Who Should the Economy Really Serve?

We should not forget that the roots of financial institutions were socially motivated and originally focused on the provision of liquidity, allocation of capital and facilitation of economic and social progress. Given the central and dominant role business plays in every society, should it not then be responsible to that society?

Elaborating on the idea that finance should serve society first, Jim Hawly and Jon Lukomnik assert that the primary purpose of finance in the asset management industry is not to make money, but rather that making money is a necessary condition of the industry. They write, “Absent profit, the industry would cease to exist and the risk mitigation and intermediation, which do serve society, would stop. But we should not confuse an essential input into self-perpetuation for the industry, with the industry’s societal purpose, which is to serve the provider of the funds it manages.”

Our current institutions and economic models are designed around neo-classical economics and our current model of innovation is contradictory to sustainable development. The role of management is to provide an enabling environment for innovation to flourish from the bottom-up, to build bridges between sustainability and finance. Governments and the private sector must give sustainable finance a serious seat at the table so that the majority of the $300 trillion stock of global capital can return to its true roots – serving society and the environment.