2021/04/23 Frankfurt am Main, Germany
In the realm of business management, there are various streams of how to characterise profit, depending on the calculation’s parameters. However, benchmarks of short-term profit are neither sufficient to achieve sustainable financial profit nor do they secure a company’s existence in the long term, writes Prof. Edeltraud Guenther. What it needs is a broader representation of environmental resources and the effects of their consumption as an essential part when calculating profit.
Because of the limited effect of state action – be it regulations in the supply chain or pricing of CO2 emissions – companies themselves will need to act out of self-interest to guarantee future profits. A growing number of equity investors that include ecological and social criteria in their assessment of potential investments constitutes an emerging shift of thinking within the sector. By doing so, companies gain innovation strength and develop with new business models, building the basis for long-term success and financial profit.
Prof. Guenther acknowledges the enduring validity of theoretical models of profit maximisation in business management. However, she calls on academics to consider sustainability and non-financial dimensions in doing business more than before, providing owners with the necessary instruments to generate sustainable profit.
The full article was published on 8 March 2021 in the Frankfurter Allgemeine Zeitung.