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Sustainable corporate governance and socially responsible investors

Carlos Torneros looks at how sustainable corporate governance evolved up to the present day.

The ‘Great Debate’ over corporate purpose is back in full swing. In the 20th century the winner was shareholder value maximisation, or shareholder primacy — meaning that public company directors should run corporations exclusively for the benefit of shareholders.

Such a notion of corporate purpose became dogma from the 1970s with economists from the School of Chicago, Milton Friedman, Michael Jensen and William Meckling.