What is FCLTGlobal?
FCLTGlobal is a not-for-profit member-based organization that works to encourage a longer-term focus in business and investment decision-making. We develop practical tools and methods to support long-term behaviors among global asset owners, asset managers, and corporations.
Focusing Capital on the Long Term began in 2013 as an initiative of the Canada Pension Plan Investment Board and McKinsey & Company, which together with BlackRock, The Dow Chemical Company, and Tata Sons founded FCLTGlobal in July 2016.
How does FCLTGlobal pursue its objectives?
Our organization is dedicated to rebalancing investment and business decision-making towards the long-term objectives of funding economic growth and creating future savings. FCLTGlobal works to generate measurable change in capital market behavior among savers, investors, corporations and other stakeholders by:
- Originating evidence-based research
- Engaging the global investment value chain to problem-solve and test strategies that create long-term value
- Developing tools and processes that help investment professionals put long-term strategies into action.
Why is FCLTGlobal concerned about short-termism behavior in business?
C-level executives have overwhelmingly expressed the increasing pressure they face to make short-term decisions. In fact, more than half of executives and directors at companies without a strong long-term culture say their company would delay a new project to hit quarterly targets even if it sacrificed value. While it’s important to manage both immediate and longer-term demands, research suggests an over-emphasis on the short term has cost investments in employees, new jobs, new plants or equipment and spending on research and development. This makes it harder for economies to innovate and reduces the quality of life for people around the world.
Long-term firms added nearly 12,000 more jobs on average than other firms from 2001 to 2015; the U.S. economy alone would have added more than five million additional jobs over this period had all companies acted in this manner. This suggests that the potential value unlocked by companies taking a longer-term approach was worth more than $1 trillion in forgone U.S. GDP over the past decade.
How long is long-term?
The “long term” is based on the mindset of investing in an asset for a prolonged period. More concretely, we consider the long-term to be the time it would take to successfully build a profitable new business, which is generally 5-7 years. However, this estimated time varies depending on the firm and its industry. For example, some pension plans look forward over generations.
Who are FCLTGlobal’s Members?
In addition to our Founders, our Member organizations are representative of the global investment value chain, including many of the world's leading asset owners, asset managers and corporations, and professional services firms. Each is committed to accomplishing long-term tangible actions to lengthen the time frame of capital allocation decisions.
How is FCLTGlobal leading the charge on long-term investing?
Through its sole focus on improving long-term value creation across the global investment chain, FCLTGlobal has a unique role to contribute with its global footprint, practical, evidence-based approach and dedicated organization. Specifically, we:
- Take a cross-value chain approach: Our Members are drawn from the global investment community. It is often at the interaction points among asset owners, managers and corporate management where short-termism is exacerbated, and it’s also where potential solutions lie.
- Focus on evidence and practical actions: We understand that both evidence and practical tools are required for change.We conduct original research on the causes of short-termism and work to test practical solutions that we will span a broad set of interventions, including corporate governance, risk management, compensation incentives, and investor-corporate dialogue. We convene to share these solutions and lessons learned to encourage greater uptake across our membership and beyond.
- Reflect a global perspective: Our organization and membership are global in nature. We recognize that the dynamics of short-termism are different across geographies and markets and by bringing this perspective we believe we can better identify lasting solutions.
- Have a dedicated organization: We take a long-term view in our own operations. We know it will take time to drive change and our Founders and Members are committed to a multi-year strategy and funding model.
How can an organization become a Member? What is your membership policy?
Our Members are typically representative of the asset owners, asset managers, and corporations that make up the global investment value chain. We ask our Members to do several things:
- Secure their CEO’s personal support for FCLTGlobal, including publicly supporting solutions that drive long-term thinking within their own organization and attending FCLTGlobal's biennial Summit;
- Designate senior delegates who can invest time in the intellectual capital of FCLTGlobal, participating in working sessions, hosting events and/or providing support for our research initiatives; and
- Make a multi-year financial commitment.
All new Members must be approved by FCLTGlobal’s Board of Directors. We welcome inquiries from organizations interested in more information.