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About the Debate
Can financial markets be reconstructed to achieve a better alignment of profit and purpose? Can businesses commit to being social mission-driven enterprises?
Milton Friedman argued that the primary duty of firms is to make a profit, benefiting investors and employees. And that charity is the appropriate vehicle by which to fund social missions. Our debate will focus on a paradoxical theory proposed in new work by Luigi Zingales along with Oliver Hart. Zingales will discuss why firms are responsible to pursue social missions when they create societal damages that are not separable from their primary business. And yet, even if their sustainable investors endorse the policy, the public firm will be unable to commit credibly to it, and financial markets will fail to succeed to redress the social harm. He will argue for a strengthening of shareholder democracy as a solution, among others.
In response, David Crane will comment on this new theory based upon his much applauded actions in leading one of the largest energy utilities towards sustainable and profitable investments.