All about that growth, ‘bout that growth, no trouble
Article from Harvard Business Review
In this article, George Serafeim maintains that one of his previous studies suggests that making socially responsible investments can lead to greater profitability and higher stocks. Serafeim, however, emphasizes that firms must invest in social and environmental issues that benefit the company. For example, transportation and fossil fuel firms may not experience aforementioned results because these kinds of socially responsible investments in the environment may not reap the same benefits as those whose investors are in healthcare. Serafeim’s study, therefore, provided the map for initial analysis. The study showed that firms making investments in material socially responsible investments “outperform[ed] their peers in the future in terms of risk-adjusted stock price performance, sales growth, and profitability margin growth.” The study’s results suggest that companies need to examine which social and environmental issues are most strategic to improve their performance and that if chosen correctly, businesses can improve both their social and financial standing. Enclosure.
Here’s the problem with this thinking. It’s all about growth for the investors. Companies are investing in these social and environmental issues in hopes of improving their image. So what happens when an issue isn’t deemed as lucrative as another? Does that issue persist, unfixed? Well, if it were up to me, businesses shouldn’t even be considered to try to “fix” social problems. To be honest, businesses don’t exist to fix anything. They exist to provide, to feed demand, and to earn money. Serafeim does bring up a good point, but one that can’t solve the problem. We’re at a paradigm conflict that is currently locked in debate. Neoliberalism isn’t going to provide water in California. The invisible hand in the free market actually exacerbates the problem because it’s drinking everything up and exporting it. And the government isn’t doing anything substantive. We can’t afford to only think about growth for the investors. We need to think about what’s best of the most amount of people. And most likely the answer to that problem is getting drowned by businesses’ machinations.
