London Business School alumni are championing sustainability across a range of different industries, arguing that it can not only make good financial sense for corporates but help them attract the best talent. This was first published on the Alumni News, Issue 130, July 2013. Read the full magazine here: http://www.london.edu/assets/documents/ourcommunity/London_Business_School_Issue_130.pdf

1. Q TheBigIssue/Capitalism for Social Change
32 AlumniNews London Business School http://portal.london.edu

2. TERRYHAWES
AlumniNews London Business School 31
IN APRIL,THEWORLD STOPPEDTO PAY
its respects to former British Prime Minister
MargaretThatcher, the high priestess of “red in
tooth and claw” neoliberal capitalism. It is hard
to imagine the Iron Lady discussing the interface
between economics and sustainability with President
Reagan,her 1980s ally across theAtlantic,and there’s
a view that any corporate responsibility legacy she
left behind was largely inadvertent. But in the 20
years since the late BaronessThatcher left office,
sustainable investment has grown from a cottage
industry to a multi-billion dollar business.Those at
the cutting edge now argue that capitalism is not the
enemy of the environment and fair trade. Instead,
they say,it is only capitalism that can save the world.
Professor Ioannis Ioannou of London
Business School is a leading advocate of this view.
“The world’s problems, such as social inequality
and global warming, are becoming more
pressing,” he says.“The question is what is the best
avenue to resolve these issues? My view, which is
learned from history, is that it is the model of
economic corporations that has propelled us
through the industrial revolution and into the
world we see today. Of course, there are issues
and problems with this that would need to be
rectified for business to realise this broader role
going forward.
“Business corporations have the ability to
problem solve. Can they leverage this to solve
the world’s problems? Can they see them as
profitable business opportunities?The scale of
transformation required is so great it is hard to
see another institution being able to do this.”
Professor Ioannou’s research (co-authored with
School alumni are championing sustainability across a range of different industries,
arguing that it can not only make good financial sense for corporates
but help them attract the best talent. HELEN POWER reports
THE FUTURE’S BRIGHT,
THE FUTURE’S
GREEN
Professors Robert Eccles and George Serafeim of
Harvard Business School) shows that it pays to be
sustainable. His survey of 180 US companies
shows clearly that the 90 that operate sustainably
have produced better returns for shareholders
since the 1990s than those that have not.
The reason for this, he argues, is that it is in a
company’s own interests to act sustainably.“Even
from a purely business perspective, you need to
realise, as a business, if you are not able to tackle
these big problems outside your front door – you
are not going to be around in 20 years time,”he says.
He points to Unilever, a company with a very
strong track record in sustainability, as a prime
example of a company that put sustainability at
the core of its activities and profited from it.As
part of gaining certification of the tea supply
chain by the Rainforest Alliance, Unilever’s
LiptonTea division found that when it gave
tea-picking staff protective uniforms and taught
them not to use excessive pesticides it saw an
increase in yields and quality that far outweighed
the cost of the initiatives.
“Paul Polman [Unilever’s chief executive, who
recently spoke at the School’s Global Leadership
Summit] has been seeing off speculative hedge funds
by courting long-term investment funds to buy
the company’s shares,” says Professor Ioannou.
“It’s about matching the right company to the
right investor base.”
For the professor, it is crucial that companies
that want to benefit from this positive feedback
loop really put sustainability at the heart of what
they do, rather than just “green-washing” their
corporate image. Ë

3. Q TheBigIssue/Capitalism for Social Change
32 AlumniNews London Business School http://portal.london.edu
make them available via royalty-free licences
under theWIPO Re:Search programme. It has
spearheaded a programme to fight malaria –
a disease that is most life-threatening in sub-
SaharanAfrican – with a new vaccine.
“This doesn’t show up in the profit-and-loss
column, but there are a number of direct benefits
you could look at to GSK,” says Mike.“One is in
terms of direct impact on staff morale. If you talk
to many people they would feel proud of what we
are doing.At a higher level there is a reputational
benefit. GSK’s mission is: do more, feel better,
live longer, and that’s not just for people who can
afford it.”
REBECA NAVARRO MBA2010,A SUPPLY
Chain Manager at Unilever, agrees that real
sustainability should permeate corporate culture.
“What I’ve seen here is that we are very different
from other companies for the simple reason that
everyone cares about the environment and their
impact on it,” she says.“What is good for the
environment is many times also what is good for
the business.If you look at saving energy,or making
sure the product travels as little as possible, that
applies to both. But it doesn’t just have to be
about the bottom line.“The MBA at the School
allowed me to find a job where I had a genuine
influence [on sustainability and environmental
issues].That was really important.”
Jelte de Jongh MBA2012 exemplifies a
new attitude towards career and meaning.
Upon graduation he started Pyoupil.com,
an award-winning for-profit startup that is
committed to tackling dyslexia through
technology. In parallel, Jelte works part-
time as investment consultant to PutYour
MoneyWhereYour Mouth Is Community
(PYMWYMIC), a network of high net worth
individuals investing in sustainable companies in
Europe. Jelte thoroughly agrees that a proper
CSR programme attracts the best employees.
“Having a clear vision on how your company
acts sustainably in relation to all its stakeholders,
rather than just concentrating on financial returns
for shareholders can generate real benefits for
everyone including those shareholders,” he says.
“The reason I think this is all the more true
going forward is that having a company with a
ALUMNI OF LBSWORKING IN BUSINESSES
around the world are putting the principles
espoused by Professor Ioannou and others into
practice.They believe Professor Ioannou’s core
theory – that business must walk the walk on
sustainability, not just talk the talk – is key.
For sustainability consultant Gustavo Romano
MBA2003, businesses have wasted too much
money on corporate social responsibility
programmes that are little more than hot air.“If
shareholders understood how badly their money
has been spent in the name of good causes, they
would be shocked,” he says.“Until now, most of
us have been content with glossy reports full of
photos and qualitative quotes because CSR has
been seen as a side dish, as an expense and not as
an investment. Incredibly, investors have been
content with reports of how much was spent, not
how much impact was generated.
“I am not saying that CSR is not crucial or
companies should not invest in it.What I’m
saying is exactly the opposite: it is so crucial that
it must be managed as seriously as any other key
investment. Put your money where it will really
have a meaningful impact.”
Other alumni are working inside corporations
to implement strong sustainability practices.
One, Mike Strange JEMBA2003, is now
Head of Operations at theTres Cantos Medicines
Development Campus – a not-for-profit unit
within GlaxoSmithKline (GSK) – which is
focused on finding new medicines for diseases
of the developing world.
Tres Cantos is making Big Pharma more
sustainable by making industry expertise open
access.“In the past you might have seen cash
donations – here what we are donating is our core
expertise instead of money,” he says.“We’ve said
we will open our labs to external researchers.We
invite scientists from around the world who want
to tap into our expertise and we help them to
progress their projects.There are no strings
attached for GSK.The researcher can walk away
with their results but we expect them to make
them available to the broader community.”
Three years ago the company put a number of
patents in the public domain and committed to
Mike Strange JEMBA2003
is Head of Operations at the
Tres Cantos Medicines
Development Campus at
GlaxoSmithKline
“CSR should be managed
as seriously as any other key
investment. Put your money
where it will really have a
meaningful impact”
“Having a clear vision on how
your company acts sustainably
can generate real benefits for
everyone, including shareholders”
GUSTAVO ROMANO MBA2003
JELTE DE JONGH MBA2012
Gustavo Romano MBA2003
is a sustainability consultant

4. AlumniNews London Business School 33
clear mission for employees is of great benefit
and increasingly employees seek to work for
those companies.”
THE SCHOOL’S ALUMNI HAVE SEEN
great changes in ethical investing and
sustainability over the last decade.“The first wave
of CSR was the awareness wave,” says Gustavo.
“Companies realised that legality was not enough:
morality was also important.The second wave,
which happened over the last decade or so, was
the action wave: we stopped talking and started
doing something about it.The third wave will be
accountability.Assessing the impact of CSR
investment will be paramount in the next few years.”
Jelte, who started his career working for
Roland Berger Strategy Consultants, has seen
interest – and returns – in sustainable investing
soar.“Fifteen to 20 years ago, what my current
company PYMWYMIC does was still very niche,”
he says.“You had NGOs and philanthropists at
one end of the sustainable investment spectrum
and businesses at the other, with a big gap in
between.What we have seen in the last 20 years,
in the UK, in Sweden, in Germany and in the
Netherlands is the sector maturing and both ends
of the spectrum invest using sustainable models.”
Jelte has seen returns for investors in ethical
business grow from a nominal 2% to an industry
average of 4-8%. He believes that the School
has made a unique contribution to the growth
of the industry:“London Business School –
not only on the research, but also on the
education side – is building a new generation
of business leaders, finance leaders and investors
who really understand sustainability principles.”
But the rapid growth of sustainable investing
has not been without its problems. Gustavo
warns that some standard CSR fallbacks – such
as donation to charities – are actually risky.
Few companies do a proper risk analysis of their
charitable donations or consider whether they
are aligned with their corporate objectives. He
points to a company which donates to a children’s
charity which only passes on 10% of money
raised to good causes.“This is shareholders’
money and it must be as properly managed and
accounted for as any other investment,” he adds.
“If the company cannot show that this money has
a tangible impact, it is better to distribute it as
dividend or keep it as retained profits.”
The benefits of a sound approach to the
issue, however, are legion and London
Business School alumni working in this area
are leading changes that will benefit business
and society alike.
A survey of
180US companies
shows clearly
that the 90
that operate
sustainably
have produced
better returns
for shareholders
since the 1990s
than those that
have not
Rebeca Navarro MBA2010
is a Supply Chain Manager
at Unilever
Jelte de Jongh MBA2012
is an investment consultant
for a network of high net
worth individuals
AS A CEO, HOW IMPORTANT ARE SUSTAINABILITY ISSUES
TO THE FUTURE SUCCESS OF YOUR BUSINESS?
54%Overall
Very Important Important
Latin America
North America
Europe
Asia Pacific
Africa
Middle East &
North Africa
39%
41%
19%
93%
93%
90%
98%
97%
97%
57%
78%
60%
48%
59%
22% 57% 79%
31%
45%
37%
WHICH FACTORS HAVE DRIVEN YOU, AS A CEO, TO TAKE
ACTION ON SUSTAINABILITY ISSUES?
Respondents identifying each factor in their top three choices
Brand, trust and
reputation
BY SECTOR
Personal motivation
Impact of development
gaps on business
Employee engagement
and recruitment
Potential for revenue
growth/cost reduction
Consumer/customer
demand
Governmental/
regulatory environment
Pressure from
investors/shareholders
72%
31%
29%
44%
42%
39%
24%
12%
54%Overall
Very Important Important
Consumer
Goods
Health & Life
Energy
Professional
Services
Communications
Metals & Mining
Media
Automotive
Utilities
Banking
Electronics
39%
38%
24%
36%
42%
93%
96%
84%
94%
81%
100%
92%
99%
92%
97%
99%
62%
68%
63%
50%
68%
31%
62%
67%
68%
22%
51% 42% 93%
26%
59%
34%
17%
29%
68%
SOURCE: Accenture – UN Global Compact-Accenture CEO Study 2010
BY REGION