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International business (IB) education typically focuses on the multinational enterprise (MNE) and how it navigates varying institutional setups for its own benefit. This reductionist and MNE-centric approach underplays the influence these firms have on the societal and environmental fabric of the geographies they are operating in. This paper aims to propose integrating systems thinking into IB education to address this shortcoming with the intention to setup IB education to engage with wicked grand challenges.

This conceptual paper offers an approach for integrating complexity, criticality and diversity into IB education through teaching systems thinking capabilities.

Integrating systems thinking into IB education allows for a more realistic appreciation of IB’s contribution to addressing grand challenges. The authors propose a systems thinking perspective to IB education and offer how systems thinking capabilities could be taught in IB.

Grand challenges are characterised by wicked problems. Addressing them requires a multilevel, cross-disciplinary approach that takes into consideration the inter- and intradependencies of all actors within a system.

Carbon leakage – where multinational enterprises (MNEs) transfer carbon-intensive production activities to countries with laxer emissions constraints for cost purposes – is one of the main mechanisms through which international business (IB) contributes to climate change. This chapter discusses a new policy initiative called the Carbon Border Adjustment Mechanism (CBAM) that the European Union (EU) introduced in May 2023 to fight carbon leakage. The authors analyze the logic of CBAM and discuss how it will likely influence IB both in industries that are directly targeted by CBAM and related industries that will face spillover effects.