Response to WSJ’s “Short-Termism is Harming the US Economy”
By Daryl Brewster, CEO, CECP
As originally featured on CECP's Insights Blog
In “Short-Termism is Harming the US Economy,” Jamie Dimon and Warren Buffett argue that executives who target quarterly, short-term results often do so at the sacrifice of long-term strategy and results. This, in turn, harms the sustainable success of companies and the economy as a whole. We agree. As part of CECP’s Strategic Investor Initiative, a coalition of long-term oriented companies and institutional investors, the call to action is clear: It is time for short-termism to end.
There is an alternative. Rather than race to attract fickle traders, executives should instead aim to woo “patient capital” by adopting long-termism. To do so, we encourage CEOs to set strategy and regularly communicate their long-term plans for sustainable value creation. Earlier this year, nine members of SII’s Board of Advisors, led by Vanguard Chairman Bill McNabb, sent an open letter to CEOs of major companies. The letter poses seven questions every CEO should answer when presenting publicly-disclosed, investor-facing long-term plans related to three themes: growth, strategy and risk. Further to this, CECP has created a platform to operationalize the call from leading investors for long-term plans: the CEO Investor Forums. The events offer offers global CEOs and senior executives an opportunity to share a new kind of business plan with investors representing over $25 trillion in AUM, focusing on the long-term and material ESG (Environmental, Social and Governance) issues.
Read more at https://cecp.me/2M0bnED.
