Shareholder returns are the primary perverse incentive of business. But not the only ones.
There are infinite ways to evaluate our businesses. Why do we insist on only using one? Especially when that one is, well, broken?
Under common business practices, shareholders grow financial capital at a higher rate if the company they’ve invested in performs financially positively. This creates an incentive for the company to prioritise short-term financial growth (market value) over social good (guided by our human values) where benefits in financial language are murky.
This bias towards narrow-lens, instant gratification promotes perverse internal behaviours too, which focus on decisions best geared toward financial reward over sustainable business practice (ego-centric vs eco-centric thinking).
We destroy tomorrow to create today.
And yet, this paradigm of practice, as narrow and cynical as it is, continues to be the dominant way of evaluating our world. As much as business needs to rethink and reshape its relationship with people, resources and the future of us all, it is the investors that drive the behaviour, sitting behind the board and the CEO.
If that’s not enough, it is also the customers ourselves, consuming products without knowledge of the systemic impacts of our behaviours and/or relying upon business itself to be inherently guiding us toward a bright consumerist future, who drive such short-termism in our business behaviours.
We might well admonish business for negative societal and planetary impacts, but not without acknowledging how we as consumers blithely stimulate these financial behemoths to continue without mindful adjustment. All of us, business, shareholder, customer, all of us eating everything. And growing nothing.