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EXECUTIVE PERSPECTIVE: Focusing on long-term value

Tim Nixon

24 Mar 2017

In an extraordinary event roughly three weeks ago in NYC, CECP’s Strategic Investor Initiative (SII) hosted a pioneering, cross-sector CEO Investor Forum, in partnership with Thomson Reuters, during which leading companies shared their long-term plans with investors representing more than $22 Trillion in AUM.

In an environment where 86% of CEOs indicate that they are too short-term oriented, the world’s largest investors–BlackRock, Vanguard, and State Street–are calling for companies to think more long-term, and recent research strengthens the case both for managing the business for the long-term and combating the short-termism of capital market traders. This orientation towards long termism represents an unprecedented opportunity for leading companies and investors to drive sustainable value creation, and reap the bounty which comes from driving the fulfillment of the sustainable development goals.

Over the past year, CECP and its multi-sector SII Advisory Board (investors, public companies, major device providers and Thomson Reuters) have taken up a new challenge we hear again and again from business leaders: investor and company attention is almost exclusively focused on short-term returns, yet the majority of money is invested in long-term stocks and funds. And stakeholders, including leading investors, are increasingly asking  companies to take the long view, focusing more on the future and the material risks business face.

To that end, the first-ever CEO Investor Forum, convened on February 27th, 2017. At this inaugural convening, global CEOs and senior level executives from across multiple industries joined nearly 200 investors representing AUM of more than $22 Trillion to share a new kind of business plan—one that focuses on the long-term and embeds environmental, social, and governance (ESG) issues in addition to traditional factors.

Although these efforts represented but a start in addressing the material ESG challenges that are an essential part of long-term business.  The following CEOs and executives presented:

  • Mitch Barns, CEO, Nielsen
  • Bruce D. Broussard, President & CEO, Humana Inc.
  • Michael Corbat, CEO, Citigroup Inc.
  • Thomas DeRosa, CEO & Director, Welltower Inc.
  • Anthony F. Earley, Jr., Chairman, CEO and President, PG&E Corporation
  • Vincent Forlenza, Chairman, President and Chief Executive Officer, BD
  • William McNabb III, Chairman & CEO, Vanguard
  • Martin Schroeter, CFO, IBM Corporation

The event also featured an address from Dow Chemical senior executives, and Discussant Robert Pozen, Senior Lecturer, MIT; Former President, Fidelity Investment.

Investor attendees included VanguardBlackRockState StreetGoldman SachsMerrill LynchMorgan StanleyBreckinridge Capital Advisors, and many more.  Thomson Reuters hosted an ‘”after-event” discussion and dinner attended by State Street, Vanguard, KPMG and others, at which it was agreed that this new forum represents an important opportunity for encouraging and highlighting corporate leaders who champion long-term value creation and ESG integration.  “This will be a great venue for corporate leaders to present long-term planning that will add materially to the sustainability of the company and the many stakeholders of the company”, said Mark W. McDivitt, Managing Director, Head of ESG Solutions, State Street Global Exchange.

Given the clear opportunity, a second CEO Investor Forum will be held on September 19, 2017 in New York City. Stay tuned to this space.  Thomson Reuters and this unique group of collaborators will continue work to open new pathways for companies, investors and the many stakeholders involved to encourage and reward long-termism at a time when our planet desperately needs this leadership.  The potential rewards and risks have never been higher.

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