‘Serious and urgent’ reform needed to overcome increasing business short-termism
Decision makers are being urged to focus on long-term challenges and solutions in order to deliver progress on climate change, reduce economic inequality, improve corporate practices and address the chronic burden of disease.
A new study, conducted by the Oxford Martin Commission for Future Generations, looked at the successes and failures in addressing global challenges over recent decades.
The researchers considered five categories of challenges – society, resources, health, geopolitics and governance – and assessed how each would impact the world and at possible responses.
Pascal Lamy, chairman of the commission and former director-general of the World Trade Organisation, said, “We must take a fresh approach if we want to build a more prosperous, equitable and sustainable future.
“Creative coalitions, reinvigorated institutions and renewed methods to value the future in business and government practices are urgently needed to accelerate change.”
The report argues that increasing short-termism, in businesses, governments and other decision making bodies, is incompatible with global medium and long-term goals.
Within democracies, there are clear tensions between the capacity of governments to deliver long-term solutions in the collective interest and more short-term political demands, according to the report.
Politicians are also increasingly being punished in times of crisis, making it harder to take difficult long-term decisions that produce immediate pain. This is demonstrated by the fact that since mid-2010, the leaders of more than 75% of European Union states have fallen or been voted out of office.
The report added that the responsibility to think and act in the longer-term interest is not confined to the political sphere. The global business community was also accused of “corporate myopia”.
This is particularly evident in the financial sector. The average speed of order execution on the New York Stock Exchange has fallen from 20 seconds a decade ago to under one second. From 1975 to 2010, the average period for stock holdings on the New York Stock Exchange dropped from six years to six months.
Prof Ian Goldin, director of the Oxford Martin School and vice-chair of the commission, said the researchers had been “frustrated by the gap between knowledge and action in meeting critical global challenges”.
He concluded, “Failure to address long-term issues exposes current generations to unacceptable instability and risk; it threatens our ability to build a sustainable, inclusive and resilient future for all.”
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