Ethics & Alpha: Can Investing Responsibly Enhance Returns?

“There is one, and only one, social responsibility of business: to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud,” Nobel Prize-winning economist Milton Friedman.

Friedman, perhaps the twentieth century’s most celebrated free-market economist, described the idea that businesses had a responsibility to wider society as a “fundamentally subversive doctrine”.

His seminal article for The New York Times Magazine, published in September 1970, sparked a furious debate as to whether firms can increase their value by incorporating environmental, social and governance (ESG) considerations into their business operations. While that argument continues to rage nearly half a century later, there is a growing body of evidence to suggest they can.

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