In January, two provocative guest panels held during orientation introduced first-term students to the School’s Individual, Business and Society: Tradeoffs, Choices and Accountability curriculum. The discussions, “How High the Firewall? Separating Investment Banking from Research” and “Corporate Social Responsibility and the Bottom Line,” brought together corporate executives and business leaders to debate the issues and talk about workplace conflicts.
On January 4, Sallie Krawcheck ’92, CFO and head of strategy for Citigroup, Inc., and Trevor Harris, managing director at Morgan Stanley and codirector of the Center for Excellence in Accounting and Security Analysis at the School, talked to students about trade-offs between the individual and the firm in the context of recent regulation intended to manage conflicts of interest in equity research operations at investment banks. “Being a research analyst is a hard job,” said Krawcheck, who was director of research at Sanford C. Bernstein & Co. in the late ’90s. “But there is a difference between the job being hard, which it is—miserably, terribly hard—and being a conflict of interest.”
Both speakers support a firewall, which is the solution recent regulation came up with to manage the conflict of interest, but they told students it is even more important to check their gut. “You need to be able to look in the mirror and say, ‘I know why I made that decision,’” even if it was wrong, Harris said. “We all make mistakes.” But it is better to do it with conviction and for the right reasons.
On January 5, Geoffrey M. Heal, the Paul Garrett Professor of Public Policy and Business Responsibility, moderated a discussion between Chris Beale, managing director of Citigroup Global Markets, Inc., and Scott MacLeod, managing director of the Global Environment Fund, on trade-offs between the firm and society vis-à-vis the environment.
“In the short run, there may be some costs to behaving responsibly,” Heal said. “But proponents of corporate social responsility argue that in the long run the benefits generated by socially responsible behavior will greatly outweigh the short run costs.” The School recently awarded Lord John Browne, group chief executive of BP, the Botwinick Prize in Business Ethics for efforts to cut greenhouse gas emissions, which also benefited the company’s bottom line.
Beale, a founder of the Equator Principles, an accord for financial institutions to manage environmental and social issues in project financing, said companies save millions of dollars in delay and conflict costs by following internationally agreed upon responsible practices.
MacLeod, whose fund invests in companies that both make a positive contribution to the environment and yield a superior return to investors, said: “Where we find more environmentally-focused practices, less raw material is required, less energy is needed, less pollution is generated, the environment is better served, but the bottom line, where the company is concerned, also benefits.”