Investors are looking for executives to strategically manage for the long term According to last year’s Edelman Trust Barometer, 65 percent of people believe companies are not doing well at living up to their climate change commitments, driven by the focus on short-term profits. With close to 30 percent of company holdings owned by index funds, investors and the capital markets need to receive more long-term strategic information about how events in the short term are expected to impact business plans and strategies in the long term. Some of those elements include board governance, sustainability, and the wider economy. The historical emphasis on short term quarterly guidance pushes companies to prioritize quarterly targets over long-term goals.
CECP’s CEO Investor Forum is a global platform for companies to share their long-term value creation strategy, based on CECP’s Integrated Long-Term Plan Framework. It is the only platform that brings leading CEOs and investors together to discuss Integrated Long-Term Plans.
In November 2023, CECP held its eleventh CEO Investor Forum focused on climate action. The audience of institutional investors who represent $25 trillion in assets under management heard Integrated Long-Term Plans from eight CEOs representing over $700 billion in market capitalization, including Mark Schneider, CEO, Nestlé and Barbara Humpton, CEO, Siemens USA .
“We have a very far-reaching sustainability agenda,” said Mark Schneider, CEO, Nestlé following the event. “This is all part of our creating a shared value approach to business, where we believe, in order to be long-term, successful businesses need to contribute to the success and sustainability of societies around them. That approach and that mindset is a hallmark of Nestlé.”
“There’s no force we face today more urgent than climate change. Like purpose has shaped who we are as a company, climate action now drives us as a focused technology company,” said Barbara Humpton, CEO, Siemens USA. “Decarbonization is a growth market for Siemens. In fact, more than 90% of our global revenue now comes from a portfolio that enables sustainability impact.”
Three key recommendations from CECP’s 11th CEO Investor Forum include:
- Focus on workers first. Build a skillset to fuel the transition, because we don’t know yet what is possible
- Change customer behavior in support of sustainability and climate. Better understand customers, create more value, and elevate experiences to control and move demand
- Find a way to operationalize “glocalization” by investing in local communities to ensure broad sustainability
CECP works alongside companies and leaders to create their Integrated Long-Term Plans to open a dialogue with all stakeholders like investors and boards who are interested in issues that create value over the long term—such as risk mitigation—that are often not addressed in mandatory disclosures. Creating an Integrated Long-Term Plan:
- Demonstrates there is an effective, forward-looking strategy
- Inspires – and retains – key stakeholders, such as employees, customers, partners, suppliers, and more over the long term
- Communicates key priorities and milestones
- Creates a favorable context for the company to execute short-term actions in the effort to achieve long-term objectives
Part of closing the climate trust gap involves a multifaceted approach combining transparent communication, engagement with key stakeholders, and integration of sustainability into core business strategies. CEOs might demonstrate how they are bringing together internal resources – such as accounting, working with the CFO and adhering to international regulations –by creating an Integrated Long-Term Plan and discuss it at CECP’s CEO Investor Forum to show holistically where it’s headed over the long term. In a world grappling with climate challenges, building trust by creating vibrant discussion around these types of issues, will help companies eventually end up in a much better place.
Contact CECP Insights to learn more about how CECP can support you in your company’s corporate purpose journey to build trust.