The long-term policies that companies are required to adopt must be consistent with five principles, which offer companies guidance as to the key elements, while providing flexibility for diverse companies from a broad range of industries.
LTSE has eschewed a prescriptive, one-size-fits-all approach and believes that companies can manifest their focus on the long term in myriad ways. The principles hold that long term-focused companies consider a broad group of stakeholders, measure success in years and decades, align compensation of executives and directors with long-term performance, engage directors in long-term strategy (and grant them explicit oversight of this strategy), and engage long-term shareholders.
- Offer metrics beyond price-determined benchmarks that investors can use to value the company’s performance over the long term
- Preserve the flexibility for management to innovate consistently and to invest in initiatives that pay off over time
- Better align with requirements for the growing share of investment capital allocated according to environmental, social and governance (ESG) mandates
- Reinforce resilience by aligning with employees, customers, communities and other stakeholders