Can Greed Still Be Good?

at 12:35 AM

"Greed is good," iconic investor Gordon Gekko pronounced in 1987's "Wall Street" movie.  His words seared into our collective conscious. The movie's sequel asks: Is greed good? The answer can be yes.

Today, a new crop of innovations, business strategies and investment funds show that more shareholder return is possible when firms balance short-term greed with actual "doing good." What's "good" in business? Selling products that are healthier for you. Reducing natural-resource intensity. Ccreating jobs that also match our society's full diversity.

My mom Alice offers, "No person's all good or all bad, they're a mix of both." Companies are made up of people, and are the same. But no accepted rating and ranking system of "net good" dominates, despite mounting evidence that higher financial performance is possible. Finance professor Alex Edmans of The Wharton School, my alma mater, shows Fortune's "best companies to work for" value people as an asset and have outperformed the general market since 1998.  Firms with more women on the board of directors yield better financial performance, says Catalyst, a women's leadership nonprofit.  Even Goldman Sachs offers portfolios where "net good" drives value -- if you are a client. Al Gore partnered with an ex-Goldman executive to create a $5 billion fund seeking profit from eco-efficient firms.

"Net good" companies may surprise you: Campbell's Soup is lowering its sodium, GE is selling wind farms and, yes, Walmart judges 60,000 global suppliers, including those in China, for eco and social results on a scorecard to allocate shelf space. Walmart's chair Rob Walton has also invested his own money in renewable-energy firms.

Today "investing for good" is not yet the norm on Wall Street or on Main Street. The new fundamentals of investing are here: solving human needs -- health, wealth, earth, equality, trust -- can benefit bottom line financials.

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If Gekko knew that in 1987, he could've avoided jail and created jobs. The 21st Century's investment opportunity awaits. "Doing good" can be served by greed -- to better your world, your company and your portfolio.
 
With this Perspective, I'm R. Paul Herman.

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