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Educating for a Sustainable Future: Creating and Investing in Corporations that Embrace Impact Performance

Mon, April 15, 3:15 to 4:45pm, Hyatt Regency, Floor: Bay (Level 1), Bayview A/B Foyers

Proposal

Millennials are encouraged to learn why corporations need to achieve sustainable enterprise, called to create and manage their business contributions by advancing triple bottom line performance (cf. Clark, Feiner, & Viehs, 2015). The reality they face, however, is that duty to sustainability remains uncommon, somewhat ancillary, or even the anomaly. In many global firms, success is still largely driven by short-term profits and/or the expectation of swift increases in shareholder value. Western pressure to deliver quarterly performance thwarts a commitment to sustainable enterprise, which requires a longer-term strategy. This can result in ethical investing being perceived as Utopian, impractical, or philanthropic, with limited returns or lacking competitive potential. While research reflects comparable returns emanating from genuinely sustainable operations, investor decisions are often made using outdated valuing techniques based upon mathematical theorizing, neoclassical economic thought, and the omission of relational values (Mussell, 2018). Although economic, social, and governance (ESG) factors are deemed important, their inclusion in publicly-traded firms is often predicated on compliance. Rather than being deeply inculcated into the firm’s mission and strategy for how success is achieved, ESG remains limited, driven by regulatory mandates. While a stakeholder perspective is advocated, young adults are uncertain about its viability. Given the blatant moral hypocrisy exercised by many corporations, student skepticism is warranted.

In the past, those who cared about corporate social responsibility (CSR) could align with firms they considered reputable. Financial institutions created funds via siphoning off industries known for their morally dubious activities (e.g., tobacco, alcohol, and weapons). As time progressed these funds included corporations based upon their provision of ESG-related information. But metrics varied widely, prompting inconsistencies and potential exaggerations. Some corporations declaring a commitment to CSR, simply employed cost-saving measures. While others ended up embroiled in ethics scandals or “virtue washing” (e.g., Volkswagen). Given this lack of coherency and difficulty in measuring dimensions across industry sectors, there have been barriers to transparency, presenting challenges for comparison and informed decision-making. Despite these concerns, a firm’s genuine ESG efforts and impact-driven performance are critical when investors experience uncertainty and market downturns (Lins, Servaes, & Tamayo, 2017).

Concerned by these issues, we asked: How might we address the financial market’s ESG insincerity by equipping the next generation with tools that help them tackle this disparity and create positive systemic change? We offer several ideas to address this question, beginning with a framework to describe the relationship between strategic perspective and corporate identity. We explicate how a fusion of these elements can underwrite investor choices that reflect moral identity alignment. By coupling sustainable enterprise with pragmatic investor activism, educators can help young adults recognize that they have the power to transform the financial market by creating and investing in firms driven by impact performance (French, 2017). Given investment decisions are moral choices, students must grapple with this ethical challenge as the health and prosperity of future generations is now in their hands. Educators can play a demonstrative role in supporting systemic change by combining ethical decision-making with financial literacy, fostering a realization that investors have the capacity to influence how money is earned and reported.

Authors