Luis Raúl Rodríguez-Reyes
Towards a Framework to Study the Relationship Between Sustainability and Finance: Looking for the sources of a stable long-term relationship
The publication of Laudato Si (2015) and the emergence of the Inspiration Paradigm for the Jesuit Business Education (2020) as an IAJBS initiative started a lively discussion among scholars in Jesuit business schools regarding the nature of the education provided in classrooms worldwide. In 2020, the discussion was organized by subject, being Finance one of them. One result of the discussions was the conclusion that mainstream finance education was centered in the firm’s profits maximization paradigm, which produces individualistic behavior, the predominance of consumption as a measure of well-being, and a preference for short-term wealth creation. There is a reason for this, the profit maximization paradigm is mathematically sound and embedded in the positive, free-market economic paradigm, predominant in western societies. However, its appeal dwindles when this paradigm is also identified as the source of some of the worst problems we suffer as a global community, such as the environmental destruction associated with economic growth, and the worsening of the balance between work and capital gains. Some alternatives to this state of the world exist. Several scholars have walked a path of innovative thinking to develop alternative models in financial thought. For instance, Elkington (2018) and Werner & Stoner (2018). However, there still exists one barrier that seems more difficult to break, the rationality of these business paradigms still is confronted with positive economic rationality. One way to deal with this confrontation is to accept that there are two different points of view at war, characterized as good and bad people, depending on the point of view, and keep fighting each other. Another way is to try to build a bridge between these opposite groups, showing that being sustainable is also rational from a positive economic perspective. This paper will produce a review of different approaches to the relationship between Sustainability and Finance and developed the proposal of a positive, economic perspective that may help to bridge the gap between two perspectives on the matter. This is a theoretical paper that would produce a theoretical proposal. The main sources of information are going to be published documents, either books, NGO’s reports, or published papers in reviews and journals. In the first part of the paper, a review of the literature is going to be conducted, and in the second part, a proposal is going to be presented.