Virtuous Capital: How to measure Business’s contribution to Society

To The Gold Mine

Key Points

  1. This article will take you about 10 minutes to read. It provides an excellent background on ways to measure a business’s contribution to society and the different ways leaders can take advantage of various financial strategies to commit to innovation sustainability projects. 
  2. A company’s contribution to society is powerfully expressed by its capital commitments. The balance sheet seems to be a far better indicator of the company’s ESG commitments than annual reports and sustainability reports.
  3. Instead of focusing on short term projects and signals, focus on capital budgets to analyse a company’s long term sustainability related commitments because capital allocation commitments tend to be sticky. 
  4. The article contrasts British Petroleum’s and Statoil’ commitments for sustainability.
  5. The authors provide four avenues for leaders to focus on going forward, including risk reallocation, different forms of ownership and government incentives.

Rotman Management Magazine