Companies with positive social effects make a real ‘impact’ for investors
The growth of impact investing – in which investments aim to not only generate a financial return but also positive environmental or social results – demonstrates a thriving interest in such returns
The United Nations’ 17 Global Goals For Sustainable Development are powerful – and necessary – for our planet and its population over the next 15 years. But if we hope to achieve them, we need to fundamentally change how we account for value.
Across the world, inequality is increasing and social mobility within countries isdecreasing. These trends – long noted by economists like Thomas Picketty and Joseph Stiglitz – are now being investigated by institutions like the Organisation for Economic Co-operation and Development (OECD) and the International Monetary fund (IMF). And progressive businesses are starting to recognize that inequality affects employee morale, productivity and economic stability, and are taking steps to reduce it.
A big part of the problem lies in value and how we account for it. Traditional economics suggest that self-interest is the basis of social value. As Adam Smith wrote in Wealth of Nations: “By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”
That idea – self-interest is the best way to help society and create value – is a founding principle of our world economic system. Whether this argument was originally deployed because policymakers actually believed in it or just because it was a convenient approach for justifying inequality, its unintended consequences can’t be ignored.
