Part of its mission is to measure and disclose things that firms and their customers turn a blind eye to. But if those shareholders wanted the company to have a more social purpose, so be it.Įsg is often mixed up with stakeholderism-but there is another way to think about it. ![]() Milton Friedman, the economist often criticised for preaching shareholder primacy, argued that the social responsibility of business was to reward owners by increasing profits. ![]() As he acknowledges in his book “Grow The Pie”, it is not as radical a departure as its advocates suggest. But it has become mainstream enough that Alex Edmans, of London Business School, is incorporating stakeholder capitalism into the next edition of “Principles of Corporate Finance”, a bible for financial practitioners. Sometimes, as when Disney protested against Florida’s “Don’t say gay” bill, enraging the state’s governor, Ron DeSantis, this can stir a backlash that is not good for the bottom line. Led by Jamie Dimon, the JPMorgan Chase ceo who chaired the Business Roundtable, a lobby group, when it embraced the concept in 2019, company bosses have used their commitment to social causes to speak out on issues ranging from racial inclusion to gay rights to climate change. That is most obvious from the embrace of stakeholder capitalism, which redefines corporate success as serving not just shareholders but employees, suppliers and the wider community.
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