Proceedings of the 9th International Conference on Research in Business, Management and Economics
Year: 2024
DOI:
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ESG Between Public and Private
Prof. Dr. Salvatore Esposito De Falco
ABSTRACT:
Addressing ESG issues by examining the differences between the public and private sectors is not an easy task, particularly because the underlying objectives are and must remain different between the two. It is, therefore, my belief that the public and private sectors should be distinguished based on their differing corporate purposes. Specifically, despite the extensive literature underpinning the corporatization processes of public administration (consider New Public Management and Public Governance), which might suggest a tendency for the public sector to resemble the private sector, one cannot ignore the fact that public enterprises must behave differently from private ones. The private firm, as Franco De Benedetti correctly stated, must necessarily aim for profit as its primary objective. However, in today’s post-Fordist era, this goal can no longer be in conflict with social objectives. The firm must utilize production factors to generate profit, and this depends not only on its intrinsic capabilities but also on its openness to the market and its ability to contribute to reducing negative externalities and safeguarding the interests of all its stakeholders. Public enterprise, on the other hand, must aim to achieve different objectives, which are certainly not centered on profit. The State must legislate with the aim of reducing and limiting negative externalities while also ensuring adequate services to support businesses and the community, thus fostering appropriate growth in social and collective well-being. In this sense, the State must regulate and steer behaviors towards broad sustainability objectives. The fundamental difference between the public and private sectors is therefore tied to the ontological distinctions that define the two systems. These distinctions inherently impose different roles and positions, even in relation to the complex issue of ESG and sustainability in general.
keywords: ESG, Capitalism in transition, legal compliance, regulatory and reputational compliance