Millions of people around the world are saving money to meet personal goals – funding a comfortable retirement, saving for someone’s education, or buying a home, to name a few.
The funds to support these goals are safeguarded by institutional investors – pension funds, sovereign wealth funds, insurers, and asset managers – who invest in companies for the prospect of growth and security. These savers, their communities, and the institutions that support them make up the global investment value chain, and each benefit from long-term decisions in different ways:
have long-term goals such as retirement or providing for the next generation
invest to match the long-term goals of their beneficiaries or constituents
and the other stakeholders benefit from companies’ long-term decisions, which create jobs, innovation, and wealth
align their horizons, incentives, and goals to those of asset owners, whose money they manage
make multi-year investments in new markets, facilities, or products in order to create value for stakeholders
Data shows that long-term-oriented investors deliver superior performance, and long-term-oriented companies outperform in terms of revenue, earnings, and job creation. But despite overwhelming evidence of the superiority of long-term investments, short-term pressures are hard to avoid. A majority of corporate executives agree that longer time horizons for business decisions would improve performance, and yet half say they would delay value-creating projects if it would mean missing quarterly earnings targets.
90% Executives who agree that longer time horizons would improve performance
50% Executives who would delay value-creating projects if it meant missing quarterly earnings targets
Today, the balance remains skewed toward short-term financial targets at the expense of long-term value creation. FCLTGlobal mission is to encourage a long-term focus in global investing by developing practical methods for companies and investors. Our work is focused on identifying key levers that can elevate long-term performance, and encouraging the measurement of progress in these areas through metrics against long-term objectives. By working across the investment value chain and creating the practical steps that all market participants can take, FCLTGlobal can make long-term practices the norm, not the exception.
We Drive Change Through a Focus on Key Areas
Boards of directors are key to long-term value creation
Strong governance provides the foundation for success. Boards of directors with long-term orientations create an environment in which management can take a long-term approach.