A primer on sustainable value creation (original) (raw)
2019, Review of Financial Economics
Much like other professionals, those in finance face many challenges in adapting their modus operandi to the digital age. Unlike most others, however, the profession faces the tremendous challenge of not having been adequately prepared for the many ethical challenges it faces. Among these are sustainability considerations in general and corporate social responsibility (CSR) in particular. 1 Most of today's senior academic staff, responsible for having educated the field's practitioners, completed their advanced training at a time when two highly influential propositions reigned and were taught as if they were the words of the Gospel: (a) that market solutions are always perfect and (b) that a corporation's only responsibility is to its shareholders and maximizing their wealth is the only goal to pursue. This indoctrination has led the profession on the path of accepting these propositions with enthusiasm and without any qualifications. In the meantime, the frequent incidences of market failures, lapses of ethics, and damage to the social and environmental fabric of the society have been routinely dismissed as idiosyncratic and not worthy of systematic examination. And, for a long time, the profession was afforded significant leeway to ignore the gathering threats. However, the emerging signs of irreversible environmental degradation, the increasing frequency (and severity) of incidences of ethical misconduct and corporate irresponsibility have now forced this issue to the forefront of the challenges
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