3 Key Themes from Davos

The debate no longer concerns why organizations should be longer-term, but rather how they can accomplish it.
Feb 04 2019

 

Sarah Williamson, CEO, FCLTGlobal


Our past discussions in Davos revolved around making the case for seeing things through the long-term lens. Now we see this concept immersed into the thoughts and strategies of decision-makers the world over. The debate no longer concerns why organizations should be longer-term, but rather how they can accomplish it. In this vein, there were a number of practical themes I heard over and over again throughout the week:

Integration of ESG as the norm

The adoption of environmental, social and governance criteria into business and investment operations has become so mainstream that it’s nearly impossible for a major public company or large institutional investor to do business without a clear approach to ESG integration. While ESG and “long- termism” are not synonyms we expect more organizations will adopt a long-term approach as they integrate these principles into the way they do business.

Reporting is a critical next step

If operating our businesses in a long-term fashion is the first step, communicating clearly to stakeholders is the next. Disclosures and dialogue around long-term oriented investments can present a challenge, selecting the right metrics to communicate with investors and the right level of strategic detail to share. A number of organizations are working specifically to shape the future of reporting, and we can expect long-term strategic roadmaps to become integral to long-term investing itself.

Public opinion is shifting toward the long term

Once just a cause for concern to those within the investment industry, the systemic focus on immediate returns at the expense of larger future value creation is increasingly troubling business leaders, regulators, and the public at large. The headlines of 2018 on quarterly reporting, short-term shareholder activism, and the future health of our global economy have put a spotlight on sustainable business practices. If companies aren’t willing to evolve, their investors, regulators, or public opinion just might do it for them.

These snippets of the discourse in Davos indicate that real change is underway. Did you encounter similar or different views? Were there other new ideas you came across that can further promote long-term behavior? Are there others we should include in our work? Let us know.