Traditional business theory makes the case for ESG - if only UK Plc would pay attention

A heretical view? There is not enough focus on shareholder value in the current conversation about sustainability, argues London Business School’s professor of finance.

by Antonia Garrett Peel

It is common for those advocating a sustainability agenda to talk of the need for a paradigm shift, a fundamental rethink of the way we relate to the planet, live our lives and do business.

However, argues Alex Edmans, professor of finance at London Business School, embracing a more sustainable model doesn’t necessarily require a departure from traditional business principles – in fact, arguably, the opposite is true.

Traditional business theory is often grounded in a long-term view, he says. It’s true that what a forward-thinking strategy looks like has changed. Today, an oil company’s exploration activities  an initial investment hoping to bring large future profits  would be unlikely to be hailed as an exemplar of far-sightedness. But the principle of taking a long-term perspective remains the same.

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