“Business schools are waking up to the issue of climate change,” says Andy Hoffman, whose new book, Business School and the Noble Purpose of the Market, addresses why business schools have a responsibility to adjust how and what they teach to address the needs of society and the environment today. 

“We’ve got to turn the arrow the other way, from the environment fitting into the market to the market adjusting to the realities of the environment,” says Hoffman, a professor who holds a joint appointment with the University of Michigan School for Environment and Sustainability (SEAS) and Ross School of Business. “The market is the most powerful orienting force on Earth. You can lament that fact, but it is a fact. If it’s not solving the climate crisis, it won’t be solved. And we don’t have the option of just wiping the slate clean and coming up with a new system, so we have to amend capitalism.”

Instead, Hoffman argues that business schools should help define how future business leaders can become stewards of the market and fix it where it’s broken. “The reality is that climate change and inequality are system breakdowns caused by capitalism. These are not externalities, these are not unintended consequences. These are the products of the market as it's designed. If we want to fix them, we have to change the market.”

“The shareholder variant of capitalism we have right now is collapsing under its own weight,” says Hoffman. “And so, the question is, what will come out of it? This isn’t a debate between socialism and capitalism, it’s not a binary choice; it’s the gray zone in the middle. So I want business schools to start to rethink what they teach to recognize the limits on the market from the environment, recognize there is a role for government in the economy, and that the purpose of a corporation is not just to make money for the shareholder, but to make products people want to buy and that serve society. If they do that, they’ll serve society and make a profit.” 

In the 30 years that Hoffman has been teaching, he says he has seen a shift in student attitudes and their interest in affecting change.

“Our students see the power of business, and many come to business school to steer that power towards solving society’s problems. Sure, some just want to make money, but many are saying that they want to find meaning and purpose, and this gives me hope, because they are the people who are going to try and change the system so it works better for everybody,” says Hoffman. “We just need to be sure to give them the tools to do it.”

In his book, Hoffman addresses students directly, affirming the importance of the questions they are now asking of the market and business, and the reality that they will be the generation tasked with doing something about climate change and inequality. 

Hoffman also directly addresses faculty and administrators, and their role in designing and delivering an effective business education that, among other things, establishes the proper role of government in the market, enacting serious policy that moves the entire market to address challenges.

“We’re not going to deal with climate change by individual companies doing voluntary carbon footprint reductions,” says Hoffman. “The corporate sector right now has tremendous influence in stifling the government’s ability to enact serious policy, and we need to train students to turn that influence around.”

He adds that the focus on a sense of purpose and the idea that the goal is to run businesses in service to society is essential to the success of today’s business school graduates.

Not doing so, he explains, comes with inevitable consequences. As an example, Hoffman describes how Boeing shifted its focus to increasing shareholder profits and went from being a company that produced quality airplanes to one plagued with problems. 

“Once they turned their focus on next quarter’s returns, adopted an efficiency mindset that led them to outsource more components, developed a culture where people could not voice dissent, planes started to fail,” says Hoffman.

Hoffman says that, while efficiency is often good, we have to consider other factors. “Moving manufacturing to other regions or countries may increase profits. But what about the people left behind? We don’t factor that into our equations. These are people’s lives!”

He also argues that the idea that there can be limitless growth needs to be challenged, as well as the notion that people are inherently selfish.

“Consumption is not the purpose of your life. How do we focus on the things that matter, like community, and living meaningful lives, not just buying more and more stuff?” says Hoffman. 

Hoffman challenges more senior faculty to think and act like “elders,” to stop caring about their own success and metrics and instead focus on their institution as a whole, working to improve things for the next generation of students and faculty. 

“The truth is, when we come to the end of our days and look back on our life, it’s not going to be our H-index and our citation counts that are going to give us satisfaction, it’s going to be, did we make a positive impact? Do we have a positive legacy on our students and society?” says Hoffman.

In the preface of the book, Hoffman says, “This book is a provocation and a call to arms,” confirming that it’s intended to challenge those who read it to become catalysts for “constructive and aspirational change in a world that desperately needs it,” and that rejuvenating the business school curriculum and pedagogy to align with twenty-first-century realities is essential to a more just and sustainable future.