The term “late capitalism”, first used by German economist Werner Sombart in the early-1900s, is coming back into vogue. The phrase is increasingly being used to describe the problems facing the modern global economy. These include gaping inequalities of wealth, stagnant real wages, aggressive and convoluted tax avoidance by global corporations, surveillance by tech firms, abuses of human and workers’ rights, rip-off products sold by the finance sector, and environmental destruction such as the transformation of the oceans into a dumping ground for plastic waste.
There are plenty of scapegoats for such ills. But inadequate corporate governance and, in particular, investors’ and corporations’ obsession with short-term performance are increasingly being seen as among the root causes. And a growing band of investors believe they’ve found a cure.
The thinking is that, if environmental, social and governance (ESG) factors are ingrained in investors’ thinking, then a triple-win will follow – more valuable companies, more value for end-investors and, ultimately, a more sustainable system.