As a young girl growing up in Turkey, Beril Toktay accepted water and air pollution as a fact of life. “It wasn’t until I went abroad that I saw how much better it could be,” says the professor of operations management at Georgia Tech Scheller College of Business.

This realization fueled Toktay’s interest in sustainability. Today, she is internationally known as a scholar in the field of sustainable operations management, with a focus on socially responsible, environmentally friendly business practices. “She is one of the pioneers in this research area,” says Scheller College Dean Steve Salbu.

Her dedication and leadership were major factors in the College’s winning of a $750,000 grant from the Ray C. Anderson Foundation to start the Center on Business Strategies for Sustainability in early 2013. That gift was soon followed by a $300,000 grant from the Kendeda Fund.

Center Goals

The Center focuses on strategies that bring business value while minimizing negative impacts on the environment and society. Center goals include:

• Generating and disseminating high-impact research on business strategies and innovation for sustainability.
• Teaching students—tomorrow’s engineers, managers, entrepreneurs, and CEOs—how to integrate cutting-edge business principles, science, and technology to further sustainability objectives throughout their careers.
• Partnering effectively with industry and a broad set of stakeholders to push the envelope on what constitutes best practices and accelerate their adoption.

Salbu points out that Scheller College rivals many top business schools with the number of faculty members actively engaged in sustainability activities.

“Our College’s strong focus in the management of technology, innovation, and commercialization is highly relevant to the adoption and management of green tech,” he says. “The opportunity to leverage these core strengths for high-visibility, high-impact leadership in sustainable business research and education has never been greater.”

Growing Interest

Interest in sustainability is growing tremendously in both the business world and academia, says Toktay, holder of the Brady Family Chair.

“When I first started my career, not that many people were researching it,” she says. “But Scheller College now has faculty in different areas, from operations and finance to business ethics and marketing, addressing various aspects of sustainability, including socially responsible investing, corporate social responsibility, brand value, and sustainable operations.”

She adds, “We hope to leverage all of this expertise through the new Center and pursue collaborative, value-adding partnerships within the broader sustainability community at Georgia Tech and beyond.”

Industry Perspective

While Toktay serves as faculty director of the Center, Howard Connell was hired in summer 2013 to serve as director as well as a professor of the practice of sustainable business. In addition to teaching, he is building partnerships and connections to industry, supporting fundraising efforts, and developing educational initiatives and career opportunities.

Prior to joining Scheller, he led B2B sustainability efforts internationally at Kimberly-Clark Corporation. “All industries are realizing that there are not enough resources on the planet to provide for everyone without massive innovations in sustainable processes and business models,” says Connell, vice chair of the nonprofit organization Sustainable Atlanta.

Connell, who began his career as a musician and sound engineer in Nashville, Tennessee, says he became fascinated with sustainable business after reading Paul Hawkens’ The Ecology of Commerce  (1993).

The book inspired him to pursue opportunities in socially responsible investing and later choose a sustainability concentration for his MBA studies at the University of California-Berkeley. That degree led to six years of sustainability-focused consulting with A.T. Kearney before he joined Kimberly-Clark in 2011.

Ray Anderson’s Legacy

Coincidentally, The Ecology of Commerce  book that so inspired Connell also had a great impact on the late Ray Anderson (1934-2011). The foundation created in his honor funded the creation of Tech’s Center on Business Strategies for Sustainability.

Anderson, who earned his bachelor’s degree in industrial engineering from Tech in 1956 and built Interface into one of the world’s largest manufacturers of commercial carpet, said that book hit him like a “spear in the chest,” inspiring him to set highly ambitious goals for his company to reduce waste and carbon emissions.

Professor Toktay says it’s a great privilege for the Center to win the support of the Ray Anderson Foundation.

“What we want to achieve is so congruent with Ray Anderson’s vision that I really cannot imagine any other partnership that would be more inspiring to us and send a more powerful message to the world about our aspirations: to do groundbreaking, high-impact research, and to educate the Ray Andersons of the future.”

Classroom Experience

Toktay and Connell are excited about expanding educational opportunities for graduate and undergraduate students through the Center.

During fall 2013, Connell is teaching a new Sustainable Business Consulting Practicum  in which MBA students work on solving real problems for participating companies. He’ll teach a similar course for undergraduates in spring 2014 as well as one called Innovation Tournaments for Sustainability.

In spring 2013, Toktay introduced these innovation tournaments into the Business Strategies for Sustainability course that she teaches to MBA students. In these contests, students generate business-model or product ideas that would have a positive environmental or social impact, and class voting and input determines and refines the best ideas. Winners go on to develop an early-stage business plan and investor pitch.

“We’re harnessing the collective wisdom and creativity of the class to come up with one or two good ideas that might tie into structures at Tech that help aspiring entrepreneurs,” Toktay says.

Evening MBA student Sophia Bromfield’s concept made it to the final round of the spring 2013 tournament. Her concept was for a nonprofit organization called Greenhouse that would provide sustainable emergency housing for natural disaster victims.

“These sustainable shelters, sturdier than tents, would be made out of recyclable materials so that they don’t become trash,” says Bromfield. “They would be great for the disaster victim as well as for the environment. Their design includes cloth ventilation for cooling and insulated materials for heat, so that in the event that it’s impossible to generate power, the dwelling would still be comfortable.”

Career Opportunities

Bromfield, who earned her master’s in architecture at Tech in 2010, wants to be at the forefront of the sustainability trend because she believes it will be crucial for her career. Now a project manager for a design and construction services firm, LCG-CI, she says that environmentally friendly design is going to be a factor that influences every company’s real estate decisions in the future.

“I’d like to combine strategy, sustainability, and construction design,” says Bromfield, who earned LEED (Leadership in Energy and Environmental Design) accreditation. “The MBA degree will open more doors for me.”

Bromfield says there’s a big push for those in her industry to understand sustainability. “Through LEED, you’re trained to be a consultant to advise builders and developers on how to make buildings green,” she says.

“I believe that sustainability should be ingrained into our culture,” she adds. “I think that in the future, it won’t really be an option. There are going to be more requirements and mandates. Corporate clients are already demanding greener approaches.”

Triple Bottom Line

Full-time MBA student Mansoor Baloch recognizes that those interested in sustainable business practices sometimes get labeled as “tree huggers.” But that’s a mischaracterization, he says.

“I think that businesses can create value for consumers and shareholders while incorporating the principles of sustainability and social responsibility. There’s value for everyone in pursuing the triple bottom line (profit, people, and planet),” he says.

“Consumers are increasingly aware of environmental issues, so there is a growing sense of urgency in the business world to minimize harm to society and the environment. I want to play a leading role.”

Baloch has already gotten deeply involved, serving on a student committee supporting the College’s new Center on Business Strategies for Sustainability. What’s more, he’s the 2013-2014 president of the College’s Net Impact chapter (which recently earned Gold Standing from the national organization).

Net Impact

Net Impact has more than 300 chapters worldwide, including 40,000 students and professional leaders who are focused on creating positive social and environmental change in the workplace and world. Tech’s Net Impact chapter brings sustainability leaders to speak on campus, enters teams into national sustainability case competitions, and promotes social responsibility by helping organize the Pro Bono Consulting  course, which supports nonprofit organizations.

During the next year, the Tech chapter plans to work in collaboration with the Scheller College’s newly created Center on Business Strategies for Sustainability to inaugurate a sustainability panel bringing industry leaders to share their experiences with current MBA students.

Early Research

Professor Toktay’s research into sustainable business began almost as soon as she started her doctoral studies at Massachusetts Institute of Technology. Her first project dealt with the Kodak single-use camera that was popular at the time.

Under pressure from environmentalists, Kodak figured out they could save money and materials by reusing lenses and circuit boards from those cameras, so the company worked out incentives for photo processors to return the devices. “My project focused on the supply chain issues that came up as a result,” she says.

Currently, Toktay and operations management associate professor Atalay Atasu are contributing to the development of proposed legislation that would extend manufacturer responsibility over the life of a product. For example, when a user is done with a computer, the manufacturer would be responsible for paying for its recycling.

“If you make the manufacturer responsible for costs at the end of a product’s life cycle, you give them incentive to design a product so that it’s environmentally friendly, thus closing the loop,” Atasu says. “But how the legislation is implemented makes a big difference to its impact.”

Secondary Markets

Some of Toktay’s research has focused on the environmentally friendly practice of refurbishing computer equipment and selling it on the secondary market. She explains that in some cases, original equipment manufacturers of IT-related products, such as servers, have made efforts to squelch the secondary market for their products through high relicensing fees, fearing the competition would cannibalize new sales.

But her research team’s work has highlighted the importance of supporting secondary markets under a wide range of industry conditions. “We’ve shown that it’s not necessary to kill the secondary market for a product,” she notes. “Companies like IBM have gained significant value from secondary markets through combining leasing strategies with asset recovery operations.”

Financial Motivation

Sudheer Chava, associate professor of finance, looks at sustainability from a different angle. A common question in his research is whether finance can be a force for good in the world. He is looking at whether capital markets can cause companies to change behavior related to sustainability.

The answer, in brief, is yes, he says. In fact, he found that the markets charge a higher interest rate to more polluting companies, most likely because of the risks involved with environmental contamination as well as the general public relations costs of being branded as a polluter.

Investors are increasingly leery of polluters, Chava finds. When investing, for example, TIAA-CREF considers the environmental, social, and governance aspects of companies.

Interdisciplinary Approach

Through the new Center on Business Strategies for Sustainability, Chava is looking forward to pooling ideas across disciplines, the business school, university, and beyond. “What we can do as a group is far better than a single discipline can produce,” he says. Ravi Subramanian, associate professor of operations management, believes the Center is well-positioned to address sustainability issues from multiple perspectives, including technology/innovation.

“Most companies’ actions are driven by customer choices, such as what to buy, how long to use, and where to dispose,” he says. “If we want firms to go beyond the basic measures required by regulations, we need to understand not only the kinds of company practices that help create and sustain firm value, but also customer behavior.”

“For example, we need to look at transactional data to understand the prices that consumers actually pay for green products as well as their opinions of these products,” he adds. “Also, are there technological or business solutions to improve the economic lives of products?”

Other professors integral to the development of the Center include Manpreet Hora (Operations Management), Omar Rodriguez-Vila (Marketing), Wade Chumney and Lucien Dhooge (Law and Ethics), and Terry Blum (Organizational Behavior; Institute for Leadership and Entrepreneurship).