Why This Wharton MBA Professor Is Running For The U.S. Senate
Eric Orts, professor of legal studies and business ethics at Wharton School, launched a campaign for U.S. Senate this summer. (Courtesy photo)
Eric Orts, professor of legal studies and business ethics at the Wharton School, believes the track of his career changed in 1992. That was the year of the United Nations Conference on Environment and Development, also known as the Rio De Janeiro Earth Summit. Orts attended as an unofficial observer for the U.S. State Department.
He’d only joined Wharton the year before. He watched a record number of heads of state, civilians and business representatives come together to talk about pressing environmental issues, including climate change. He started thinking about not only the intersection between business interests and climate, but of the intersection with business schools as well.
“Seeing that businesses were serious about this, understanding that business has to be part of the solution, and then realizing that I’m in a pretty good position to help push this forward,” Orts told Poets&Quants. “And, frankly, businesses have been ahead of business schools in this area. I’ve found that in the last 15 to 20 years that I’ve been very much active on the academic side of pushing this forward, business schools are playing catch up.”
A RUN FOR U.S. SENATE
Orts, also a professor of management at Wharton, has taught business and MBA students about social responsibility, corporate law and environmental law for 30 years. He’s also studied the complexities of the climate crisis and the solutions business, and business schools, can offer.
Now he’s running for the U.S. Senate. This summer, he launched his first ever political campaign in Pennsylvania’s crowded Democratic primary. He and his opponents are vying for an open seat now held by Republican Sen. Pat Toomey, who has said he will not seek reelection. It will likely be among the most competitive and closely watched races in the country, and it will help determine which party controls the Senate.
Orts’ primary issue? Climate change.
“My career has increasingly been focused on the importance of environmental issues. I’m very aware of how business has advanced the ball significantly in terms of the technologies and the know-how to solve the climate problem,” Orts said.
“There are lots of people in the business world working on increasing energy efficiency, lowering the cost of solar and wind power, improving battery technology, and green steel that doesn’t require burning coal, etc … And this goes to the reason why I’m running for office: We have the solutions in the business community, and we have the technology to solve this problem. The only thing in our way is the politics.”
Orts is taking a leave of absence from Wharton to focus on his campaign. He recently sat down with P&Q to talk about the intersection of business and business students with the fight against climate change. (Read the interview on the following page. It has been edited for length and clarity.)
‘The climate imperative is that every business needs to think about the climate, because everyone has to be part of the solution to the climate problem,’ Orts says. (Courtesy photo)
What do you see as business’ role in combating climate change?
First of all, it’s helpful to begin with the understanding that this is a very complex phenomenon. When people just say ‘business’ and business does ‘x’, it’s really an oversimplification. There are a lot of different kinds of businesses.There’s the fossil fuel industry side of business, and then there’s the renewable energy side. There are very large businesses that are multinational and have an interest and then there are lots of medium size and small businesses. There are some businesses that are oriented very strictly to maximizing profit.
And then there are students graduating from business schools, and I think this is increasing, who don’t want to be part of just maximizing profit. They want to be part of a company that has values, that wants to maximize profit without destroying the planet.
There are people who believe that business can do no wrong. There are people on the other side of the spectrum who also don’t understand that business is an intrinsic part of our global civilization. There’s no way that we continue to reproduce ourselves in our economy without a business framework. At the same time, you have to think about what is the purpose of business? The answer cannot be, in my view, just making money. If that is the answer, then we will destroy our climate and that’s not a very good argument for business. You cannot destroy the underlying natural basis of your entire civilization, just to maximize profits.
In April, you wrote a piece for the Berkeley Haas School of Business’ California Management Review called ‘The Climate Imperative for Business.’ Tell us, what is the climate imperative?
The climate imperative is that every business needs to think about the climate, because everyone has to be part of the solution to the climate problem.
I generally think about the role of business in our society. Business has to be part of providing goods and services that are good for people. If it means destroying the climate, that’s not really good for people. It’s not good for our children or grandchildren.
I wrote the piece with a colleague of mine, Brian Berkey, who is a philosopher. And in philosophy, we have this idea of a categorical imperative, the idea that you don’t kill somebody else to get ahead. It’s not something that you do a cost benefit analysis about the moral principle. There are some things that are just right and wrong. So we argue that today, it’s imperative from an ethical point of view that you can’t act in a way to make the climate problem worse. We know, with a high degree of certainty, that continuing to produce greenhouse gases in the atmosphere is killing people already. So, you have to behave in a way that is helping to be part of the solution to the complex but solvable climate problem.
What roles do governments and politicians play?
I think one of the biggest fallacies that has infected the understanding of people in business schools and in business, is the idea that somehow government is always bad. Government can never solve a problem and therefore, you just let the free market rip and things will be fine. If you look at it from an environmental perspective, you have a well known problem that economists call externalities. Greenhouse gases are a huge externality, and you just simply cannot incorporate that into the business framework without a government structure. You need to have the government to solve certain kinds of collective action problems.
Having said that, it’s also true that there are huge weaknesses in government’s dealing with the climate problem. For example, a lot of people say, ‘Well the climate problem is easy. All we have to do is figure out the externality, put a cost on that externality, tax all the products that are using it, and then the markets will work and we will have a solution.’ Unfortunately, it doesn’t work that way.
The government has to play a role, including an international role.The U.S. government is giving a lot of subsidies to fossil fuel companies, and what we need to do is switch the incentives. We need more incentives going toward renewable energy and more incentives going toward smart grids, rather than pipelines. In that respect, the government is key. You have to have the government to get the policy framework right.
And that’s why, that’s one reason why I’m coming from business school and I’m jumping into politics. The business solutions are actually there. We can move to a renewable energy economy. It’s not that easy to achieve, but we can do it and a lot of businesses are going to make a lot of money in the transition.
(Interview continues on the following page.)
‘I see an increasing interest in the MBA students. I also see an increasing interest in undergraduates where students are really motivated to pay their bills and want to find a good job, but also don’t want to take a job where they feel complicit in destroying the planet,’ Orts says. (Courtesy photo)
Do you think business schools are doing a good job talking about climate change? What do you think they should be teaching?
I think some progress is being made in the business schools, but business schools basically have to take their signals from the general market. As long as the economic incentives for consulting, investment banking and private equity jobs are favorable to destroying the planet, then I think it’s going to be hard for business schools to shift. They depend on what the market is for who’s hiring their students.
Having said that, and I see this at Wharton, there are several schools moving in this direction. Increasingly, schools are establishing centers devoted to business and climate. There’s a lot of opportunity for business schools to move in this direction, but there’s a lot of inertia as well.
But, let me give one example: Increasingly, investment banks and banks in general are looking at climate as a really key question. They don’t want to give loans to coal fired plants and to environmentally bad investments. Then you have to ask, what are the skills that you need for the jobs at these types of companies? You have to not only have the traditional finance, marketing, management and operation skills, but also someone who understands sustainability, who can do lifecycle analysis and who can calculate a carbon footprint. Increasingly, I think there’s a market for those courses and those skills at business schools.
‘One thing I say often to students who ask me for advice about finding a good job and providing for their families but also doing good for society, is that you need to be willing to take a risk,’ Orts says. (Courtesy photo)
Have you noticed an increase in Wharton business students interested in the relationship between climate and business?
Yes. I see an increasing interest in the MBA students. I also see an increasing interest in undergraduates where students are really motivated to pay their bills and want to find a good job, but also don’t want to take a job where they feel complicit in destroying the planet.
I’ve seen a sea change of interest in the last 20 years I’ve been teaching this area.When I first taught my course on environmental management, law and policy, I had a dozen students or maybe up to 20. I think the course is now fully subscribed. We now have an environment and energy based major at Wharton for MBAs, and enrollments are increasing for that.
What would you like business students, and maybe decision makers at business schools, take from your campaign?
One thing I say often to students who ask me for advice about finding a good job and providing for their families but also doing good for society, is that you need to be willing to take a risk. One of the lessons I’ve learned, and from some of my colleagues who do risk analysis and study decision making theory, is that most people are too risk averse. Particularly students who might be at Wharton or other pretty good business schools, they may really be in a position where they can take a risk in their lives. They can probably afford to work for a company that they really believe in. Or start up a company not only for the financial return, but that they think is a social good or doing something good for the planet. I know a lot of people who have done that and are really much more satisfied, even if they might not have made as much money as somebody else who follows a more traditional route.
What else would you like MBA students and Poets&Quants readers to know?
One thing I’ve appreciated through this campaign is just the beauty of democracy. We do live in a country where somebody can decide, ‘I’m going to try to do this,’ and then sometimes they win. And I think that’s the beauty of the American system: Everyday citizens can step up and say, ‘Hey, I think I can do this,’ and then make their case.
I have two primary issues: One is, we are living in a world where there is a climate emergency. We are dealing with a climate emergency that’s equivalent to a world war situation. We need a mobilization to deal with this emergency that is burning our forests, causing massive droughts and floods, and intensifying hurricanes. We have to make that the top priority for the government to deal with it.
And the second priority is we need Senate reform, including the elimination of the filibuster which is a ridiculous rule that is locking up the Senate. We’re seeing it happen right now with the threat to default on the government debt. The reason we have that is because of this ridiculous foil called the filibuster that could destroy our whole reputation as a country.
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