Business School

Inclusive Capitalism and More

May 22, 2012

The release last Monday of the first white paper of the Henry Jackson Initiative For Inclusive Capitalism, under the leadership of Dominic Barton of McKinsey and Lady Lynn Forester de Rothschild of El Rothschild, is worth reading. Published by a talented and experienced group of business leaders, the report highlights several avenues for greater attention, in pursuit of healthy markets and healthy societies. I find it encouraging that this particular group of individuals sees the need, and potential, for change.

One section builds on the work of the Aspen Institute on curbing short-termism in business and capital markets. There is a lot of congruence between the recommendations from the panel, and the signatories of the “Aspen Principles for Long-Term Value Creation” (2007) and “Overcoming Short-Termism” policy statement (2009)—specifically the focus on dropping quarterly earnings targets and revamping pay to align incentives with long-term investment.

The obvious question, now, is how will these important recommendations get traction? As the report indicates, one need is to document the best practices for businesses that are leading the way by establishing long-term metrics, compensation programs and communications with analysts that mirror these objectives.

In the Aspen Business and Society Program we are also engaging academics who seek to reconsider shareholder primacy in the corporation (PDF). Watch this space for announcements of programs for business scholars and practitioners to engage on questions of business purpose and strategies for encouraging long-term investment.