Impact is in the eye of the beholder: customer, employee, shareholder, government, society, and future generations. Impact is therefore difficult to evaluate because there are trade-offs among the different perspectives. Finance is a framework that allows you to value impact from any perspective; more importantly, it allows you to understand and value the trade-offs. Shareholder wealth maximization, which is distinct from the framework of finance, is an attempt to incorporate the trade-offs in a subtle way. It has been increasingly adopted as the ideal way to create value. We now need to be more explicit about the trade-offs in creating value for different stakeholders, especially given real world considerations.
Speaker: Gautam Kaul