By Kim Bo-eun
For traditional pure profit-oriented businesses, protecting the environment and promoting equality may appear an irrelevant choice.
Yet sustainable businesses that incorporate these values can also make sense from a financial point of view, an expert in the field said.
"If you can find a way of investing where you can positively contribute to society at the same time as making money, wouldn't it be better than just making money?" Jasjit Singh, professor of strategy at INSEAD and academic director of the business school's social impact initiative, said in a recent interview.
He said this can present new opportunities that are lucrative, as well as protect companies from future risks.
Taking the case of financial firms, the professor noted margins they can take from index funds have shrunk.
"But now suddenly firms may have a segment of retail investors who are interested in actively managed funds that have an agenda," he said.
New opportunities can also be found by reaching out beyond the conventional realm of business.
"If you can identify a high potential investor not connected to financial markets but which shows promise, there is an opportunity as the only partner for that entrepreneur," he said.
Meanwhile, engaging in sustainable business efforts also makes sense from the risk management side, Singh said.
The professor explained since it is the general trend to support sustainability efforts, not being aligned with such values can pose a risk when shareholders, customers, business partners and the government call for this in later years.
"It's about whether you are ready for regulations, whether you are ready for more conscious consumers," he said.
"If your competitors are on the frontier but you are not, then you are in trouble."
The professor said companies can begin by reviewing processes such as procurement and hiring from an ESG point of view.
"Start asking questions on each step in the value change ― is there a way to do better on environmental, social dimensions?" he asked.
"Speak to your employers, government, community, employees and customers and identify the top social needs of stakeholders. Find the maximum overlap with what you can achieve practically because the return on investment would be the biggest there."
Singh noted the government could also encourage businesses to do so through measures such as taxbreaks or subsidies.
It is effective to start with issues that people find affect their lives most, such as air quality, he said.
"This would have the practicality to get support for tax money channeled to initiatives and generate the political will to invest as the government subsidizes companies to come up with related solutions."
The professor also said inclusion is not "doing any one a favor" but key to enlarging the pool of talent with a healthy level of difference and viewpoints which can potentially lead to innovation.
Singh, based at INSEAD's Singapore campus, was in Seoul for the World Knowledge Forum hosted by Maekyung Media Group last week.
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| Jasjit Singh |
Yet sustainable businesses that incorporate these values can also make sense from a financial point of view, an expert in the field said.
"If you can find a way of investing where you can positively contribute to society at the same time as making money, wouldn't it be better than just making money?" Jasjit Singh, professor of strategy at INSEAD and academic director of the business school's social impact initiative, said in a recent interview.
He said this can present new opportunities that are lucrative, as well as protect companies from future risks.
Taking the case of financial firms, the professor noted margins they can take from index funds have shrunk.
"But now suddenly firms may have a segment of retail investors who are interested in actively managed funds that have an agenda," he said.
New opportunities can also be found by reaching out beyond the conventional realm of business.
"If you can identify a high potential investor not connected to financial markets but which shows promise, there is an opportunity as the only partner for that entrepreneur," he said.
Meanwhile, engaging in sustainable business efforts also makes sense from the risk management side, Singh said.
The professor explained since it is the general trend to support sustainability efforts, not being aligned with such values can pose a risk when shareholders, customers, business partners and the government call for this in later years.
"It's about whether you are ready for regulations, whether you are ready for more conscious consumers," he said.
"If your competitors are on the frontier but you are not, then you are in trouble."
The professor said companies can begin by reviewing processes such as procurement and hiring from an ESG point of view.
"Start asking questions on each step in the value change ― is there a way to do better on environmental, social dimensions?" he asked.
"Speak to your employers, government, community, employees and customers and identify the top social needs of stakeholders. Find the maximum overlap with what you can achieve practically because the return on investment would be the biggest there."
Singh noted the government could also encourage businesses to do so through measures such as taxbreaks or subsidies.
It is effective to start with issues that people find affect their lives most, such as air quality, he said.
"This would have the practicality to get support for tax money channeled to initiatives and generate the political will to invest as the government subsidizes companies to come up with related solutions."
The professor also said inclusion is not "doing any one a favor" but key to enlarging the pool of talent with a healthy level of difference and viewpoints which can potentially lead to innovation.
Singh, based at INSEAD's Singapore campus, was in Seoul for the World Knowledge Forum hosted by Maekyung Media Group last week.
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