1. Learning for a New Leadership:The Collaborative Redesign of Lidera Programme By Susana C.Simes LealSubmitted to the University of Plymouth as a dissertation for the degree of Master of Sciences in Learning for Sustainability The Sustainability Institute Education Faculty University of Plymouth November of 2011 1

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3. ABSTRACTThis study begins by reflecting on the growing complexity of the world and themultiple economic, geopolitical, social and environmental changes it is undergoing andthe implications of these for business leadership in the 21st century. It reviews theopinions of various authors on the need to rethink business school teaching and thetraining of business leaders to prepare them for working towards a more sustainableplanet. The case-study of the Lidera Program Lideranas Empresariais para oDesenvolvimento Sustentvel, is presented as a model of transformative learning forbusiness leaders who wish to bring about sustainability in their local environment.Former participants in this program have recently experienced difficulties applying theknowledge they have learnt to the contradictions of the business world and haveshown an interest in continuing their learning in networks with other formerparticipants. The Program is also facing the challenge of training local facilitators. Inview of these needs, an action research program was designed, using appreciativeinquiry and collaborative learning, and mostly virtual tools, for a group of formerLidera participants, with a view to setting up a forum for the training future Liderafacilitators. This process showed many possibilities for the development of thisobjective and the use of the methodologies selected for similar programs. However,there were clearly challenges in developing such a program for businesspeople, giventheir hectic schedules and the level of commitment required for self-directed learning.It was also shown that the use of virtual resources still poses an obstacle to someparticipants and face-to-face meetings are still indispensible for such collaborativelearning. A number of contradictions were also observed which can be used tostrengthen relations in the group, when there is dialogue, transparency and self-awareness. The study concludes by noting the possibility of transforming this groupinto a learning community and a community of practice to provide support for futuresustainable business action taken by the Lidera network.Key-words: education, learning, leadership, collaboration, sustainability and business 3

4. Table of ContentsAbstract........3Summary......4Chapter 1. INTRODUCTION............10 1.1. Background...........10 1.2. The Reasons for the Proposed Experience, its Objectives, Goals and the Structure of the Study.....................13Chapter 2 .CORPORATE LEADERSHIP, LEARNING ANDSUSTAINABILITY........17 2.1 The world outlook....17 2.2 Development and sustainability.....................24 2.3. The Contradictions on Corporate social responsibility...................30 2.4. Business Schools and Education for Sustainability.........................42 2.5. Business leadership...............60 2.6. The Threshold of a New Leadership.........................69Chapter3 - THE LIDERA PROGRAMME, LEARNING AND BUSINESS LEADERSHIP...82 3.1. The Brazil of Lidera...............82 3.2 Learning with Lidera...86 3.3. The Post-Lidera Challenge.....105Chapter 4. LIDERA, ACTION-RESEARCH AND COLLABORATIVE LEARNING ....109 4.1. Collaborative Learning and Communities of Practice................110 4.2. An experience in Action Research and Collaborative Learning...............120 4.2.1. The Aims of the Action.....121 4.2.2. Methods................122 4.2.3. Creation and Profile of the Group.......................125 4.2.3.1. The Multiple Roles of the Facilitator...........126 4.2.4. Description of the Research and Collaboration Process......127 4.2.5. Analysis of the Process................143 4.2.5.1. What happened in practice........145 4.2.5.2. About Methods................161 4.2.5.3. About Facilitator..............163 4.2.5.4. The Use of Virtual Tools165 4.2.5.5. About Self-directed Learning...167 4.3. Discussion...169Chapter 5. CONCLUDING REMARKS...181 5.1. The Findings.....181 5.2. Lessons Learnt from the Experience183 5.3. Possible Developments....190List of Abbreviations..6Acknowledgements.8List of FiguresFigure 3.1.1 The U Journey......90Figure 3.1.2. The Learning Cycle...98Figure 3.1.3 Lideras Dimensions of Learning100Figure 3.2.1 Lideras Challenge106 4

5. Figure 3.2.2 The Transition of Lidera.107Figure 4.2.4.1. Appreciative Inquiry 4-D Cycle130Preamble.7The document body....02Annex :Ethical Protocol.202Contents of pocket:...Last CoverAppendix CDLast CoverAppendix 1. Starting the Action documentsAppendix 2. Basis for Action documentsAppendix 3. Working on Lidera documentsAppendix 4. Closing Action documentsAppendix 5. Evaluation process documentsBibliography References.........................................................................................192 5

6. List of AbbreviationsAACSB International - The Association to Advance Collegiate of BusinessAEC- Instituto de Ao Empresarial pela CidadaniaBNB - Banco do Nordeste do BrasilBNB/ETENE - Banco do Nordeste do Brasil/Estudos Econmicos do NordesteCEIBS- China Europe International Business SchoolEABIS - The Academy of Business in SocietyEFMD - European Foundation for Management DevelopmentHBOS - http://en.wikipedia.org/wiki/HBOSGA - Grupo de Aprendizagem (Learning Group)GDP -Gross Domestic ProductGMAC- Graduate Management Admission CouncilGRI- Global Reporting InitiativeGRLI - Globally Responsible Leadership InitiativeIBGE/IDS - Instituto Brasileiro de Geografia e Estatstica / Indicadores deSustentabilidadeINCA- Instituto Nacional de CncerIPCC -Intergovernmental Panel on Climate ChangeMEB- Movimento Empresarial pela BiodiversidadeMMA - Ministrio do Meio Ambiente do BrasilNMUE - Ncleo Minerva da Universidade de voraPAN-BRASIL -Programa Nacional de COmbate Desertificao e Mitigao dos Efeitosda SecaPRME - Principles for Responsible Management EducationSEC-Securities and Exchange CommissionUNCED - United Nations Conference on Environment and DevelopmentUN - United NationsWBCSD-World Business Council for Sustainable DevelopmentWWF- World Wide Fund for Nature 6

7. What is education? It is not repression, but the opposite, expression, freedom. Neitheris it imprinting, but, rather, sprouting, bringing forth. Still less is it the imposition of aform, but rather an unraveling of the deeper being of ones own form (Tagore, 1994.p.7). 7

8. AcknowledgementsFirst of all, I would like to thank the Kellogg Foundation for twelve years of productivepartnership and for the scholarship which enabled me to conclude this Mastersdegree. Special thanks are due to Andrs Thompson for his sincere encouragementand support.I am also grateful to LASPAU- , especially Craig Hastings, Derek Tavares, Ryan Keaneand Mary Helen Ybarra Johnson for providing me with this opportunity and furnishingvital support during the 16 months of the Masters course.I am very grateful to my teachers at the University of Plymouth, Alan Dyer and RobertCook, for their support and understanding throughout the course. I am especiallygrateful to my teacher and supervisor, Roger Cutting, whose patience, wisdom andtrust, helped me to discover my own way of learning.Thanks are also due to:Instituto Ao Empresarial Pela Cidadania, in particular, its president, Pedro Pereira,for his unconditional support as a business partner during the 16 months of theMasters.To Paul Webb, Peter Ratcliffe, Talita Moura and Isaias Dias for their professionalismand vital support with the translation and layout of this document.To my travelling companions, Alexandre Merrem, Carmen Cardoso, Emanuella XavierIvan Rocha, John Freitas, Mrcio Waked, Saritta Brito, Sergio Ferreira, who did morethan be present at one of the most important points in my journey;To my dear friends, Rebecca Simes, Flavia Amadeu, Marcos Feitosa, who were therefor me in moments of uncertainty and whose support and guidance helped me toovercome this great challenge. 8

9. To all those who encouraged me with their words, deeds and prayers: my father, mymother, my brothers and sisters, my mother- and father-in-law, my brothers- andsisters-in-law, my cousins, and my friends, who are a gift from God and my greateststrength.To my beloved children, Victor and Maria Luiza, who make it worthwhile believing inand striving for a better world and whose love gives meaning to my life.To my friend, companion and beloved husband, Frederico, who, in 33 years ofmarriage, has taught me to believe in myself and that true love is that which brings theone we love to life.Finally, and most importantly, I am grateful for the mercy and love of God, myconstant and faithful companion, who gave me life, purpose, and a reason to exist!Appreciative Inquirywhen used in the right measure, provide a necessary andstimulating contrast for a group of individuals that are overloaded on a day-to-daybasis by pragmatic concerns. 9

10. Chapter 1. INTRODUCTION1.1. BackgroundIn 1999, I made the decision to leave behind 24 years of professional life as abusinesswoman and company executive, to move to a career that would broaden myhorizons. Lots of things were going on at the same time and, in the midst of thisprocess, I discovered the Ao Empresarial pela Cidadania project, which had beenrunning in Brazil since 1998, with the support of the Kellogg Foundation and thecommitment of five social leaders who were working in institutes and businessfoundations in four different regions of the country. This group believed thatCorporate Social Responsibility was a key factor in changing Brazilian society. The mainchallenges faced were social inequality and changes in the environment in Brazil.I joined this group and, in Pernambuco, we embraced the cause of Corporate SocialResponsibility, at a time when the issue seemed to be far removed from the reality ofthe local business world.After two years of engagement with a number of businesspeople and activists in therea, the initiative was taken to set up the Instituto Ao Empresarial pela Cidadania Pernambuco (AEC).At that time, the main objective of the movement was to raise awareness amongbusinesspeople of the social reality they were embedded in and the role they ought toplay in changing this. The main challenge at the time was to spark discussion of a rangeof unfamiliar or poorly understood concepts, such as corporate social responsibility, 10

11. private social investment, corporate citizenship and, at the same time, to raiseawareness in the business community of the need for companies to adopt sociallyresponsible practices.At present, the AEC has 65 associate companies and has made progress in alerting thebusiness community and bringing it to understand that the future of business is relatedto vision and corporate responsibility, when they invest both in the economic and thesocial and environmental field. These are investments which should follow theprinciples of balanced and sustainable development.After five years of operation, the AEC identified one of the main reasons thatcompanies to not relate the development they bring about with social equity andsustainability was that these topics were not addressed by schools of business andadministration. Although they trained managers and businesspeople to generateprofits for their companies, schools were not developing the skills people need to dealwith these other issues or with the complexity and uncertainty of an increasingly lesssustainable world. Thus, in 2005, the BACI sought the support of the Kellog Foundationto run a program for the development of business leaders. With the support of thisorganization, and later in partnership with the Fundao Avina and the C&A Institute,three editions of the Lidera Program were held, and a fourth is currently underway.Lidera aims to bring together knowledge, content, experiences and reflections on thetraining of business leaders for sustainability, relating their role in the company withresponsible action and solidarity in the political, social, and environmental context of 11

12. the region in which they work. Furthermore, the aim was to learn that theirenterprises are related to sustainable development of the region, the country and theplanet. The ultimate objective of the program is to put together a network of businessleaders capable of acting together to bring about sustainable development in theNortheast region of Brazil.The results achieved by the program so far suggest that the chosen path was thecorrect one. At present, 43 businesspeople have been through the Lidera program andthe program is meeting the challenge of creating the means to strengthen their workwithin their companies and the wider business community, maintaining theconnections between them and their process of self-development. The aim is also toensure the future of Lidera by training a team of local facilitators.After heading the AEC for nine years, and having been part of the team that came upwith Lidera and one of the facilitators for the first three editions of the program, alongwith the BACI directors, we faced the challenge of finding alternative ways of ensuringthe future of Lidera. We therefore applied for a study grant for a Masters in Learningfor Sustainability at the University of Plymouth, again with the support of the KelloggFoundation.This was the background to the experience that is presented in this dissertation.It is important to tell this story in the introduction to a study that involves leadership,collaboration, sustainability and business, and not only because it is a story that bringstogether all these factors. The prevailing and most striking feature of this narrative is a 12

13. question: Can committed leadership drive action, even though the accomplishmentdepends on the collaboration of many others, who, jointly, make it happen1.2. The Reasons for the Proposed Experience, its Objectives, Goals andthe Structure of the StudyAs will be outlined in Chapter 2, the world is currently going through a point ofinflexion and has arrived at a point where change is irreversible. There are multiplereasons for this, including the Cartesian way of thinking of leaders, a self-centeredeconomic system that is exhausting the planets resources, and the contradictions of asociety that lead to injustice and conflict.Meanwhile, people from very different parts of the world are beginning to discoverthat they are connected, not only by access to the Internet or other means ofcommunications, but by exclusion, by the desire to have a say and awaken thepotential to bring about change. Connectivity among the excluded is spreadingaround the world and telling the powers that be that it is time for change.The world is beginning to look for the causes of the crises it is going througheconomic, political, social, and environmentaland is finding in the economic sectorand the way companies do business, one of the points where these crises converge.The background to this question is the way people think and the prevailing values ofthe education system and schools of business and administration, which train theleaders of the world economy. In view of this, the United Nations has begun amovement to change teaching practices in these schools, where ethics, sustainabledevelopment and corporate social responsibility are the vehicles of this change. A 13

14. series of initiatives is beginning to emerge that proposes innovation in the waysustainable business leaders are trained.In this world context, Brazil is confronting the paradox of being one of the leadingworld economies, but unprepared to continue its development process withsustainable management of its natural resources and the necessary evening out ofsocial and regional inequalities.This local and international context gave rise to the Lidera Programme - LideranasEmpresariais para o Desenvolvimento Sustentvelwhich, with a new proposal forthinking and learning, carries out training courses for business leaders, with a view tocontributing to more sustainable development in the region. This experience and itsapproach to learning will be discussed in Chapter 3.Despite the positive evaluation of the first three editions of the Lidera Programme,recent research with former participants has identified the difficulty they haveexperienced when they have to confront a contradictory business environment underpressure from the market. Some business leaders have expressed a desire to continueto dialogue with their peers, and conduct self-directed learning as a way ofstrengthening their shared initiatives. There is also a need for the program to have itsown team of local facilitators to ensure its future viability.These are the events that gave rise to this action research proposal that aims to usecollaborative learning and appreciative inquiry with a group of former Lidera Programe 14

15. participants, whose immediate, and challenging, aim is to revise the current programcurriculum.The overall aim of this objective: to set up a forum for the training of local Liderafacilitators, which could become a continuous learning unit capable of stimulating andproviding support for the development of former program participants, therebyenabling them to take action together in networks.This initiative aims to: 1. prove the viability of building up a learning community of business leaders; 2. find effective ways of creating a continuous learning process in the midst of the everyday activities of people with a heavy work load; 3. identify the opportunities and limitations of a training process that involves collaborative learning and self-directed learning, via the use of virtual tools; 4. identify factors that contribute to the training of a group of local facilitators for the Lidera Program; 5. understand that factors that help bring about a learning community of former Lidera participants for the purposes of strengthening networked action; 6. make it possible to revise the Lidera curriculum by way of collaborative learning.This process, which took four months and made use mainly of virtual tools mixed withoccasional face-to-face meetings, will be described, analyzed and discussed in Chapter4. This section will outline what was found that was different, contradictory orinnovative and consider its implications for the training of a possible collaborativelearning community that aims to bring together former Lidera participants. It also aimsto examine the extent to which the content worked on during the process has been 15

16. assimilated and the opportunities for the strengthening of Lidera and its network ofbusinesspeople on the basis of this experience. This chapter will also discuss theimplications and repercussions of these results for the continuity of this learninggroup.Chapter 5 will present final remarks on the study and summarize the relevant findingsfrom the review of the literature and of the Lidera program that may help to trainbusiness leaders at schools of business and administration, along with the strengthsand weaknesses of the action research that may help improve collaborative learning,and finally the relevant results of this study and its implications for the future. 16

17. Chapter 2 .CORPORATE LEADERSHIP, LEARNING AND SUSTAINABILITYThis literature review aims to explore how changes in geo-political, economic, socialand environmental world outlook have led to changes in the business environmentand the emergence of business leadership. It will reflect on the difficulties Schools ofBusiness and Administration Schools encounter in training managers and leaders forthis new world context, where the trend is to pursue sustainable development. It willalso present possible paths which could be adopted by these institutions. This studyalso includes reflections on the evolution of the concept of leadership and seeks tocharacterize the emergence of a new profile for sustainability within businessleadership. Finally, the study points to the importance and need for continuingdevelopment of leaders who want to act in a changing world.2.1 A world outlook We have reached a tipping point, an extreme point in time where change is inevitable (Sassen in: Folha de So Paulo, 2011).At the time of writing, various chains of events are occurring in various parts of theworld that draw attention to the importance of the global environment in determiningthe development paths leaders and their businesses must take.In Tahrir Square, in Cairo, in Puerta del Sol, Madrid, in Syntagma Square, in Athens, inIsrael, in Chile, and, more recently, on the streets of London and other cities in the UK,thousands of peoplemost of them younghave invaded public spaces to protest thelack of civil rights and the right to vote, unemployment, rising taxes, the privatization 17

18. of public services and the like. These popular uprisings, whose immediate causes varyfrom political and economic issues to the way young immigrants are treated by thegovernment, are occurring in countries with very different histories. However, thereare signs that they all have the same origin. This is the view of the sociologist, SaskiaSassen, who argues in a recent interview in O Estado de So Paulo newspaper1 that"we have reached tipping point", that the world has come to a critical juncture. Sassenunderstands these recent events to be in some way related to the exclusion that is partof the logic of globalization. She adds that, for thirty years half of the worldspopulation has seen their income decline, and there is such a concentration of wealthat the top, that we simply can take no more. This is what has caused the explosionsthat we are now seeing in our cities ". In the same interview, Sassen notes2 that thestreet has become the political forum for those who do not have formal access topower. The sociologist believes that these acts go beyond merely protesting theexisting regime and claims that all these demonstrations are united by the fact thatthey are part of a social struggle. She further suggests that these movements want toshare power, not just protest against it. She argues that we are living in a world ofextremes, where, abject poverty rubs shoulders with massive accumulation of wealth,where communicationon line and in real timeis exposing this situation andbringing it to a middle class, which, owing to the economic crisis, feels they have noplace in the interests of those who decide how the world is run. She concludes thatwe have reached a tipping point, a point in time where change is inevitable (O Estado1 This interview was published in O Estado de So Paulo newspaper on 13/08/2011 and can be consultedat http://www.estadao.com.br/noticias/suplementos,a-globalizacao-do-protesto,758135,0.htm. Lastaccessed on 20/09/20112 See note 1. 18

19. de So Paulo, 2011)3. These words show how the various crises are deeply interlinkedand the complexity of the web these events are weaving and the challenge posed byfinding answers to these demands ( Sassen in O Estado de So Paulo, 2011) .According to the reports contained in the United Nations Restructuring WorldDevelopment the World Economic and Social Survey (2010), there are no easysolutions to the complex situation outlined above. What we can see in this word that iscrying out for change is a series of interconnected crises. The economic crisis comes ontop of a social onewhich has long been in placewhich is exacerbated by theclimate changes that pose a clear and imminent danger, whose effects, such as morefrequent and more severe droughts, excessive rain, earthquakes and tsumanis, to citebut a few, are felt all over the world. These are situations that, in a cyclical fashion,lead to multiple worsening crises and calamities that unfold simultaneously andexpose the way the world is governed (UN, 2010).Science shows that the climate of Planet Earth has been changing for thousands ofyears, but in recent decades has changed far more than expected and this has caughtthe attention of the world, putting it in a state of alert, in view of the large numbers ofenvironmental disasters that have occurred. The Intergovernmental Panel on ClimateChange (IPCC, 2007 p. 16) predicts that this situation could worsen and also that globaltemperatures may rise between 1.8 and 4 degrees centigrade by the end of the 21 stcentury. This would result in a rise in sea-levelsand growing risk of flooding in areaslying below sea-leveland problems with freshwater in many parts of the world,3 See note 1. 19

20. leading to a reduction in agricultural production with considerable impact on humanhealth. The Stern Report (2006) calls attention to the fact that climate change poses athreat to global society and thus requires an urgent global response. According to thisreport, the impact of this will be disproportionately felt in poorer countries. However,it will also affect rich countries and cause political, economic and social instability.Sterns remarks (2008) are corroborated by Fountain (1995) when she claims that: No matter where we live; we are all linked to other parts of planet. In our increasingly global society, places, events, issue and people are connected in a complex and delicately balanced web of relationships (Fountain,1995, p15 ).The global context thus reflects different complex facets of reality with multipleconnections between governments, businesses, and societies, the private and publicsector, culture, the environment and other aspects of an extremely complex andinterdependent world system (Castells, 1999 p. 411-439). In recent years, thisinterdependence has been growing more and more, owing the degree of connectivityof the society of web users.It would appear to be essential that business leaders reflect on such issues, sinceknowing how to read the worldto see the underlying political, economic, culturaland social dynamicsand how to act on this, is an indispensible leadership skill.According to Kahane (2010), the leaders of the 21st century are going to need to beready to deal with these new social dynamics, if they want to create new realities. Atransformative leader is open to and connected with him- or herself, with others, with 20

21. the surrounding context and with the demands that arise from it, according to the rolehe or she plays in the company, in society, and in the local community (Kahane, 2010).It would thus appear to be important for a leader to understand the dynamics ofpower that emerges from this new context. None of us live in a terra nullius. We can pretend that our world is empty, but it is not. Our planet is getting fuller and fuller of people, buildings, cars and mountains of solid waste. Our atmosphere is increasingly full of carbon dioxide. Our society is getting fuller and fuller of voices, ideas, and cultures, which are powerful, diverse and often conflicting. This overloaded world is the main reason why, when confronting more complex social challenges, we cannot use power alone, but must also use love ( Kahane, 2010 p 35)Wallersteins Word-Systems Analysis (2005) draws attention to the fact that the socialreality of the world should not only be interpreted as a mere collection of differentNation States, but as a world-system that functions in an integrated fashion. A systemis made up of a variety of institutions, including Nation States, corporations, and socialand supra-national organizations. All of these are connected in a network, which, onthe one hand, helps this system to function, but, on the other, generates internalconflicts and contradictions. In the dynamic of the modern world-system (Wallerstein,2005), the authority of a State is based on various regulations, rules, laws andconcessions, such as, for example, the permission to move capital, to work, for goodsto cross frontiers, to own land and the like. This gives the State the power to influencethe decisions of the institutions of which it is composed and those of other States.However, Gonalves (2002) calls attention to the fact that the State is not alone in thisand notes the growing influence of corporations on this world system of governance,especially multinational corporations. He gives the example of companies whose 21

22. economic power has come to have a strong impact on the way the countries theyoperate in grow and develop. This power is increasingly bolstered by the flexibility thatcompany structures have acquired through globalization. Gonalves (2002) arguesthat, in the 20th century, when companies were structured like pyramids, where thetop level of the hierarchy controlled all production units, they had geographically fixedstages of production, while, in the early 21st century, they have started to operate as anetwork, with no single center of control. A system is thus installed, in which control isdetermined by the priorities and the interests of the sectors to which these companiesbelong. Although centralized control is exercised by the large-scale industrialoligopolies, production has been geographically decentralized and its stages ofproduction distributed across regions and countries where costs are lower and profitshigher, from the point of view of the global market. Cost-cutting, flexibilization andtechnological innovation, in addition to expertise in the management of financialassets have thus become the main objective of these corporations (Gonalves, 2002).Operating as a network, contemporary capitalism is increasing its influence over theNation States with which corporations have dealings and large-scale economic groupsare becoming a locus for the accumulation of capital and the accumulation of power(Gonalves, 1999 a: 3).Thus, according to Stopford et.al (1995), the internationalization of corporations hasexpanded the economic power of these organizations and also produced a kind ofauthority that, in some cases, transcends that of the nation states they operate in. Ithas thus come to be understood that international relations are no longer guided by 22

23. diplomatic relations between nations and that the growing participation ofcorporations in this field provides adds another dimension to international relations,which are now said to be triangular: company to company; State to company; State toState (Stopford et.al, 1995). As a result, it can be concluded that global influence hasbeen divided into various dimensions: the relations between companies, which spreadout around the globe struggling for competitive advantages that ensure theirdomination of the world markets; the relations between States that are developingtheir own economies and striving to maintain or acquire advantages over othercountries; and the relations between States and corporations, in which States enterinto crucial partnerships with companies in order to advance their developmentprojects. According to Stopford et al. (1995), this situation allows corporations tomanipulate the interests of States and to obtain greater incentives and benefits.It can thus be concluded that this was the dynamics underlying the processes anddecisions that have brought about changes in geopolitics, economics and life in societyaround the world. Stopford et al. (1995), however, call special attention to the fragilityand contradictions of the relations that are produced by the different ways thesestakeholders come together to make decisions. These relations alternate betweencooperation, rivalry and confrontation, with the main issue being the interests of theparties involved (Stopford et al., 1995).However, there are signs that this is changing. In recent years new stakeholders haveemerged and are growing in strength, benefitting from the interconnectivity of newcommunications Technologies and the growing interdependence of global society. In 23

24. this context a diffuse stakeholder is emerging, who, in the words of Joseph Nye (2010)is typified by soft power and is gaining ground in organized civil society andmultilateral institutions. These organizations lie outside the control of the State and4corporations and are showing themselves to be increasingly capable of influencingthe global agenda in a persuasive fashion. This is happening, according to Villa (1999),because of the growing incidence of what he calls global issues, such as environmentaldisasters, migrations of populations and complex crises that political authorities andmarket forces are unable to control. These are issues of interest to the collective thatare decentralized and transnational in nature. There is thus growing influence on thepart of civil society and organizations which are based on an invisible power that isdiffuse and connected by social networks, as can be seen from the example cited atthe beginning of this chapter. Villa (1999) adds that the power of these social forcesand their organizations is based on a search for consensus and the mobilization ofpublic opinion and direct joint action that has a qualitative and quantitative impact onall levels of power. Likewise, Sassen 4 argues that the global environment is becomingan increasingly complex and horizontal one, where power and decision-making do notsimply stem from above but flow through all levels of thought, showing leaders newways of moving forward.2.2 Development and sustainabilityThe changes the world is going through seem to herald the beginning of a new age, asSenge (2009) argues in A Revoluo Decisiva, (2009) no age, however far-reaching4 See note 1. 24

25. its influence, can last forever. Here he is referring to the end of the industrial erawhich is underway, despite the fact that in the past 25 years, the world has seen anunparalleled rise in industrial production. There are no signs that this age is going intodecline, but the growing interdependence of nation-states, the interconnectedness ofenvironmental, economic and social crises, the ever greater quantities of toxic wasteproduced, the pressure caused by dwindling natural resources, and the deep gulfbetween rich and poor have all sparked political and social reactions that are of greatconcern to leaders around the world. According to this author, these events arebringing about a new awareness in individuals, corporations and governments, leadingthem to understand that the effects of increasing industrial production areunsustainable in a future that has already begun to make itself felt (Senge, 2009).According to Capra (2002), many corporations which are governed by the metaphorof the machine are still loth to give up already out-dated methods and technologies.They thus continue to treat all goodsand not only air, water and landas if theywere freely-available and inexhaustible, and to have a negative impact on the fragileweb of social relations by promoting a kind of continuous economic growth thatresults in an environment that is unfit for life (Capra, 2002). It can thus be concludedthat quality of life and well-being cannot be related to economic growth or to GDP(Gross Domestic Product) as Jean Gadrey and Jany Catrice argue (apud Dowbor in:Hoyos Guevara, 2009 p.19). For Dowbor (in: Hoyos Guevara, 2009) the only purpose ofGDP is to measure the value of commercial goods and services produced annually,without revealing whether this wealth is accumulated in the hands of a few or whether 25

26. this is achieved at the cost of degrading natural capital. In this authors view, ifgovernments and markets are regarded as successful on the basis of GDP alone, thereis a tremendous distortion that needs to be corrected (Dowbor in: Hoyos Guevara,2009 p.19). Concern in this regard led the United Nations Development Fund in the1990s to begin to measure HDI (the human development index) as a way of combiningeconomic indicators with others that assess the quality of peoples lives. The idea wasthat the HDI might provide a yardstick for genuine progress in society (Dowbor in:Hoyos Guevara, 2009 p.19).However, Capra (1997) suggests the sustainability in human communities shouldfollow a different path. In his view (1997), there is a mismatch between economics andthe ecology in so far as nature is cyclical, whilst our industrial and commercial systemsare linear. He argues that corporate activities extract resources and transform theminto goods and waste, sell these products to consumers, who, in turn, produce evenmore waste, once they have consumed them. Capra (1997) goes on to suggest thatsustainable patterns of production and consumption need to be cyclical and to imitatethe processes of nature, according to which nothing is lost and everything istransformed. For this to become reality, corporations need to profoundly rethink theway they operate and review their patterns of production and their economic anddevelopment models. According to Hawken (2000), there is a secret history behindevery manufactured product: discarded materials, non-renewable natural resourcesconsumed and environmental footprints. By way of illustration, the author cites theproduction of orange juice in Florida, where for every cup of juice produced two litersof gasoline and one thousand liters of water need to be consumed (Hawken, 2000). 26

27. In view of facts such as these, Capra (1997) reminds us that not all developmentprocesses can be considered sustainable. He argues that sustainability is aconsequence of a complex pattern of organization that has five basic characteristics:interdependence, recycling, partnership, flexibility, and diversity. In his view (1997),sustainability does not lie merely in relations that aim to preserve or conserve theenvironment, so as not to threaten the availability of natural resources for futuregenerations, or relations that seek to keep up the pace of continuous improvement ofeconomic, social, cultural, political, institutional or territorial processes. Capra arguesthat sustainability is rather a complex function, which combines the aforementionedcharacteristics that are found in ecosystems (Capra, 1997).Returning to the dilemma of development versus sustainability, Dennis L. Meadowsand his team of researchers have raised other important questions regarding therelation between economic and ecological stability in their study of limits to growth.In this study, Meadows et al. (1972) advocate stabilizing world population growth andthe growth of industrial capital, on the grounds that natural resources are limited,thereby re-awakening discussion of Malthuss theory, in his 1798 Essay on the Principleof Population, which warned against the danger of unchecked world populationgrowth.However, the idea of freezing growth clashed with the philosophy of continuousgrowth of the industrial society of the time and was interpreted as an indirect critiqueof the theories of development on which capitalism is based. Scholars who wereproponents of theories of economic growth were not slow to respond. One of these, 27

28. the Nobel prize-winning economist, Robert Solow, (1973 and 1974), vehementlycriticized the catastrophic prognostications of the Rome Club, to which Meadowswas associated. There were also criticisms from the opposite end of the spectrum,such as those of Mahbub Ul Haq (1976), who argued that rich countries, after acentury of rapid industrial growth, had made it impossible for poorer countries todevelop likewise and were attempting to use ecological rhetoric to justify this. Thisdebate dominated the UNCED - United Nations Conference on Environment andDevelopment - in Rio in 1992 and revealed the extent to which specialists disagreedregarding economic development, its environmental impact and the social imbalance itgives rise to.Amidst this heated debate the concept of Sustainable Development began to emergeand gain in strength as an alternative to older theories of development. The conceptemerged from the 1987 Brundtland Report, which defended the argument thatdevelopment should meet the needs of the present without undermining the capacityof future generations to meet their own needs. The Brundtland Report was the resultof the work of the United Nations World Commission on the Environment andDevelopment (UNCED)s complex study of the causes of socio-economic and ecologicalproblems of global society and advocated the inter-connectedness of economics,technology, society and politics, drawing attention to the need to adopt a new ethicalposture characterized by responsibility for future generations as well as for individuals,governments, institutions, corporations and society at large. The report suggested theadoption of a series of measures by nation-states, including: 28

29. a) Limiting population growth; b) food security for the future; c) preservation of biodiversity and ecosystems; d) reduction in energy consumption and investment in technologies that use renewable sources of energy; e) stimulating industrial production in non- industrialized countries on the basis of sustainable technologies; f) control of urbanization and integration of city and countryside; g) meeting basic needs. This report also sets goals at the international level, to be regulated by various international institutions, such as that: development organizations should adopt sustainable development strategies; the international community should protect supranational ecosystems, such as Antarctica, the oceans, and space; that war should be outlawed; that the UN should introduce a sustainable development program. (Brundtland, 1987)5The Brundtland Report (1987)6 advocates growth in non-industrialized as well asindustrialized countries and espouses the theory that overcoming under-developmentin countries from the Southern Hemisphere is linked to the continuing growth ofindustrialized nations. This view has further fuelled the controversy surroundingMeadowss thesis (1972) and the limits of economic growth that has been ragingamong specialists ever since.According to Veiga (2010), some economists believe that redesigning the process ofproduction in order to achieve greater eco-efficiency and lower energy consumptionwould make it possible to grow economically without exhausting natural resources. Onthe other hand, Tim Jackson (2009), in his report, Prosperity without growth?Economics for a finite Planet, questions this view and argues that growing productionand consumption, even if it is eco-efficient, will not solve the problem of theexhaustion of natural resources and the problem of the impact on the environment(Veiga, 2010). According to Jackson (2009), the development of awareness and values5 See note 4.6 See note 4. 29

30. regarding sustainability in contemporary society is occurring at a slower pace thanglobal warming demands.All this discussion of growth and sustainable economic growth, fuelled by growingawareness of ecological issues and sustainability in the 1970s, 80s and 90s, werefundamental in rekindling another long-neglected debate regarding the extent towhich corporations should be socially responsible.2.3. Contradiction on Corporate social responsibilityIn order to live as human beings, men and women need to agree on certain issues,coordinate certain activities, outlaw certain practices and develop collective expectationsand projects ( Boff, 2003, p.27)Corporate social responsibility is not a recent idea. Although it did not mean the sameas it does today, it was considered the norm in Europe and the United States in the19th century. In that time, the right to do business as a corporation was subject toregulation by the State or by the Monarch and was not considered a matter of purelyprivate economic interest (Hood, 1998 and Ashley, 2005). According to these authors,governments authorized permits for open capital corporations that were committed toproviding public benefits in return. Thus, when companies set up business, even in thecolonies, they were expected to provide public servicesconstruction, transportation,infrastructure and so forthand the scope and nature of their business and capitalstructure were subject to regulation. However, following the declaration ofindependence, the United States changed the rules and corporations came to be 30

31. primarily concerned with generating profits for share-holders. This is the pattern thathas now spread to the whole of the capitalist world. (Hood, 1998 and Ashley, 2005).However, the issue continues to be debated and developed in different waysdepending on the stake-holders involved. One case that exemplifies the contradictionsalready surrounding this in 1919 was that of Dodge versus Ford. This dispute arosewhen Henry Ford, president and major share-holder of an automobile company, in thename of social objectives, was aiming to go against the interests of the share-holdersand not pay out the expected dividends, so that he could pass them on to his workersas a pay rise, arguing that this was an investment in production capacity. However, theMichigan Supreme Court found in favor of the Dodges, ruling that corporations existfor the benefit of their share-holders and that the free-will of executive directors islimited to meeting this objective, and that therefore they may not use company profitsas they please. This case would have a great influence on the debate regardingcorporate social responsibility in the coming years (Hood, 1998 and Ashley, 2005).For Ashley (2005), the concept of corporate social responsibility has matured sincethen and grown in weight in the last three decades, both in terms of improvedpractices and greater regulation and assessment.In fact, the concept of social responsibility, although on the face of it a simple one, has,for reason of the etymology of the words used and the numerous other conceptsrelated to it, led to much confusion regarding its interpretation. The concept is oftennot understood in the same way by different companies and this has given rise to 31

32. misunderstandings or interpretations that are guided by self-interest (Marrewijk,2002).According to Oliveira (1984 p.204), corporate social responsibility has already beeninterpreted in various ways: ...some take it to mean legal responsibilities and social obligations; for others, it is socially responsible behavior in keeping with ethical standards and, for others, it means nothing more than charity. There are also those who argue that social responsibility is confined to paying good wages and treating workers well. Of course, corporate social responsibility means all of these things, but it cannot be confined to these factors alone (Oliveira, 1984 p.204).In order to reflect on this authors comment, rather than theorizing about the variousconcepts and different interpretations that surround the subject, the presente studywill seek to demonstrate how different levels of understanding of social andenvironmental responsibility are reflected in the concepts adopted by institutions andthe practices they adopt when relating to others, which are sometimes beset bycontradictions and shortcomings.Organizations that promote these ideas in business tend to stress a wide range ofdifferent aspects of the concept and interpret it in diverse ways.The United Nations, for example, expresses its understanding of corporate socialresponsibility through the Global Compact initiative7 . The United Nations seeks tobase its understanding on its own Universal Declaration of Human Rights, the ILOsFundamental Principles and Rights at Work, the Rio Declaration on the Environment7 More information on this initiative can be found at http://www.unglobalcompact.org/ . Accessed on21/09/2011 32

33. and Development (UN) and the United Nations Convention against Corruption. TheGlobal Compact thus defines social responsibility in terms of 10 principles.Human Rights: Principle 1: Businesses should support and respect the protection ofinternationally proclaimed human rights; and Principle 2: make sure that they are notcomplicit in human rights abuses. Labor Principle 3: Businesses should uphold thefreedom of association and the effective recognition of the right to collectivebargaining; Principle 4: the elimination of all forms of forced and compulsory labor;Principle 5: the effective abolition of child labor; and Principle 6: the elimination ofdiscrimination in respect of employment and occupation. Environment Principle 7:Businesses should support a precautionary approach to environmental challenges;Principle 8: undertake initiatives to promote greater environmental responsibility; andPrinciple 9: encourage the development and diffusion of environmentally friendlytechnologies. Anti-Corruption Principle 10: Businesses should work against corruptionin all its forms, including extortion and bribery.On the other hand, the Instituto Ethos de Empresas e Responsabilidade Social8 - a non-profit organization that brings together 1,429 businesses in Brazil under the banner ofcorporate social responsibilities believes that Corporate social responsibility is a formof management that defines itself in terms of ethical and transparent relationsbetween the company and all the stakeholders it has dealings with and in terms of theestablishment of corporate goals that promote the sustainable development of society,8 More information on the Instituto Ethos de Empresas e responsabilidade Social can be found athttp://www1.ethos.org.br/EthosWeb/pt/29/o_que_e_rse /o_que_e_rse.aspx 33

34. the preservation of environmental and cultural resources for future generations, withdue respect for diversity, and the reduction of social inequality.A third organization that promotes corporate social responsibility, which is led by 200CEOs of global companies that combine business with sustainable development, is theWorld Business Council for Sustainable Development9. This association argues that"corporate social responsibility is an ongoing commitment on the part of businesses tocontribute to economic development, improving the quality of life of workers and theirfamilies, as well as the local community and society at large.There are certain similarities in the way these three organizations view corporatesocial responsibility, despite differences in emphasis. Two of them explicitly includeconcepts relating to sustainable development, social justice and ethics in businessrelations. However, one of them, the WBCSD does not explicitly state its view ofbusiness ethics, an issue that has been shown to be crucial for corporate socialresponsibility in theory and practice.There is much debate at all levels and business ethics is full of contradictions. Thisbecomes clearer when we compare what some companies say with what they actuallydo.One of the most controversial cases is that of the tobacco company, Phillip Morris. Thiscompany has a specific department for corporate social responsibility10 and claims to9 More information on the WBCSD can be found athttp://www.wbcsd.org/templates/TemplateWBCSD5/layout.asp?MenuID=110 More information on the companys social responsibility initiatives can been found on Philip Morriss web site:http://www.pmi.com/eng/about_us/company_overview/pages/company_overview.aspx . Accessed on 21/09/2011 34

35. understand the term as follows. For us, responsibility begins with the product. For thisreason, we are committed to communicating the health risks associated with smokingtobacco in an open and transparent manner and in supporting the regulation oftobacco wherever our products are sold. They add that we also support initiatives inthe local communities where our staff-members live and work and those where ourtobacco is sourced. We focus on five critical social issues: hunger and extreme poverty,education, environmental sustainability, domestic violence, and disaster relief. Atpresent, our charitable contributions program is making a difference in communitiesaround the world.The companys vision of social responsibility does not, however, make it fully explicitthat it is concerned with the statistics produced by the Associao Mdica Brasileiraand the Agncia Nacional de Sade Suplementar, which, in its Clinical Guidelines forSupplementary Health11, states that burning a cigarette produces 4,720 substances,15 chemical functions, 60 of which have been shown to be carcinogenic and others areknown to be toxic.12Furthermore, according to data presented by the Observatrio da Poltica Nacional deControle do Tabaco run by the Brazilian Ministry of Health, in partnership with theInstituto Nacional de Cncer (INCA)13 the harmful effects of tobacco are not confinedto the direct or indirect consumer. There are also consequences for the tobaccoplantation workers, since, during harvesting, their skin comes into contact with thetobacco leaves and absorbs a large quantity of nicotine, which may cause the so-called11 More information on this can be found at http://www.projetodiretrizes.org.br/ans/diretrizes/71.pdf12 See following footnote.13 Information onf the Instituto Nacional de Cncer and the Observatrio de Controle do Tabaco can befound at http://www2.inca.gov.br/wps/wcm/connect/observatorio_controle_tabaco/site/home 35

36. "green tobacco leaf disease". The symptoms of this range from dizziness and nausea toloss of sleep and appetite, which, researchers claim, may lead to depression.Another company that has recently attracted media attention regarding corporatesocial responsibility is the clothing outlet group, ZARA14. In its communications onsocial responsibility the company says that it believes that Through its business model,ZARA aims to help promote the sustainable development of society and theenvironments with which it interacts. This commitment to the environment is part ofthe Inditex groups corporate social responsibility policy. On its website, the companyexplicitly outlines practices that contribute to sustainable development, such as:energy saving by eco-efficient management of stores; a policy of reducing waste andpromoting recycling; using biodegradable paper or plastic bags, and the like. However,the company does not clarify its vision of relations with its stakeholders. On this count,Zara was recently involved in scandals relating to the use of slave labor15 in its supplychain.The contradictions and inconsistencies of these two companies are not isolatedexamples. According to studies carried out by Global Compact16 forced labor is foundfrequently in the supply chains of other companies, especially transnational ones thatuse labor from countries where people are living in extreme poverty. This study14 More information on the Zara Groups corporate social responsibility program can be found athttp://fashiongear.fibre2fashion.com/brand-story/zara/commitments.asp accessed on 21/09/201115 See Reuters News http://uk.reuters.com/article/2011/08/17/zara-brazil-idUKN1E77G18N20110817 accessedon 21/09/201116 Study carried out by Global Compact on corporations and forced labor http://human-rights.unglobalcompact.org/dilemmas/forced-labour/ . Acessado em 21/09/2011 36

37. suggests that it is common practice for such companies to contract the services ofsmall-businesses in countries with high levels of poverty, which in turn take onhundreds of workers without any legal obligation to register them or to meet agreedstandards. However, nowadays, with civil society increasingly well-organized andmarkets interconnected in real time, companies can be monitored and requirementsregarding moral conduct are becoming the norm. Cohen (2003 p.35) corroborates thisview when he argues that, in this context, ethicsdefined as transparency in relationsand concern regarding the impact of ones activities on societyis now coming to beseen as a kind of prerequisite for company survival...Despite the shortcomings noted above, it cannot be denied that some progress hasbeen made in understanding of the concept of social responsibility and sociallyresponsible behavior, even though this has been limited by the challenges faced.There have been palpable changes in relations between corporations, civil society andthe environment, as is noted in the study, In Search of Sustainability: The Road toCorproate Social Responsibility in Latin America (Korin, 2011). According to this study,there has been a genuine increase in the number of companies who measurecorporate social responsibilitypresenting reports modeled on the Global ReportingInitiative (GRI)17all over the world. The study shows that between 1999 and 2009,companies produced a total of 4,745 reports using the GRI methodology, and there is atendency for number to continue to rise.17 For more information of GRI, seehttp://www.globalreporting.org/ReportingFramework/ReportingFrameworkOverview/ . Accessed on21/09/2011 37

38. Korin (2011) also reports that, in recent years, the concept of corporate socialresponsibility has broadened and companies have adopted the concept ofsustainability as a way meeting a larger number of demands. The study argues thatcorporate social responsibility has begun to be fueled by issues such as inclusivebusiness, fair trade, responsible consumption and sustainable cities, among others, insuch a way that companies have come to understand that corporate socialresponsibility is a means and sustainability the end (Korin, 2011). Corporatesustainability is thus playing a determining role in the success of business and theirunderstanding of corporate social responsibility. According to Daniel Domeneghetti(2009), this issue has gained ground in companies based on the triple bottom line.Corporate sustainability is a term that was coined by the British social scientist, JohnElkington18, a specialist in the field for 30 years and founder of SustainAbility, aconsultancy agency specializing in sustainable business. According to Savitz & Weber(2007), The Triple Bottom Line captures the essence of sustainability, in so far as itmeasures the impact of the activities of organizations on the world. When this ispositive, it adds value to the company, both in terms of profits and the wealth ofshare-holders, and in terms of social, human and environmental capital. ForDomeneghetti (2009), this index has become increasingly highly valued byshareholders and clients and has become imperative for the success of a company. Theidea is thus spreading in the business world that a sustainable company is one thatgenerates profit for shareholders at the same time as protecting the environment and18 For more information on SustainAbiliy see: http://www.sustainability.com/company . Accessed on21/09/2011 38

39. improving the quality of life of the people whose lives it touches. (Savitz & Weber2007). In the view of Dias (2006), a company can only play a viable role in society if it iseconomically viable and that this too is a fundamental aspect of corporatesustainability.However, Leff (2006) points to the contradictions that remain in understanding of theissue, talk about sustainable development aims to bring together in the same field ofinterest the various expectations of a great diversity of stakeholders engaged inactivities that exploit natural resources. Furthermore, this author draws attention tothe fact that the concept of sustainability includes the idea of creating the ecologicalconditions for nature to be able to renew itself in a natural cycle and in its own time,which clashes with the idea of development as continuous process of growth. It canthus be seen that there is a contradiction in this view of sustainability that acceptscontinuous economic development at the expense of the preservation and renovationof natural processes (Leff, 2006).In fact, as can be seen from the opinions expressed by the authors cited above, as withthe concept of corporate social responsibility, there are misunderstandings regardingthe concept of sustainability, especially when it is linked with the concept ofdevelopment. Such misunderstandings suggest a lack of discussion and investment ineducation in this field.Despite the valid concerns of those who consider these issues, pragmatic companiestend to address them as a way of developing more efficient management processes. 39

40. They seek eco-efficient practices, clean production, strategies that increasinglydiminish the environmental impact of their processes, products and services, as a wayof avoiding or reducing the short- and long-term risks for human beings and theenvironment (Dias, 2006). On the other hand, it is clear that much more needs to beaccomplished in terms of raising awareness in the business community of the realmeaning of their role in achieving global sustainability.We live in a world that is much more complex than it was twenty years ago and lesscomplex than it will be ten years from now. Technological progress, interconnectivity,the agility of the dynamics of international relations in the face of the multiple crisesthat are emergingtogether with the need for urgent changes in political, economic,social and environmental relationsrequire a kind of leadership whose thoughtparadigm is different from that of the leaders who brought us to this state of affairs.This is echoed by Voltolini (2010) when he writesin an article on the website of IdiaSustentvel magazine19--that: "The paradigm shift that is so much needed if we are to achieve sustainable development depends on social cohesion, a state in which individuals action is moved by a common interest. Thus, by catalyzing this process of mobilization of society, leaders in various spheres, have an important role to play in building sustainability" (Voltolini, 2010)20 .Evidence that this paradigm shift is already under way can be seen in the behavior ofsome companies and the declarations of some business leaders. For example, JulioMoura (Voltolini, 2010) president and CEO of Grupo Nuevadeclares that:19 Voltolini (2010) Sustentabilidade em srie: os quatro desafios complexos. Idia Sustentvelhttp://www.ideiasustentavel.com.br/2010/03/os-quatro-desafios-complexos/. Published on 23 March.Accessed on 21/09/201120 Idem. 40

41. global warming, the energy crisis, the future water crisis and poverty are huge issues for humanity in which leaders should see challenges and opportunities. They thus need to understand all the variables involved. In addition to the overall culture, consistent values and solid ethical conduct, it is important that they be pro-active and innovative, with a long-term vision and a capacity for perseverance (Moura apud Voltolini, 2010).The co-president of the Conselho de Administrao da Naturaa Brazilian cosmeticscompanyGuilherme Peiro Leal ( apud Voltolini, 2010), recognizes that: the need for change has never been clearer. The world needs to be redesigned. The way we live, produce and consume needs to be revised or will not have any more life, business or products. This is a fantastic opportunity. The leader should be heavily involved, passionately involved, in efforts to transform difficulties into opportunities (Leal apud Voltolini, 2010).Fernando Almeida (apud Voltolini, 2010) former president of CEBDS - ConselhoEmpresarial Brasileiro para o Desenvolvimento Sustentvel categorically states that: companies who do not adopt sustainability as a business strategyand not just in name, which is already the case, but, above all, in the presentation of resultswill be out of business in, at most, fifteen years. It doesnt matter how big they are. Those that do not reinvent themselves will disappear (Almeida apud Voltolini, 2010).In view of these opinions, Voltolini (2010) concludes that the fear that the multiplecrises that have erupted around the world will worsen, both the environmental onesand the social and economic ones, has led to a rethink of business leadership withregard to models of production and the natural resource economy, with the adoptionof alternative energy sources in place of fossil fuels. He realizes that these changeshave proved to be slow in coming when compared to the needs of the plant, althougha growing number of companies have already started out on the path towards change(Voltolini , 2010). 41

42. The dynamics and increasing velocity of social, political, economic and cultural changein modern society have led to significant changes in the way human beings live thatcould require at least a generation to establish themselves. However, these changesare gradually picking up speed and become more predictable and this pace has animpact on various aspects of human existence. Knowledge is one of the areas mostpowerfully affected and the education sector has struggled to keep up with thisprocess and often failed in its role of forming a bridge between the past, the presentand the future. In view of this, as we shall see below, Business Schools are beingconfronted with the indispensible need to question the way they teach and thecurricula they follow, in an attempt to review their role and accompany these changes.2.4. Business Schools and Education for Sustainability "An intelligence that is incapable of perceiving the context and the planetary complex remains blind, unconscious, and irresponsible. (Morin, 2003 p.15)According to Paulo Freire (1979) change must be something conscious and consistent,it must be assumed by an active, committed subject who understands his or herhistory and the reality of which he or she forms a part to the point of beingindistinguishable from it. According to this author, change only takes on meaning,when the subject is sufficiently critically aware and self-conscious, when he or she issufficiently grounded in the present to be able to project ideas into the future, whenone knows that ones own actions should be committed to people other than oneself,when there is a sense of serious moral duty. (Freire, 1979). In other words, when onetakes action that is committed to change, one is capable of reflecting on who one is 42

43. and what one does and making a personal commitment based on reflection on thereality one is familiar with.Freires way of thinking shows that a truly transformative education needs to fosterself-consciousness, a feeling of belonging and the awareness of the place one occupiesin the world.Accepting and broadening Freires insight, Jane Nelson (apud Voltolini 2010)21 director of the University of Harvards Corporate Social Responsibility Initiative in aninterview with Idia Sustentvel says that universities and companies should createan educational system that favors understanding of global systems, develops systemicthinking is capable of recognizing, identifying and valuing interdependence; thatencourages entrepreneurship, innovation, leadership, and the convergence ofknowledge from different segments of society (Nelson apud Voltolini 2010)This recent reflection of Nelsons (apud Voltolini 2010) acquired renewed significance,when, a few years ago, Harvard University came under severe criticism and was heldindirectly responsible for the business scandals and crises sparked by the behavior ofits alumni.One example of this is an article written by Broughton (2009) for the UK SundayTimes22, in which he recalls the 2002 Enron scandal and remarks that this was acompany stuffed with Harvard Business School graduates, starting with its chiefexecutive, Jeff Skilling. In the same article, he notes that Enron was not the only case21 See footnote 19.22 Broughtons Sunday Times article can be accessed athttp://www.timesonline.co.uk/tol/news/uk/education/article5821706.ece 43

44. of mismanagement where Harvard Business School graduates were involved and citesother examples, such as Stan ONeal and John Thain, the last two chief executives ofMerrill Lynch, and Andy Hornby, former CEO of HBOS who came top of his class.Broughton (2009) cites other illustrious names and comments that to add furtherluster, the list also contains the names of George W. Bush, Hank Paulson, former USTreasury Secretary, and Christopher Cox, former president of the Securities andExchange Commission (SEC), a remarkable trinity, who more than fulfilled the missionof their alma mater of teaching leaders who make a difference in the world." Theauthor concludes with irony that Harvard University was certainly not expecting toproduce this kind of difference in the world. Broughton (2009), who himself is aHarvard graduate, claims that business schools have shown a remarkable capacity foravoiding the blame for the economic catastrophes that have unfolded before theirvery eyes.Another article on the subject could be considered more of a self-criticism, since it waspenned by a former professor and published in the March 2009 edition of the HarvardBusiness School Review Magazine. It is an article entitled "Are Business Schools toBlame?"23 in which Joel M. Podolny comments that the US economic crisis hasproduced many casualties, especially among the MBA programs whose alumni wereinvolved in the financial corporation scandals. The author admits that business schoolsprovide students with many technical skills, but little or nothing in terms of values,responsibilities, and accountability. Wondering how things came to this, Podolny23 This article can be consulted at http://blogs.hbr.org/how-to-fix-business-schools/2009/03/are-business-schools-to-blame.html 44

45. (2009) describes the traditional MBA curricula as dysfunctional, in that they onlyprovide a brief overview of leadership without going into the difficulties raised by thechallenges and responsibilities of being a leader. The author argues that working withleadership means defining a vision and setting an agenda. However, the approachadopted by MBA programs means that the students leave school convinced that theessential work of a leader can be accomplished without consciously needing takevalues and ethics into consideration. Podolny (2009) also criticizes the paucity of self-evaluation and contrition on the part of MBA programs in relation to the crisis andconcludes that business schools need to rethink what they teach and how they teachit (Podolny , 2009 p.66).However, in order to shed more light on how business schools arrived at a theory ofteaching that allowed them to assume the critical position that Harvard BusinessSchool symbolically occupies today, it is necessary to understand the kind of thinkingthat has guided it until today.The paradigm of scientific administration emerged at the end of the 19th century andthe beginning of the 20th, with the work of Taylor, Fayol and Ford (Burrel & Morgan,1979). According to this approach, administration involves controlling the process ofproduction itself, presupposing the need for precise monitoring of all stages. Accordingto these authors, know how is the capacity to accomplish a task in accordance withstandardized results within a planned time-frame. 45

46. According to Podolny (2009 p. 63 e 64)24, fifty years ago, two US foundationstheFord Foundation and the Carnegie Foundationcommissioned independent studies ofthe teaching of management in the United States, since they considered the quality ofknowledge in the area to be very poor. Both studies conclude by recommending thatfaculties of administration incorporate traditional academic disciplines that place moreemphasis on quantitative methods, such as economics, statistics and operationalresearch. These suggestions were adopted by most faculties at the time and nowadaysthe number of teachers who use quantitative methods and mathematical models faroutstrips that of those who opt for qualitative, inductive, humanistic approaches(Podolny, 2009).Thus, the quest to measure and divide up all manner of things gave increasing powerto mechanistic ways of thinking in the business world. Any problem increasingly cameto be managed by taking elements in isolation, using a fragmented vision, based on theidea that analysis of the parts allows one to understand the whole (Wheatley,1993).According to Wheatley (1993, p.2), in the past three centuries... we have broken up,planned, forecast and analyzed the world. We are addicted to cause and effect... EdgarMorin (2001,p.13) likewise argues that: There is one singular problem, which is always overlooked, which is the need to promote knowledge capable of grasping global and fundamental problems in such a way as to incorporate partial and local knowledge in them. The supremacy of fragmented knowledge in accordance with the traditional disciplines frequently impedes the formation of links between the parts and the whole and should be replace by a form of knowledge capable of understanding all subjects in context, in their full complexity, and as a whole. There is a need to develop the natural aptitude of the human spirit to put all this information in24 This article can be consulted at http://www.livecontent.in/roomreading/accenture3.pdf 46

47. context. There is a need to teach methods that will enable us to establish mutual relations and reciprocal influences between the parts and the whole of a complex world."Thus, although Podolny (2009) and Cortese (2003) argue that the emphasis onquantitative methods has brought greater rigor to the teaching of management, thisway of thinking leads to fragmented, increasingly specialized management, that isdisconnected from the organization as a whole (Morin, 2001; Wheatley, 1993).Cortese (2003) recognizes that the emphasis on individual learning and competitionresults in professionals who are not prepared for collaboration, which is a skill that isincreasingly in demand in a world of growing interdependence.Reflection of the complexity of the contemporary world and the fact that business andadministration schools are unprepared for this, one must agree with Orr (in Sterling,2009) when he argues that the old educational model needs to be revised and newparadigms introduced that move education in the direction of an ethics ofsustainability based on a holistic view of the world and democratic and ecologicalpractices, rather than the strict, instrumental, centralizing and standardized model oftraditional education.Albert Einstein said that "no problem can be solved by the same kind of consciousnessthat created it. We have to learn to see the world anew (apud Sterling, 2009 p. 12).Cortese (2003) likewise understands that future business leaders need to undergo aprofound and transformative change in their thinking, values, and way of acting, insuch a way that they incorporate a new more systemic, holistic and collaborative viewof the world. Orr (2009) agrees when he says that: 47

48. "there is a myth that the purpose of education is that of giving you the means for upward mobility and success... The plain fact is that the planet does not need more "successful" people. But it does desperately need more peacemakers, healers, restorers, storytellers, and lovers of every shape and form. It needs people who live well in their places. It needs people of moral courage willing to join the fight to make the world habitable and humane. And these needs have little to do with success as our culture has defined it. (Orr, 2009 p.12)Criticizing the way the concept of sustainability has been misunderstood and, at times,re-invented by the business sector to suit its own interests, Delyse Springett (2010)remarks, in a comment on the work of Hawken (1993)25, that there is no subject moreimportant for business schools than sustainability, since the leaders and businessmanagers of the future need to become agents of a turn towards sustainability. Shealso argues, citing Levy (1997)26, that recognizing the influence that businesses have onthe way society at large thinks and the way it is planned, through their hegemoniccoalition with governments and other elites, only lends yet more weight to theargument that education for sustainability should be an integral part of the businessstudies curriculum.In the wake of events and global crises involving the world of business and theemergence of a systemic form of thinking that leads to change, there is a clear needfor connections that go beyond the interests of governments and markets, if waybusiness administration is taught is to be changed. Thus, with the Global Compact(2007)27, the United Nations has started a movement to support business schools,25 Hawken, P. (1993) The Ecology of Commerce: How Business Can Save the Planet", Harper Collins,New York, NY26 Levy,D.L.(1997) "Environmental management as political sustainability, Organisation andEnvironment, Vol 10, no 2, pp. 126-12727 See footnote 7. 48

49. universities, companies, governments, and civil society organizations interested inbuilding up a global view of business education and training effective business leaders.The United Nations has thus adopted an initiative entitled Principles for ResponsibleManagement Education (PRME, 2007)28. The aim is to encourage the teaching ofresponsible management, research into new paradigms and new business thinkingaround the world.According to Manuel Escudero (in: Alcaraz & Thiruvattal 2010)29, of the United NationsSpecial Council and Executive Director of the PRME initiative, there are serious reasonsfor the UN to undertake this initiative, which include the following: (a) the recent foodand energy crises have raised awareness that we live in an overpopulated world whosenatural resources are stretched to the limit, although many still insist on continuingeconomic growth, which has resulted in new crises related to the scarcity of theseresources; (b) the recent financial crisis and economic recession that has infected thewhole world and attendant problems has led to need to rethink the way capitalismworks; (c) the emergencies of a multipolar world with new nations as partners hasbrought a new way of conducting international relations that is more conducive to thisscenario onto the agenda. We all thus face huge changes in terms of internationalrelations and foreign policy and this raises the question of whether business schoolcurricula can afford to neglect all this complexity. Can these schools claim that they areteaching and preparing their students for this new kind of world, for a future in whichsocial and environmental issues will certainly have to be faced?28 For more information see http://www.unprme.org/29 See interview with Manuel Escudero at http://www.unprme.org/resource-docs/AnInterviewwithManuelEscudero.pdf 49

50. Taking these considerations as their starting point, a meeting was held with the UnitedNations, AACSB International, EFMD, the Aspen Institute for Business and Society,EABIS, GMAC, GRLI and Net Impact institutions that have taken some of the maineducational initiatives in responsible management around the world to launch thePRME movement. This project has given a new impulse to schools of business andadministration, bringing them into line with international values, such as thoseoutlined in the United Nations Global Compact.The PRMEs work with six principles for responsible education and management, basedon values that may have an impact on learning and education, as well as businessschool practices. These principles are:Purpose: We will develop the capabilities of students to be future generators ofsustainable value for business and society at large and to work for an inclusive andsustainable global economy.Values: We will incorporate into our academic activities and curricula the values ofglobal social responsibility as portrayed in international initiatives such as the UnitedNations Global Compact.Method: We will create educational frameworks, materials, processes andenvironments that enable effective learning ex