Horizon: Moving from Short-Term to Long-Term Thinking

In spite of ample evidence that ESG or CSR practices are crucial for the long-term success of firms, many CEOs and managers today are reluctant to participate in ESG, CSR, or sustainability activities.

So the question here is whether CEOs and managers do not recognize or are unaware of the benefits of sustainability to the company, or if they are fully aware of these benefits but face obstacles preventing them from engaging in these activities. One possible answer to this question is short-termism. Here are some short-termism practices that prevent firms from engaging more in sustainable development: quarterly financial reporting, payment and evaluation methods, and using quarterly outcomes as benchmarks to evaluate fund managers’ performance, among others.