Sustainable Sustainability: Why ESG is Not Enough

Adam Smith and Milton Friedman argued that profit maximization should be the incentive for businesses to create goods and services, but incentives created bad behavior and regulations were routinely bypassed. To address todays existential challenges, we need innovation of the highest order, which cannot be legislated or driven by extrinsic incentives alone.

Format: Paperback / softback
Length: 320 pages
Publication date: 29 February 2024
Publisher: Penguin Random House SEA

In the 18th century, economist Adam Smith championed profit maximization as a driving force for businesses to produce goods and services that meet the demands of society. He believed that free-market competition would lead to consumers obtaining the highest quality products at the lowest prices. Two centuries later, Milton Friedman, in his influential 1970 New York Times op-ed, asserted that businesses should prioritize maximizing profits as long as they adhere to the rules of the game. He argued that incentives and regulations would serve as safeguards for societal interests. However, incentives often fostered undesirable behavior, and regulations were frequently circumvented through clever loopholes. Despite these challenges, we are once again employing incentives and regulations, with a significant focus on the ESG framework. However, our current approach is yielding disappointing results, characterized by widespread greenwashing and mere compliance. To confront the existential challenges of our time, we require a profound level of innovation that cannot be solely driven by external incentives or legislative mandates. True innovation emerges from a combination of intrinsic motivation, creativity, and a deep understanding of the complex issues we face. It requires a willingness to challenge established norms, explore new ideas, and take risks. In this pursuit, we must foster an environment that encourages collaboration, open dialogue, and a culture of continuous learning. Only through innovation can we find sustainable solutions to the pressing problems of our time, such as climate change, economic inequality, and social injustice. Let us embrace the power of innovation and work together to create a better future for ourselves and generations to come.

Weight: 464g
Dimension: 152 x 234 x 21 (mm)
ISBN-13: 9789815144574