From ESG to holistic value addition: Rethinking sustainable investment from the lens of stakeholder theory

Stakeholder theory calls for effective stakeholder management in the interest of sustainable businesses. Whilst there is a need to redefine ‘stakeholders’, investors (i.e. shareholders) can play an essential role in bringing a paradigm shift in shaping current business practices. In recent times, the ‘Environment, Society and Governance’ (ESG) approach has emerged as an alternative form of investment for key investors seeking change. However, certain deficiencies have been identified when it comes to ESG strategies, which have led to disagreements among sustainable investors. To plug this gap and overcome this challenge, we propose an alternative framework based on sustainable business practices that holistically adds value that is inclusive of all stakeholders. To this end, we conducted semi-structured interviews with social entrepreneurs, academics, and experts from the financial services industry in an emerging country context, namely India. Based on our text analysis of interview data, we propose a ‘Holistic Value Addition’ (HVA) framework of sustainable investment that builds on value-addition by businesses towards its stakeholders. We envisage that adoption of this framework will help sustain the sustainable agenda.