The big fallacy in the backlash against ESG and stakeholder capitalism
www.weforum.org
Most corporate boards and institutional investors now accept that certain environmental, social and governance (ESG) risks and opportunities can be financially material Some argue that if they are financially material, then by definition managers and directors focused on maximizing shareholder value
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- Most corporate boards and institutional investors now accept that certain environmental, social and governance (ESG) risks and opportunities can be financially material
- Some argue that if they are financially material, then by definition managers and directors focused on maximizing shareholder value already take them into account
- Others assert that these concepts are inherently unworkable because they are bound to politicize decision-making within firms, tangling them up in knots in ways that misallocate resources
- But none amounts to anything close to a disqualifying argument.
- This is mainly due to financial materiality’s inescapable logic for those directors, managers and investors who take their fiduciary responsibilities seriously.
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