Revolutionizing the Market:
A closer look at the
Long-Term Stock Exchange
professor at cambridge, author
This article was previously published on LinkedIn.
Like many facets of today’s economy, listing on traditional stock exchanges incentivize short-term returns while neglecting long-term resilience. Expectations of analysts and other market participates intensely focus on quarterly earnings, which strongly shapes executives’ decisions.
In my new book The Profiteers: How Business Privatizes Profit and Socializes Cost, I discuss a number ways for the financial system to shift its focus from short-termism to creating a more lasting and positive impact on the world.
One organization I have studied is the Long-Term Stock Exchange (LTSE) and how this new marketplace prioritizes sustainability and future-thinking over the fleeting allure of hitting quarterly numbers. I had the privilege of speaking with Michelle Greene, President Emeritus and Board Member of LTSE, to delve into how this innovative exchange is reshaping the landscape of public markets by creating institutions to foster long-term value creation and resilience among companies. Below are some key points from my Forbes article on the Long-Term Stock Exchange:
- The Genesis of LTSE: Greene describes LTSE as a response to the traditional market's short-term pressures, emphasizing, "The companies that are thinking much longer term...have a very different orientation than those that were overly focused on 'Are we going to make this quarter's numbers?'" This perspective underpins LTSE's mission to provide a platform for companies committed to long-term strategies and sustainability.
- Principles Over Prescriptions: Greene explains that the LTSE "wanted to create a public marketplace that was focused on long-term incentives," but it doesn't impose rigid rules. Instead it operates on five core principles designed to orient companies towards the long-term. Greene points out that these principles revolve around broader stakeholder engagement, sustainable performance metrics, and a commitment to environmental and social governance.
- Supporting Sustainable Practices: Greene's experience has shown her that long-termism is intrinsically linked with better environmental, social, and governance (ESG) practices. "Long-term focused companies take a broader perspective...this is how we were really going to make traction on sustainability," she shares, underscoring the belief that a long-term outlook is essential for integrating sustainability into core business strategies.
- Shaping the Future of Business: Greene envisions the LTSE as a catalyst for systemic change, promoting a shift in how companies measure success and engage with their stakeholders. By prioritizing long-term strategies, LTSE aims to inspire a new generation of businesses that are sustainable, responsible, and aligned with broader societal goals.
The Long-Term Stock Exchange offers a blueprint for how businesses can thrive by focusing on long-term value creation, breaking out of systems that reinforce the pressures of short-term profitability. This is not only a challenge to conventional market practices but also shows pathways for companies to integrate sustainability and social responsibility into their core operations. In an era where the future of our planet and societies is increasingly under threat, the principles and practices championed by the LTSE offer hope for a more sustainable and equitable global economy.
