The Radical Old Idea: Alex Edmans explains how responsible businesses need to grow the pie

GEFI’s inaugural Radical Old Idea event took place on Tuesday 23rd June, with a virtual meeting replacing the physical event which had been postponed due to COVID-19 earlier in the year. The series draws inspiration from the Scottish Enlightenment, providing a platform for “old” ideas such as responsible business which have the potential to radically transform our financial and economic systems. The first session, entitled ‘Responsible Business in a Time of Crisis’ saw Professor Alex Edmans of London Business School discuss his highly-rated new book, Grow the Pie, and the relevance it has in these uncertain times.
Professor Edmans was introduced by the session chair Eva Cairns of Aberdeen Standard Investments and he started his presentation with an interesting example as to the role the media plays in informing the public’s perception of responsible business. In 2007, Vodafone created the innovative M-Pesa mobile money service that, through a mobile phone, provides access to financial services to over 37 million people who previously had only limited access to bank accounts, while in 2012, they were the first telecoms company to release a tax transparency report highlighting its contributions to the public finances in the countries of operation. Professor Edmans posed two questions:
  • Which of these decisions created most value for society?
  • Which of these decisions, if not taken, would have led to most public outrage, or worsened Vodafone’s CSR rating / reputation?

Public and media anger was focused on the issue of tax – relating to the fair division of the pie. Whilst this is important, Professor Edmans proposes that it is time to change the thinking about responsible business and move from a “doing no harm” approach to “actively doing good” by growing the pie with socially beneficial projects like M-Pesa.

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