Video: Investing for the Long Term

A longer-term view and sustainable business practices can lead to better results, argues Daryl Brewster, in the latest installment of Heron's "Poor U.S." video series.

“All investing is impact investing.” We at Heron repeat this phrase (coined by Clara Miller) regularly in the market, but what does it mean for CEOs, their employees, customers, and other stakeholders? In this video, Daryl Brewster dives into this from his perspective at the helm of CECP, a membership organization of CEOs creating positive business impact (as well as from his experience in leadership positions at Kraft, Planter’s, Krispy Kreme, and Campbell’s corporations). 

Brewster argues that leaders of large companies already know that their business practices affect the lives of employees, customers, and neighbors, but that they are incentivized by a variety of forces to keep a short-term focus on exclusively financial outcomes: 

We see companies price too aggressively, treat their workers inappropriately, cut back on ingredients and quality of the products and services they provide — all things that can make you more profitable in the near term, that are going to plant the seeds of your destruction down the road. …

The vast majority of CEOs are good people. … Most have really thought through [ways of having a positive impact through their business practices]. When we ask them, “What holds you back?” several things come up. One, that we hear is at the top of the list, is really that their investors in their company — the belief is that they just don’t care; it’s not something that they’re interested in. Every company has a quarterly call; no one’s ever asking them questions about how you’re treating your employees. It’s just, “Did you make your number this quarter or not?”

So how do we reinvent our economy to build up our communities and the people who live in them? It starts, in part, with how we engage business leaders in strategic decision-making. Brewster encourages corporate leaders to resist the pressure toward short-termism and a narrow focus on maximizing profit for shareholders — in favor of long-term multi-stakeholder approach that will both attract and reward long-term investors.

He also encourages investors, customers and even employees to use their resources to encourage long-term thinking and business decisions that positively impact a variety of players over only a few.

Business has multiple stakeholders. It has multiple responsibilities. And I think what we’ve seen from the research is the companies who work with and engage a broader set of stakeholders, which includes the financial community, but well beyond that, outperform over the long haul those who are just focused on the bottom-line.

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