Boston, MA, 26 February 2019 – FCLTGlobal, a not-for-profit organization that advocates for a longer-term focus in business and investment decision-making, published today its latest report on corporate investor communications practices. Driving the Conversation: Long-term roadmaps for long-term success makes the case for companies to share more robust long-term plans, or “roadmaps”, with their investor base rather than issue the quarterly guidance statements that perpetuate a short-term ideology.
The new report outlines key elements that companies can include in a roadmap to their shareholders in order to build consensus. This list includes more fundamental components like a clear mission statement, core drivers of business growth, or management’s market view, and more involved benchmarks such as capital allocation priorities, key performance indicators, and 3-5-year objectives. Together, these elements paint a clearer picture of a company’s trajectory for investors and mute share price volatility.
“Despite evolving preferences within the investment community, many companies still find themselves stuck in the quarterly cycle of hitting 3-month targets. Well-executed roadmaps can present investors with a more comprehensive picture of how a company will create value for them over the long term, with metrics that are easily trackable,” said Sarah Williamson, FCLTGlobal’s Chief Executive Officer.
Driving the Conversation: Long-term roadmaps for long-term success is the latest in a series of papers from FCLTGlobal on the shifting nature of corporate communications. Key elements of a long-term plan were first laid out in Straight Talk for the Long Term (2015). In Moving Beyond Quarterly Guidance: A Relic of the Past (2017), FCLTGlobal focused on the damaging effects of earnings-per-share guidance and recommended that companies issues long-range planning in lieu of issuing estimates for the next quarter.
As a part of the project, FCLTGlobal conducted the Investor Guidance Preferences Study, a survey that queried global institutional investors about what they value most when receiving information on long-term performance. These responses indicated a strong interest in companies’ capital allocation and competitive advantages, as well as a clear preference for long-term objectives to be evaluated on a 3-year or longer time frame. More results from the study can be found in the full report.
FCLTGlobal is a 501(c)(3) not-for-profit dedicated to developing practical tools and approaches that encourage long-term behaviors in business and investment decision-making. It takes an active and market-based approach to achieve its goals. By conducting research and convening business leaders, FCLTGlobal develops tools and generates awareness of ways in which a longer-term focus can increase innovation, economic growth and future savings. FCLTGlobal was founded in 2016 by BlackRock, Canada Pension Plan Investment Board, The Dow Chemical Company, McKinsey & Company, and Tata Sons out of the Focusing Capital on the Long Term initiative. Its membership encompasses asset owners, asset managers and corporations from around the world. Please visit www.fcltglobal.org for more information.
# # #
+1 617 203 6588