A “pieconomics” framework to guide sustainability investments

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  • Professor Alex Edman’s book – “Grow the Pie” – is worth reading. Hit me up if you want my notes about the book.
  • It’s about “pieconomics.” “Win-win’s” for shareholders and other stakeholders. So shareholder primacy isn’t threatened with this ideology.

Harald Walkate shared some tidbits from Alex Edman’s new book. Both are great thought leaders in the ESG space. Here’s a LinkedIn note from Harald (that I cleaned up slightly since LinkedIn is more informal):

I promised to share some indispensable insights from Alex Edman’s great book “Grow the Pie.” First up: a very useful framework to help you make decisions – whether to undertake certain projects; which sustainable development goals should companies contribute to; whether investors should try invest with ‘impact.’ All you need to know is three principles:

1. Multiplication: If I spend $1 on a stakeholder, does it generate more than $1 of benefit to the stakeholder? If not, the enterprise could instead pay the $1 to the stakeholder who can then use it more effectively.
2. Comparative advantage: Does my enterprise deliver more value through this activity than other enterprises? A company typically has comparative advantage in any activity it *controls directly* OR due to its expertise.
3. Materiality: Are the stakeholders material to the enterprise?

How to remember all this? A simple mnemonic device: “Most Cows Add Milk” – MCAM -> Multiplication, Comparative Advantage, Materiality. (This is my own little contribution, don’t hold it against Alex).

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