NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, April 24, 2017

Wall Street has a longstanding reputation for checking its conscience at the door. “Greed is healthy,” stock trader Ivan Boesky told a University of California at Berkeley business school class in 1986. The inspiration for Gordon Gekko in Oliver Stone’s Wall Street, he would later go to prison for insider trading.

Indeed, a persistent idea in finance — and the business world in general — has been that the only bottom line is, well, the bottom line: “The social responsibility of business is to increase its profits,” economist Milton Friedman wrote in a 1970 piece in the New York Times Magazine.

Of course, this way of thinking has started to fall out of favor. The financial crisis cost nearly 9 million American jobs, and cast doubt on the belief that unrestrained capitalism can generate prosperity without consequences. A narrow majority of millennials actually say in polls that they oppose capitalism, and a third say they actively support socialism.

In this climate, “consumers are in a mood to notice” a brand’s values, Tensie Whelan, director of the Stern Center for Sustainable Business at NYU Stern School of Business, told Mic. “It’s that overall impression… The majority of consumers couldn’t care less if 80% of brands disappeared tomorrow.”

And — just as brands are leaping to satisfy consumers who increasingly expect morethan empty slogans — financial firms are heeding the call for meaning, with a growing number of products that purport to further social good.