Except for its subjective nature, other criticism towards well-being as an economic indicator exists. Classical welfare economists argue that it does not give a rigorous framework for policymakers in which decisions can be valued based on its Pareto efficiency; ensuring that some individuals are not worse of while improving the well-being of others. Moreover, the aim of classical welfare economics is to optimise efficiency and is a crucial component of social welfare, thus allowing for an equal distribution of resources among people. Policy that is not inclusive leads to rejection by individuals and to a mistrust in policymakers. Therefore, it is well advised to adhere to the voice of the individual. Even though wellbeing is subjective by nature, it is important that policymakers seek to rectify the growing inequality that arises from classical economic theory as well as the utilisation of the GDP as a primary indicator for a country’s success. A balancing act indeed. The debate continues over whether the solution is found in complex metrics like the Monitor of the Well-Being Economy or in adjusting established economic theories to account for the pricing of externalities, non-market transactions, inequality, and unsustainable business practices. To enhance transparency and harmonise reporting practices, the European Union introduced the Corporate Sustainability Reporting Directive (CSRD) alongside the European Sustainability Reporting Standards (ESRS) (Commission, 2024). The latter is a set of standards encompassed within the CSRD. Key objectives of the CSRD are to support the EU Green Deal’s ambitious target of achieving climate neutrality by 2050 and to foster the incorporation of sustainability considerations into corporate business strategies. The ESRS framework ensures mandatory reporting criteria across three domains: environmental, social, and governance. Especially, as we will see in the following section, the perception is that businesses focus solely on profit and therefore, the desire is for businesses to adapt their business models, leading to positive environmental and social outcomes. 4.4 Corporate Responsibility and Firm Contributions to Well-being Corporate social responsibility (CSR) initiatives discussed under the broader framework of John Elkington’s Triple Bottom Line (Slaper et al., 2011), are often designed to address not just economic benefits (like profits) but also to improve social and environmental outcomes. This aligns directly with the principles of a well-being prosperity which seeks a balance between economic performance and the health, education, and environmental quality that affect overall societal well-being. Among the different characteristics of CSR, Crane et al. (2014) names ”internalising or managing” negative externalities to ensure social welfare. Yet, since the start of the early concepts of CSR in the 1950’s, there is a feeling that firms have made minor progress. Several possible reasons for the lack of progress exists, including that businesspeople cannot be trusted, they are ill-equipped to deal with social issues, their corporations are not equipped to do so, and it is not their responsibility (ibid.). Scholars like Friedman (1970) argue that the only social responsibility of business is to use its resources and engage in activities designed to increase its profits. For him, the corporate executives are employees of the owners of the business, namely the shareholders. Hence, their primary duty is to those owners. He further believes that by internalising externalities, executives are imposing taxes and deciding how to spend tax revenue, roles that should belong to the government and not private individuals or entities. 20 4.4 Corporate Responsibility and Firm Contributions to Well-being
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