Business and Society Program

Public Policy

A Call to Action for Policy Makers

Download the full statement with footnotes.
Download the statement (color brochure version).
Download a list of signatories.

28 BUSINESS, INVESTMENT, ACADEMIC, & LABOR LEADERS JOIN ASPEN INSTITUTE IN BOLD CALL TO OVERCOME SHORT-TERMISM

Washington, DC, September 9, 2009—Twenty-eight leaders representing business, investment, government, academia, and labor joined the Aspen Institute Business & Society Program’s Corporate Values Strategy Group (CVSG) to endorse a bold call to end the focus on value-destroying short-termism in our financial markets and create public policies that reward long-term value creation for investors and the public good.

The statement, “Overcoming Short-termism: A Call for a More Responsible Approach to Investment and Business Management,” identifies three leverage points for encouraging a renewed focus on long-term value creation and for addressing one part of market short-termism, shareholder short-termism:

1. Market incentives: encourage more patient capital through tax policy

2. Alignment: better align the interests of financial intermediaries and their ultimate investors

3. Transparency: strengthen investor disclosures

The statement highlights the need to focus on the system and not just the corporation, recognizing that a complex dance involving corporate managers, boards, investment advisers, providers of capital, and government drives the results we have now. This distinguished and diverse group is unified in calling for a comprehensive examination of market short-termism in our economy. The signatories hope that policy makers in Congress, the Executive branch, and relevant regulatory agencies will heed this call.

Recognizing that voluntary action alone is not enough to address today’s economic reality, a small group came together to create the foundation for this much-needed public policy conversation. The current drafting committee began with a set of ideas shared in Aspen CVSG meetings among varied market players beginning in July 2008. This effort builds on the CVSG's ongoing focus on sustainable value for investors and society, including the “Aspen Principles for Long-Term Value Creation,” that were released in June 2007 by a coalition of business, labor, institutional investors, and corporate governance experts. The Principles called for voluntary change in practice by business and investors around metrics of success, investor communications, and executive compensation.

“Short-termism must be addressed as a conceptual whole — piecemeal approaches do not work,” said Judith Samuelson, executive director of the Aspen Institute’s Business & Society Program. “Now is the time for bold ideas to drive change in the incentives and behaviors critical to transformation of how value is created and sustained.”

Download the full statement with footnotes.
Download the statement (color brochure version).
Download a list of signatories.
Press coverage.

Related articles:
"Government and Businesses Must Think Long-Term" in Roll Call by Barbara Hackman Franklin, Charles Rossotti, and David Langstaff. September 10, 2009.

"Short-Term Thinking Linked to Compensation Problems" in The Wall Street Journal's Real Time Economics blog featuring an interview with Ira Millstein and Lynn Stout. September 29, 2009.

"Focus on Short-Term Hurts Companies: The Perils of Subprime Leadership" in The Wall Street Journal by Bill George. October 30, 2009.

"Shareholders: Part of the Solution or Part of the Problem?" in The Atlantic by Ben W. Heineman, Jr. October 28, 2009. Reposted on the Harvard Corporate Governance blog on November 20, 2009.

"Q & A with Martin Lipton and Richard Ferlauto: Short-Termism" in The Conference Board's Governance Center Blog. December 9, 2009. 

"Making Sen$e of 2010: Economic Surprises in Store," a PBS NewsHour interview of several economists and financial experts, including UCLA corporate and securities law professor Lynn Stout. December 15, 2009.

"A New Tax on Banks and Bankers?" is a New York Times article published on January 11, 2010.  Judy Samuelson was invited to add her thoughts about "Taxes and Long-Term Thinking" to the Times' "Room for Debate" running commentary on January 12, 2010.