When Lloyd Kurtz began teaching a course on socially responsible investing five years ago for the Haas School of Business at the University of California, Berkeley, he had no idea how quickly the field would expand.
But a number of things have made his curriculum increasingly rich and relevant: New academic research has linked environmental, social and governance (ESG) factors with strong investment returns. The United Nations-backed Principles for Responsible Investment has won widespread endorsement. There has been a greater emphasis on sustainability in investing. And, of course, the global financial crisis struck.
"To teach, I have to stay up to date with this fast-moving area," says Kurtz, who is not only a lecturer at Haas but the chief investment officer at Nelson Capital Management. The Palo Alto, Calif.-based registered investment advisory, owned by Wells Fargo & Co., offers socially responsible investment strategies, among other things, for both people and institutions.
Kurtz's MBA course, now called "Social Investing: Recent Findings in Management and Finance," covers economics, finance and management but also includes stakeholder theory and ethics.
"We're taking well-understood disciplines and giving them a fresh application; that's half the battle," Kurtz says. "The research papers are where the action is." He incorporates the latest findings into his curriculum. In addition to studying how ESG factors deliver alpha, he asks students to consider what's not making sense and where business models fail or are incomplete.
"In wealth management, this is a tool kit that fits very well," says Kurtz, who hopes his students develop a sense of self-reliance and open-mindedness.
He also has them look at strategies employed by specific practitioners, and he's invited portfolio managers to class to participate in Q&A sessions. "Part of my role is to give students a sense of how theory translates into practice," he says.
Around the globe, universities have begun to infuse sustainable and responsible investing and corporate social responsibility principles and practices into their curriculums.
Since 2009, there's been a 38% increase in the number of required courses in finance departments that include social, ethical and environmental content, according to the 2011-12 Beyond Grey Pinstripes report from the Aspen Institute Center for Business Education. The survey included 149 leading MBA programs in 22 countries on six continents. Undergraduate students are also being exposed to these topics more.
Like Kurtz, most professors are aiming to give their students a different perspective and a competitive advantage by helping them see the world as many investors have already begun to.