We all know that everything has a price, but is what you pay the real price? Not according to George Serafeim, a professor at Harvard Business School who argues that “without monetising impacts, we’re left with the illusion that businesses have no impact”.
In the 1970s Milton Friedman introduced the idea of valuing business value purely on the basis of shareholder performance. However, in the past decade investors have become more interested in the environmental and social impacts of businesses. Analysts increasingly recognise that Friedman’s criteria fails to account for all of these impacts (what are called externalities) and that traditional financial measures are not a good enough representation of the benefit companies provide to society.
Serafeim suggests that to better understand business value, we need to put a dollar value on the negative impact of business activities. As a proponent of Environmental, Social and Governance (ESG) Investing, Serafeim maintains that a clear metric (i.e. a dollar value) which evaluates a company’s environmental and social impact is vital for modern, progressive markets.
This is precisely what Planet Price aims to do – by providing an algorithm that calculates the real cost of everything.