Final answer:
The mandate for banks and financial institutions to engage in socially-responsible investing considers the balance between profit maximization and the broader impact of their financial activities. While the traditional view, as expressed by Milton Friedman, emphasizes profitability, the experience from the 2008-2009 Great Recession and subsequent understanding of sustainable practices indicates that social responsibility can also be integral to long-term profitability and risk management.
Step-by-step explanation:
The question of whether banks and financial institutions should be mandated to engage in socially-responsible investing addresses a significant aspect of modern economics and corporate ethics. The perspective mentioned by Milton Friedman in 'The Social Responsibility of Business Is to Increase Its Profits' suggests that the paramount objective for a business, including banks, is to maximize shareholder wealth. However, this assertion is countered by the awareness of social responsibility and sustainability, which can be integral to long-term profitability and risk management.
Banks play a critical role in the economy, not just through financial capital markets but also by influencing social outcomes through their investment choices. The issue at hand is complex, involving the balance between profit-making and adhering to social responsibilities. Moreover, the 2008-2009 Great Recession highlighted the necessity for a responsible approach to banking, which includes considering the broader economic and social impact of their financial activities.
While some argue that a focus on social responsibility may detract from profit-making, others believe that in the long term, integrating socially responsible practices can lead to sustainable growth and thus, maintain or increase profitability. This remains a debated subject which points to a need for further consideration about the role of banks in contributing to social objectives without compromising their financial goals.