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Why businesses should maximise profit by maximising purpose
The ESG model needs to be adjusted as it currently relies too much on governance – and that can be costly.
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Throughout history, great wealth has been created by solving society’s biggest problems.
PHOTO: REUTERS
Rajeev Peshawaria
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Amid the recent pushback against ESG (environmental, social and governance) principles, chief executives and business leaders have been calling for a return to a more hard-nosed, profit-driven approach. This reaction isn’t surprising as the framework has not only failed to achieve the desired impact on the environment and society, but also imposed significant financial and resource stress on businesses already battling market uncertainty driven by geopolitical tensions and rising costs.
Opponents of the model also argue that it negatively impacts financial performance because focusing on social or environmental issues distracts leaders from profit generation.
