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.