistant professor of operations management at the Leeds School of Business, saw a need to explore how HOs manage great variation in volunteers’ amount of experience with volunteering platforms.

Her research paper, “The Role of Volunteer Experience on Performance on Online Volunteering Platforms,” recently won the 2021 POMS Humanitarian Operations and Crisis Management (HOCM) Best Paper Award Competition.

“I am very honored and grateful to have received this award,” said Urrea, who co-authored the study with Eunae Yoo of the Kelley School of Business at Indiana University. “I feel it is a recognition of a project that is motivated by a real and relevant problem, developed in a rigorous manner and that proposes realistic practical recommendations for organizations.”

"It is recognition of a project that is motivated by a real and relevant problem.”

Gloria Urrea, Leeds Assistant Professor

Specifically, they investigated the role of volunteers’ experience with the online platform, the Humanitarian OpenStreetMap Team Tasking Manager, and how it impacts project completion rates and volunteer retention. They found that completion rates increased when a volunteer’s experience level matched a project’s priority level. Furthermore, they found that volunteers were more likely to continue volunteering if they felt incentivized to reach the next experience level.

“Something that I have really liked about this project is that we have had the opportunity to collaborate very closely with the online platform, sharing our findings with them and talking about future collaboration,” said Urrea. “They found our research informative and published a blog post about our findings.”

She pointed out that the study’s increased visibility from the award will allow more HOs and online platforms to benefit from their recommendations.

At Leeds, Urrea studies operations of HOs whose mission is to alleviate human suffering and improve the quality of life of the most vulnerable populations. Her research focuses on how organizations can manage the donations required to perform their work and how they can make their operations more efficient.

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For Center’s New Leader, Sustainability is Personal

Anonymous — Tue, 13 Jul 2021 14:57:08 +0000

For Center’s New Leader, Sustainability is Personal Anonymous (not verified) Tue, 07/13/2021 - 08:57

CESR’s new executive director brings a passion for the environment, and a career in social responsibility, to Leeds.

Kathryn Wendell brings a leadership career in sustainability to the Center for Ethics and Social Responsibility. Her experience includes assignments at the World Bank, Chevron, Stanford University and, most recently, the nonprofit Kennebunkport Climate Initiative.

In its search for a new executive director, the Center for Ethics and Social Responsibility at the Leeds School of Business wanted an accomplished strategist whose insights and global connections can help CESR advance on the world stage.

That’s exactly what they’re getting in Kathryn Wendell, an experienced leader in sustainability and social entrepreneurship, who will join the University of Colorado Boulder in August.

“I’m at a place in my career where I can leverage my networks to enable others to go out and make a difference,” Wendell said. “That’s important for this position, but it’s also very meaningful to me.”

Wendell’s career in sustainability has spanned the for-profit world (Chevron and Levi Strauss), the public sector (World Bank and Peace Corps), and higher education (Stanford University). Prior to joining Leeds, she was a director at Stanford’s Institute for Innovation in Developing Economies—known as Stanford Seed—which enables social entrepreneurs in Africa and Asia to grow and scale their businesses.

Currently, she serves on the board of the Kennebunkport Climate Initiative, a national nonprofit working to empower youth voices for climate action. She helped to launch the organization, collaborating with senior executives in Silicon Valley, New England and across the nation to advance its mission.

Bringing CESR 'to the next level'

That variety will serve her well at CESR, said Julie Waggoner, the center’s interim director.

“Kathryn has a lot of experience getting people excited about an idea and moving in the same direction,” said Waggoner, who is continuing on as CESR’s director of operations. “In the work she did for Kennebunkport, she was bringing together a lot of people with different, but related, interests and getting them committed to solving a problem—and that's really what what we're looking for in this role.

“We have many of the pieces to become a top 10 institution, in terms of sustainability, and I think Kathryn will really help us take it to the next level.”

Wendell’s experience leading corporate social responsibility initiatives at Chevron should serve her especially well, Waggoner said. In this role, Wendell led global initiatives to foster economic development in regions where the energy giant did business. In Bangladesh, she helped train local vendors and organizations to be able to supply Chevron, which imported virtually everything—even cafeteria food—from abroad.

“We are going to see a lot of change over the next decade. ... For business students, it's an incredible time to learn about the issues and identify innovative solutions.”

Kathryn Wendell, executive director, CESR

An ability to build capacity is important for CESR, which aims to be the recognized leader and authority for innovative education in ethics, social responsibility and sustainability.

“Leeds is already doing amazing work—in terms of research and education—when it comes to business solutions to environmental challenges, diversity and inclusion, and ethical leadership,” Wendell said. “Where I see myself able to make an impact is in building relationships with influential businesses and organizations, to see how we can work together toward common goals.”

While she’s new to Leeds, Wendell already is a Boulder resident; her husband, Mike McGehee, is a professor in the College of Engineering and Applied Science. Wendell is a firm believer that the engineering and business disciplines have much to learn from one another as they try to solve problems related to clean energy and the environment.

The environment, of course, was what drew her to Boulder in the first place.

“I love to ski and backpack, and I’m an avid trail runner,” she said. “One of the main motivations to come to Boulder was to be able to appreciate the outdoors, and be surrounded by people who deeply care about the environment.”

When she’s not in the mountains, Wendell enjoys travel—she has lived, worked or studied in more than 80 countries—which has given her a great network, but also a worldly perspective that’s crucial to solving the kinds of challenges confronting the business world.

“We are going to see a lot of change over the next decade, especially as companies integrate climate, diversity and ethics into their core business strategies. For business students, it's an incredible time to learn about the issues and identify innovative solutions,” she said. “It’s an honor to join Leeds as CESR advances our understanding of the challenges and offers the fresh ideas and best practice models that the business world seeks.”

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CESR Thought Leadership

Ethan Poskanzer on Democratizing Innovation

Off

Tony Kong on Social Sustainability and Transcendence

Mobile money serves people in poverty - up to a point

Investor Policy, ESG Contracting Influence Firms’ Sustainability Performance

Leeds focuses on the economic opportunity of solving the climate crisis

Corporate ESG Policies Respond to SCOTUS

West Virginia v EPA

Reguating Emissions vs. Reporting Standards

The Clean Energy Transition is not Slowing Down

Dobbs v. Jackson Women’s Health Organization

Companies Respond to Stakeholders

Corporate Value Statements have Measurable Impacts

ESG is a Strategic Imperative

Further Reading

Developing Ethical Business Leaders

Why does philosophy belong in a business school?

What is the one thing you want future business leaders to learn from your classes?

What would you tell a student who was considering working for a large, legacy company, for example in an extractive industry? We can’t leave them behind if we want to be successful at a global scale.

Industries as varied as automotives, grocery and apparel have begun to combine sustainability and innovation in the same role. Do you see this as part of a trend toward acknowledgement of the importance of a values-driven framework to the core of business strategy?

We often talk about making the business case for sustainability. You seem to be arguing for a different approach.

What about those early in their careers? What kinds of ethical dilemmas do they face, and how can people not in positions of authority contribute to the conversation?

Has the pandemic impacted how you think about, and teach about, sustainability?

Learn more about Joshua Nunziato’s research and teaching

Climate Crisis, Meet Entrepreneurship

Gloria Urrea Wins Best Humanitarian Paper Award

For Center’s New Leader, Sustainability is Personal