The Financial Challenge: Reconciling Social And Environmental Value With Shareholder Value

My chapter has two main goals. First, to illustrate clear examples where social and environmental issues and the creation of shareholder value go hand-in-hand. These examples show clearly that companies can do good things for the environment and other stakeholders, while at the same time improving the bottom line and impacting their stock price positively.

The second objective is to highlight other aspects of corporate social responsibility (CSR) that have a more tenuous connection (if any) to shareholder value. This tenuous connection between certain aspects of CSR and shareholder value could have several causes. One possibility is that there really is no connection; another is that we just don’t have the correct metrics by which to measure the impact. It is important to understand that I’m not claiming companies should avoid undertaking such activities, but rather that they should not simply assume they will automatically reap benefits for the firm’s shareholders.

A manager’s fiduciary duty to shareholders is an important tenet of capitalism and free markets. But good managers also understand that to create lasting shareholder value they must give careful consideration to all of the firm’s stakeholders. This chapter is an attempt to provide some guidance on achieving both goals.

 Richard Bliss, Associate Professor, Finance
 Chapter Author, The New Entrepreneurial Leader