Environmental ,Social and Governance(ESG) versus Friedman Doctrine and the SME

Written on 02/06/2022
Nexia SAB&T

The Friedman doctrine is a theory advanced by economist Milton Friedman which holds that the social responsibility of a business is to increase its profits. This approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. decide such matters for them. The Friedman doctrine has been very influential in the corporate world.

The World Economic Forum, on the other hand is a staunch supporter of ESG which in its simplest form promotes that a corporation exists for benefit of all stakeholders. Stakeholders is a broad term, but from a corporation’s perspective this would include inter alia the following:

• Shareholders

• Directors

• Employees

• Suppliers

• The environment

The following image represents the 4 pillars of the stakeholder capitalism metrics (image source World Economic Forum.

While most of us take the view that only large corporates need to take heed and apply these standards, we are all responsible for “doing our bit”.

If you would like to learn more about ESG and the changes that you can make to contribute towards achieving the 4 metrics described above contact us for professional advice in this regard.

© 2020 Nexia SAB&T. ALL Rights Reserved. Nexia SAB&T is a member of Nexia International, a leading, global network of independent accounting and consulting firms that are members of Nexia International Limited. Nexia International Limited, a company registered in the Isle of Man, does not provide services to clients. Please see the “Member firm disclaimer” for further details.