Equilibrating financially sustainable growth and environmental, social, and governance sustainable growth

Abstract

AbstractShould financially sustainable growth and environmental, social, and governance (ESG) sustainable growth targets interact? Does a company's growth add to both shareholders' surplus and surplus of stakeholders different from shareholders? The objective of this study is to address the unconventional problem of equilibrium between financially sustainable growth and ESG sustainable growth and how to detect and correct imbalances in those two dimensions. It develops both an incremental framework that articulates, organizes, and connects current theories of financially sustainable growth, ESG, sustainable development, corporate social responsibility, and stakeholder theory, and a revelatory model, the financial/ESG sustainable growth matrix. It inspires new multiple‐disciplinary research to see growth differently, as the impact on shareholders versus stakeholders different from shareholders of equilibrium and tension between financial and ESG growth. The model developed is directly applicable to management practice and beneficial to a broader community, as it reveals companies that create or destroy societal surplus.