Impact economics could save Israel during pandemic
Ex-Jewish Agency CFO thinks country should adopt corporate social values
To save Israel’s economy and make sure it’s ready for the post-coronavirus reality, the nation should look into the growing business models of corporate social responsibility (CSR) and environmental social and governance (ESG), National Advisory Board (NAB) activist Yaron Neudorfer told The Jerusalem Post.
Grouping these concepts in the larger framework of an impact economy, Neudorfer explains how using money to do good could be the wisest action.
“The state is already giving a lot of money out, it could tie that money with ecological values at the same time,” said Neudorfer, who was the Jewish Agency’s chief financial officer from 2005 until 2012.
The French government, he said, offered Air France a rescue package of $7.6 billion in April, on the condition it reduces its 2005 carbon emissions levels by half by 2030. Israel now attempts to save its own national airline, El Al, but no similar reports have been made in the Israeli case.
“Israel has roughly NIS 2 trillion in pension money,” Neudorfer said. “Can you imagine what would happen is just 10% of that will be invested according to impact values?”
Some writers, like Naomi Klein, view modern capitalism as a disaster-driven system in which massive upheavals are used to change the rules of the game via the power of the state, such as lowering minimum wage or pushing the retirement age up.
The impact option cites
Harvard Business School Prof. George Serafeim because his article “Corporate Social Responsibility and Access to Finance” argues that it pays to do good.
The logic is that humans do like to make money, but they also enjoy feeling that their company, service, product or labor has a social value. These shared values mean those who work in the firm care about their work, are more efficient, and are more productive.
This conceptual framework has question marks. For starters, it might be virtue signaling for businesses.
In July, Al Arz Tahini openly supported the LGBTQ community and received a backlash from conservative Arab clients who vowed never to buy it.
In addition, Serafeim says that a “well-defined government framework” is needed to measure success. In Israel, the IDF faked data concerning how many ultra-Orthodox men enlisted in 2011. Some 600 men enlisted, but on paper, the figure was 1,200. This went on for years. How could Israelis know if a firm is being honest about its values when the army was not?
Neudorfer reasons that, while it’s always possible to find fault, one should not dismiss the validity of an impact economy just because some people might exploit it.
He suggests that the path forward for Israel is impact accounting, which will present shareholders with the social and environmental effects of what their firm is doing in addition to the bottom line.