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Why Does Long-Termism Matter?

Words by 3p Contributor
Investment & Markets
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By Julia Wilson

If you were told tomorrow that half of your retirement savings wouldn’t be available to you in 40 years, would you still invest? What if the sound investment decisions you made today eventually collapsed under the collective weight of environmental, social, governance (ESG) factors like climate change and resource scarcity? Protecting ourselves against this possibility means investing today in sustainable solutions that expand the scope of what’s possible.

Let’s zero in on investors as one key stakeholder and influencer in this equation. Investors’ risk appetite and trust in a company’s leadership can have an impact on a business's ability to invest in a sustainable future. In other words, investors’ active and vocal interest in ESG considerations can propel companies to make long-term investments in sustainability that matter within and beyond the boardroom. When capital flows into companies that do well by doing good across people, planet and profit, we all benefit.

As a corporate responsibility and sustainability professional, I recognize the important role that investors play in helping companies open the door to new sustainability opportunities. There’s no shortage of ESG information out there for investors to tap into; when they recognize what’s relevant and ask the right questions, investors in particular are compelling advocates for sustainability.

So what does this focus on the future of our people, planet, and profits ultimately boil down to? Long-termism. We’ve seen an accelerated interest in the impact of long-termism on business and sustainability – inextricably linked as they are – through a number of different investor-focused efforts, like Larry Fink’s letter to BlackRock portfolio companies, the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and Nasdaq’s voluntary ESG reporting guidelines for the Nordic and Baltic markets, to name a few examples of many.

One particularly compelling example of how companies and investors can communicate more directly with each other about the importance of ESG factors on long-term success is through CECP’s Strategic Investor Initiative. Nielsen's CEO, Mitch Barns, presented at the first CEO-Investor Forum in February 2017. Mitch’s presentation touched on a number of different aspects of Nielsen’s long-term strategy and story, focusing on how the history of our company has guided us through turbulent times, and how hard work and patience can lead to some of your greatest innovations.

Like a growing number of CEOs and other corporate leaders, Mitch also made the direct connection between our company’s most relevant areas of opportunity and risk—like data privacy, security and integrity; diversity representation and inclusion; and future-focused leadership and innovation—to our future growth and success.

Your ESG strategy is your business strategy. By linking business and sustainability strategies, companies demonstrate their true value for investors and beyond.

Plenty of time is devoted to how best to make the business case for sustainability. At conferences and seminars across the globe, sustainability professionals debate the merits of various approaches. Which executives within your C-suite will hold the most sway? Which arguments are most compelling – the financial bottom-line, reputational, or human interest? In reality, much of this depends on your company’s structure, industry, and the maturity of your sustainability efforts.

No doubt, sustainability is a team sport. A truly unified approach creates and supports a meaningful ESG strategy anchored in future goals and designed for long-term growth.

Long-termism is the critical link between the investment and sustainability communities. It is through this expanded – and connected – view of profitability and ESG success that companies truly win over the long-term.

Julia Wilson is Director of Global Responsibility & Sustainability at Nielsen.

Image credit: CECP

 

 

3p Contributor

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