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The Long-Term Stock Exchange (LTSE) recently started trading in the U.S. with the goal to turn capitalism around for the planet and people. Discouraging quarterly reporting and requiring all firms to consider all stakeholders, the LTSE offers companies and investors an alternative to traditional securities exchanges.
Launched on Wednesday (September 9), the LTSE’s debut comes nine years after the Silicon Valley entrepreneur and CEO and founder of the platform Eric Ries proposed his concept of an exchange that puts long-term thinking at its centre. To list on the LTSE, companies must maintain and publish policies that give insight into their long-term strategies, measures and practices with consideration to a “broad group of stakeholders”.
Among some of the outlined principles of LTSE’s approach are to “measure success in years and decades” rather than subjecting to the usual market pressures that encourage short-term results, and ensuring that the board of directors of firms have “explicit oversight of long-term strategy” while engaging with long-term shareholders.
Read: Why investors are now all about long-termism & responsible investment
In a public post, Ries said that his idea came from a wide range of discussions and conversations with long-term focused institutional investors, corporate executives, employees and managers.
Employees, customers, communities and the environment would be dramatically better off. The majority of shareholders would be better off as well, because those companies would be both better equipped to deal with the disruption of the pandemic and to emerge on the other side prepared to create value for years to come.
Eric Ries, LTSE Founder & CEO
“They described the immense pressure on companies to pursue short-term results over creating value for future decades and generations,” wrote Ries. “They described innovation held hostage by boom-bust cycles, abrupt changes in governance, struggles to maintain constancy of purpose, and the difficulty for public companies in knowing who their long-term shareholders even are.”
“One of the few things that pretty much everyone agreed on is that the focus on the short term undermines the building of sustainable businesses,” he added.
According to Bloomberg, the exchange has so far raised an estimated US$90 million, with investment from venture capital firms including the Collaborative Fund, Andreessen Horowitz and the Founders Found.
Read: 90% of global public investors now have ESG investment policies, new survey finds
As we adapt to a different world, a public market that offers companies the resilience of long-term governance and supports the creation of value over time can help to put our society on the path toward a sounder future.
Eric Ries, LTSE Founder & CEO
The launch of the LTSE comes at a time when environmental, social and governance (ESG) metrics are being increasingly prioritised in the financial world amid the coronavirus pandemic, which has led to greater concerns over human and planetary health. Recent data demonstrating the outperformance of ESG-focused investments have also further bolstered longer-term, stakeholder-forward and sustainability-related strategies as a profitable approach.
“Employees, customers, communities and the environment would be dramatically better off. The majority of shareholders would be better off as well, because those companies would be both better equipped to deal with the disruption of the pandemic and to emerge on the other side prepared to create value for years to come,” wrote Ries in his post.
“As we adapt to a different world, a public market that offers companies the resilience of long-term governance and supports the creation of value over time can help to put our society on the path toward a sounder future.”
Lead image courtesy of AdobeStock / Getty / designed by Green Queen Media.
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