The phrase “long-term value” – as a goal of or approach to the new economic order – signifies the transition TO Impact/ESG outcomes and investments (FROM real goods and services) as the fundamental unit of economic value. “Long-term” is a phrase that operates as a sort of risk-management strategy. You’ll likely never see materialized the economic “value” that these approaches purport to create. That is, you won’t see any problems fixed or satisfactory outcomes achieved.
In order to prevent questions and the rejection of the system, the architects of this grave reset have hedged their bets, so-to-speak, by claiming at the outset that the returns are to be realized far, far off into the future. They can do this because they’ve also defined the problems as global, systemic, and structural challenges that are impossibly large in scope – not to mention usefully vague and apt to morph in nature, scope, or origin. When you are inclined to think that “long-term strategy” means something reasonable or prudent, just remember that these wordplays always appeal to our highest aspirations as a way of obscuring their sinister and deceptive meanings.
The excerpts below (from linked articles) lay out the parameters of the 4IR transformation and its relation to ESG/ impact investments.
(Ftr: I think the Millennial/Gen Z “demand” for ESG accounting is 100% manufactured and maybe 10% truthful.)
Companies that look ⚠long term – to 2030 and beyond – and master the integration of environmental, social and governance (ESG) risks and opportunities with commercial strategy will build the resilience to thrive over the next decade. Getting this integration right matters for C-suites and boards – and it matters because we urgently need to accelerate progress to live within planetary boundaries and towards social justice and equity.
The principle here is simple: sustainability strategy is smart⚠ long-term business strategy. Increasingly, it’s also smart near-term strategy.
Why? Because effective management of ESG opportunities and risks contributes to commercial value creation. Sustainable offerings can increase topline revenue and build trust with customers. Operational eco-efficiency can reduce costs over the ⚠long term. Values alignment and ESG performance are increasingly important to attract and retain top talent, which in turn drives productivity and innovation. Community investment bolsters social licence to operate and can help secure sources of supply – while driving positive societal impact. And strong ESG performance increasingly unlocks capital, either as a signal of sound management to investors, or through sustainability-linked loans or bonds.
From now to 2030, businesses across industries are rapidly transforming due to digitisation, AI, big data, the future of work, consumer power, and reshaping of global supply chains, among other macro-trends. Compounding these shifts are rising expectations for companies to deliver ESG performance and value to stakeholders, including – but no longer limited to – shareholders. And around the globe, governments and businesses are facing calls to “build back better” and deliver an inclusive, green, economic recovery.
To optimise near-term value through ESG, while building a⚠ long-term strategy for sustainable and responsible business, companies need to make smart decisions about what to prioritise and resource. At Corporate Citizenship, we are seeing companies develop sustainable and responsible business strategies through two approaches: 1) bold and rigorous ⚠long-term planning that sets direction and identifies early wins; and 2) “fail fast” innovation sprints that build early momentum and lay the foundation for ⚠long-term goals and targets.
Building resilient businesses will require a new mindset for many leaders. Instead of focusing exclusively on maximizing efficiency, resilience involves building new capabilities that may come at a short-term cost. And instead of managing short-term shifts in performance, resilience requires a focus on consistent ⚠long-term value creation and a balancing of short-run efficiency against ⚠long-run effectiveness.
As the post-COVID world emerges, leaders will need to shift their attention back to ⚠longer-term challenges. By building resilience, digitizing for advantage, and supporting collective action on climate change, leaders can put their businesses in position to succeed in and help shape the new reality.
Securing competitive capital.
As millennial and Gen Z investors become an increasingly important segment of the investment market, their interest in values-based investing will enhance pressure for ESG-type transparency. Addressing the evolving wants and needs of these stakeholders will be critical to secure the capital needed to make ⚠long-term, growth-oriented investments⚠ and supporting new programs and initiatives that will evidence an organization’s commitment to its stated values. Organizations like the Montreal Social Value Fund, which Eva has co-founded, and other Social Value Funds across the country are run by post-secondary students who make impact-first investments that prioritize the social and environmental efforts of Canadian businesses. And they’re one of many initiatives that work directly with organizations who are committed to driving sustainability efforts.
Companies are increasingly shifting towards more sustainable strategies and stakeholder capitalism by⚠ moving away from short-term shareholder primacy.
Financial and accounting systems influence decision-making, the assessment of corporate performance, and the value attributed to it. Therefore, financial and accounting systems play an important role in helping management and others evaluate a company’s ability to identify and manage ESG risks and create ⚠sustainable value over time.
As accountants, we are expert in financial capital, management information, and accounting standards. But I would strongly argue that the stocks and flows,⚠ impacts and dependencies of other forms of capital are ⚠equally – if not even more – important in the 21st century to understanding value creation.
Investors aligning COVID-recovery with ESG
ESG investing focuses on understanding how ESG risks and opportunities impact on long-term success, and takes into account externalities and the potential impact on performance.
These considerations have not disappeared as a result of COVID-19. In fact, there is growing recognition from the investment community that ESG is more important than ever. The United Nations-supported Principles for Responsible Investment (PRI) – the international network of investors with over 2500 signatories – has recognised that systemic recovery from the crisis is paramount, signalling that PRI signatories should be ‘supporting sustainable companies through this crisis – in the interests of public health and ⚠long-term economic performance – even if that limits short-term returns.’