Aliging Profit with Purpose - Global Goals Yearbook 2019

Stronger Profit Potential
for Companies
That Serve
Society
Alex Edmans
Professor of Finance
London Business School
Executives need to prioritize
serving a social purpose if
they want to achieve stronger
and more sustainable profits,
according to Alex Edmans,
Professor of Finance at
London Business School.
He argued that the value a
business creates extends
well beyond the profits it
generates. Professor Edmans
likens the whole impact of a
business to a pie – of which
profits for investors are just
one, albeit important, slice.
The pie-splitting mentality
Professor Edmans, who is also Mercers
School Memorial Professor of Business
at Gresham College, argued that a company’s
value to society should be measured
holistically to include stakeholders
such as workers, customers, suppliers,
the environment, and the government
through taxes.
Too many executives, he said, take from
stakeholders’ slice in order to give a portion
to investors. They view their business
as a fixed zero-sum game. With that
mentality, if you want to grow your slice
you have to take it from other parts of
business. A prime example of this kind
of business was Turing Pharmaceuticals,
which bought existing drugs, restricted
58 Global Goals Yearbook 2019