“Do we mean to hold businesses or paper?”

The question is one of the most compelling to emerge from Davos this year because its implications are so provocative for long-term investment institutions. 

Additional ways of asking it include: 

Resilience is the commonality among all of these questions. Long-term institutions reserve capital, in one way or another, for their own resilience when they have to withstand J-curves induced by mispricing and especially when that mispricing is the result of their own efforts to influence economies – in other words, when they think of themselves as holding business, not just paper. 

If this sounds too abstract, think about climate change 

Long-term institutions agree with near unanimity that carbon use and GHG emission are – and always have been – mispriced. Many are now responsible for meeting investors’, clients’, or sponsors’ higher expectations to participate in financing a transition. 

Institutional investors approach these climate trends in several ways, ranging from silence to catalyst, and those same approaches apply to the many other trends, disruptions, and uncertainties that still are becoming familiar: 

The path will be bumpy, but the end result of that transition will be the creation of lower-carbon economies. Businesses – real-world enterprises – are the instrument of this transition much more than the various stocks and bonds that they issue. 


Recap: 2023 Davos CEO Roundtable

19 January 2023 - On 17 January, FCLTGlobal hosted its annual CEO Roundtable in Davos alongside the World Economic Forum Annual Meeting. The topic of the day was the challenge both companies and investors face to balance long-term performance and near-term decision-making amid a time of historic disruptions.

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Climate, Investor-Corporate Engagement, Strategy | Report

Sustainability or Strategy: Bridging the Gap Between Climate Change and Long-term Value Creation

31 May 2022 - New research suggests that companies could do more to bridge the gap between their climate change approach and their long-term value creation strategies.

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