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<br /> PERSPECTIVES<br /> ON THE<br /> LONG TERM<br /> Building a Stronger Foundation for Tomorrow<br /> PERSPECTIVES<br /> ON THE<br /> LONG TERM<br /> Building a Stronger Foundation for Tomorrow<br /> Focusing Capital on the Long Term is an initiative for advancing practical actions<br /> to focus business and markets on the long term. It was founded by the Canada Pension<br /> Plan Investment Board and McKinsey & Company.<br /> CONTENTS<br /> INTRODUCTION<br /> A Time for Action<br /> DOMINIC BARTON<br /> AND MARK WISEMAN 4<br /> CONTEXT<br /> Our Gambling Culture<br /> LAURENCE FINK 8<br /> Restoring Trust<br /> In an Era of Change<br /> RICHARD EDELMAN 12<br /> Short-Termism<br /> And the Threat<br /> From Climate Change<br /> HENRY M. PAULSON JR. 16<br /> Capitalism<br /> For the Many<br /> LYNN <a title="Perspectives on the Long Term page 1" href="http://viewer.zmags.com/publication/a1b195ee?page=1"> PERSPECTIVES ON THE LONG TERM Building a Stronger</a> <a title="Perspectives on the Long Term page 2" href="http://viewer.zmags.com/publication/a1b195ee?page=2"> PERSPECTIVES ON THE LONG TERM Building a Stronger</a> <a title="Perspectives on the Long Term page 3" href="http://viewer.zmags.com/publication/a1b195ee?page=3"> CONTENTS INTRODUCTION A Time for Action DO</a> <a title="Perspectives on the Long Term page 4" href="http://viewer.zmags.com/publication/a1b195ee?page=4"> INVESTING An Unshakable Belief In the Long Term </a> <a title="Perspectives on the Long Term page 5" href="http://viewer.zmags.com/publication/a1b195ee?page=5"> INTRODUCTION / Dominic Barton and Mark Wiseman </a> <a title="Perspectives on the Long Term page 6" href="http://viewer.zmags.com/publication/a1b195ee?page=6"> Tilley, CEO of the Chartered Institute of Managem</a> <a title="Perspectives on the Long Term page 7" href="http://viewer.zmags.com/publication/a1b195ee?page=7"> </a> <a title="Perspectives on the Long Term page 8" href="http://viewer.zmags.com/publication/a1b195ee?page=8"> CONTEXT Our Gambling Cul</a> <a title="Perspectives on the Long Term page 9" href="http://viewer.zmags.com/publication/a1b195ee?page=9"> CONTEXT / Laurence Fink Our Gambling Culture The</a> <a title="Perspectives on the Long Term page 10" href="http://viewer.zmags.com/publication/a1b195ee?page=10"> on political theater such as debt-ceiling brinksm</a> <a title="Perspectives on the Long Term page 11" href="http://viewer.zmags.com/publication/a1b195ee?page=11"> CONTEXT benefit pension plans to defined-co</a> <a title="Perspectives on the Long Term page 12" href="http://viewer.zmags.com/publication/a1b195ee?page=12"> clients, we try to ensure that we have robust, on</a> <a title="Perspectives on the Long Term page 13" href="http://viewer.zmags.com/publication/a1b195ee?page=13"> CONTEXT / Richard Edelman Restoring Trust In an </a> <a title="Perspectives on the Long Term page 14" href="http://viewer.zmags.com/publication/a1b195ee?page=14"> ture that takes a truly long-term approach to add</a> <a title="Perspectives on the Long Term page 15" href="http://viewer.zmags.com/publication/a1b195ee?page=15"> CONTEXT high trust scores by having outstan</a> <a title="Perspectives on the Long Term page 16" href="http://viewer.zmags.com/publication/a1b195ee?page=16"> © STEPHANIE KEITH VIA CORBIS these actions carri</a> <a title="Perspectives on the Long Term page 17" href="http://viewer.zmags.com/publication/a1b195ee?page=17"> CONTEXT / Henry M. Paulson Jr. Short-Termism And</a> <a title="Perspectives on the Long Term page 18" href="http://viewer.zmags.com/publication/a1b195ee?page=18"> good deal of time assessing risk and deal- ing wi</a> <a title="Perspectives on the Long Term page 19" href="http://viewer.zmags.com/publication/a1b195ee?page=19"> CONTEXT impossible for large portions of th</a> <a title="Perspectives on the Long Term page 20" href="http://viewer.zmags.com/publication/a1b195ee?page=20"> An even greater service would be for busi- nesses</a> <a title="Perspectives on the Long Term page 21" href="http://viewer.zmags.com/publication/a1b195ee?page=21"> CONTEXT the way of smart decision making. T</a> <a title="Perspectives on the Long Term page 22" href="http://viewer.zmags.com/publication/a1b195ee?page=22"> Average Days Over 95°F: Projections Mapped Over a</a> <a title="Perspectives on the Long Term page 23" href="http://viewer.zmags.com/publication/a1b195ee?page=23"> CONTEXT energy technologies on a speed and </a> <a title="Perspectives on the Long Term page 24" href="http://viewer.zmags.com/publication/a1b195ee?page=24"> Lynn Forester de Rothschild Capitalism For the M</a> <a title="Perspectives on the Long Term page 25" href="http://viewer.zmags.com/publication/a1b195ee?page=25"> CONTEXT according to a 2013 poll.1 While it</a> <a title="Perspectives on the Long Term page 26" href="http://viewer.zmags.com/publication/a1b195ee?page=26"> struck between business and society has bro- ken </a> <a title="Perspectives on the Long Term page 27" href="http://viewer.zmags.com/publication/a1b195ee?page=27"> CONTEXT reports, newspaper articles, and bo</a> <a title="Perspectives on the Long Term page 28" href="http://viewer.zmags.com/publication/a1b195ee?page=28"> As the White House noted in its announce- men</a> <a title="Perspectives on the Long Term page 29" href="http://viewer.zmags.com/publication/a1b195ee?page=29"> CONTEXT / Nicholas Carr The Human Advantage Comp</a> <a title="Perspectives on the Long Term page 30" href="http://viewer.zmags.com/publication/a1b195ee?page=30"> told Bloomberg News. “To be the master of the mac</a> <a title="Perspectives on the Long Term page 31" href="http://viewer.zmags.com/publication/a1b195ee?page=31"> CONTEXT that we’re losing the ability to th</a> <a title="Perspectives on the Long Term page 32" href="http://viewer.zmags.com/publication/a1b195ee?page=32"> © SALLY ANSCOMBE VIA GETTY IMAGES simultaneously</a> <a title="Perspectives on the Long Term page 33" href="http://viewer.zmags.com/publication/a1b195ee?page=33"> CONTEXT tells us is that when computers and</a> <a title="Perspectives on the Long Term page 34" href="http://viewer.zmags.com/publication/a1b195ee?page=34"> </a> <a title="Perspectives on the Long Term page 35" href="http://viewer.zmags.com/publication/a1b195ee?page=35"> LEADING Long-Term Visions</a> <a title="Perspectives on the Long Term page 36" href="http://viewer.zmags.com/publication/a1b195ee?page=36"> LEADING / Nitin Nohria Long-Term Visions Cut Sho</a> <a title="Perspectives on the Long Term page 37" href="http://viewer.zmags.com/publication/a1b195ee?page=37"> point to external forces, such as pressure from W</a> <a title="Perspectives on the Long Term page 38" href="http://viewer.zmags.com/publication/a1b195ee?page=38"> LEADING are simply human. Research in psych</a> <a title="Perspectives on the Long Term page 39" href="http://viewer.zmags.com/publication/a1b195ee?page=39"> © MATT SLOCUM VIA CORBIS Compare these role</a> <a title="Perspectives on the Long Term page 40" href="http://viewer.zmags.com/publication/a1b195ee?page=40"> LEADING In business, unlike in political or </a> <a title="Perspectives on the Long Term page 41" href="http://viewer.zmags.com/publication/a1b195ee?page=41"> what would have to be true to accomplish their lo</a> <a title="Perspectives on the Long Term page 42" href="http://viewer.zmags.com/publication/a1b195ee?page=42"> LEADING / Paul Polman Solving Problems That Matt</a> <a title="Perspectives on the Long Term page 43" href="http://viewer.zmags.com/publication/a1b195ee?page=43"> thriving society and economy. We’re at the precip</a> <a title="Perspectives on the Long Term page 44" href="http://viewer.zmags.com/publication/a1b195ee?page=44"> LEADING way. This kind of openness will go </a> <a title="Perspectives on the Long Term page 45" href="http://viewer.zmags.com/publication/a1b195ee?page=45"> 100 percent renewable power by 2020, fol- lowing </a> <a title="Perspectives on the Long Term page 46" href="http://viewer.zmags.com/publication/a1b195ee?page=46"> LEADING one of the poorest areas of India, </a> <a title="Perspectives on the Long Term page 47" href="http://viewer.zmags.com/publication/a1b195ee?page=47"> term-focused peers, addressing increasingly compl</a> <a title="Perspectives on the Long Term page 48" href="http://viewer.zmags.com/publication/a1b195ee?page=48"> LEADING / Whitney MacMillan and Greg Page Genera</a> <a title="Perspectives on the Long Term page 49" href="http://viewer.zmags.com/publication/a1b195ee?page=49"> targets. A 2008 McKinsey survey of UK direc- tors</a> <a title="Perspectives on the Long Term page 50" href="http://viewer.zmags.com/publication/a1b195ee?page=50"> LEADING </a> <a title="Perspectives on the Long Term page 51" href="http://viewer.zmags.com/publication/a1b195ee?page=51"> COMMITMENT TO EMPLOYEES While Cargill is not perf</a> <a title="Perspectives on the Long Term page 52" href="http://viewer.zmags.com/publication/a1b195ee?page=52"> LEADING make investments for growth when op</a> <a title="Perspectives on the Long Term page 53" href="http://viewer.zmags.com/publication/a1b195ee?page=53"> Chanda Kochhar Long-Term Planning In a Volatile </a> <a title="Perspectives on the Long Term page 54" href="http://viewer.zmags.com/publication/a1b195ee?page=54"> LEADING responses, both strategic and tacti</a> <a title="Perspectives on the Long Term page 55" href="http://viewer.zmags.com/publication/a1b195ee?page=55"> our strong capital position to maintain the stren</a> <a title="Perspectives on the Long Term page 56" href="http://viewer.zmags.com/publication/a1b195ee?page=56"> LEADING 4. FOCUS ON EXECUTION Execution is </a> <a title="Perspectives on the Long Term page 57" href="http://viewer.zmags.com/publication/a1b195ee?page=57"> Kathleen McLaughlin and Doug McMillon Business a</a> <a title="Perspectives on the Long Term page 58" href="http://viewer.zmags.com/publication/a1b195ee?page=58"> LEADING shipping services that move goods a</a> <a title="Perspectives on the Long Term page 59" href="http://viewer.zmags.com/publication/a1b195ee?page=59"> ations. Between 2010 and the end of 2013, we redu</a> <a title="Perspectives on the Long Term page 60" href="http://viewer.zmags.com/publication/a1b195ee?page=60"> LEADING and expertise in logistics (since t</a> <a title="Perspectives on the Long Term page 61" href="http://viewer.zmags.com/publication/a1b195ee?page=61"> our US private-label supply chain alone, we depen</a> <a title="Perspectives on the Long Term page 62" href="http://viewer.zmags.com/publication/a1b195ee?page=62"> </a> <a title="Perspectives on the Long Term page 63" href="http://viewer.zmags.com/publication/a1b195ee?page=63"> INVESTING An Unshakable Belief In th</a> <a title="Perspectives on the Long Term page 64" href="http://viewer.zmags.com/publication/a1b195ee?page=64"> INVESTING / Adrian Orr An Unshakable Belief in T</a> <a title="Perspectives on the Long Term page 65" href="http://viewer.zmags.com/publication/a1b195ee?page=65"> tion of both my family and Bud, the dog. Lik</a> <a title="Perspectives on the Long Term page 66" href="http://viewer.zmags.com/publication/a1b195ee?page=66"> INVESTING euphoric and eager to purchase. O</a> <a title="Perspectives on the Long Term page 67" href="http://viewer.zmags.com/publication/a1b195ee?page=67"> © WISIEL VIA GETTY IMAGES is difficult, and it i</a> <a title="Perspectives on the Long Term page 68" href="http://viewer.zmags.com/publication/a1b195ee?page=68"> INVESTING In resolving these questions</a> <a title="Perspectives on the Long Term page 69" href="http://viewer.zmags.com/publication/a1b195ee?page=69"> John D. Rogers Capitalism in The Postfinancial Er</a> <a title="Perspectives on the Long Term page 70" href="http://viewer.zmags.com/publication/a1b195ee?page=70"> INVESTING finance is to enable economic pro</a> <a title="Perspectives on the Long Term page 71" href="http://viewer.zmags.com/publication/a1b195ee?page=71"> area of specialization, and we witnessed the asce</a> <a title="Perspectives on the Long Term page 72" href="http://viewer.zmags.com/publication/a1b195ee?page=72"> INVESTING Beneficiaries 50 or 100 years from </a> <a title="Perspectives on the Long Term page 73" href="http://viewer.zmags.com/publication/a1b195ee?page=73"> negative externalities. Such recognition is diffi</a> <a title="Perspectives on the Long Term page 74" href="http://viewer.zmags.com/publication/a1b195ee?page=74"> INVESTING should be welcomed by businesses </a> <a title="Perspectives on the Long Term page 75" href="http://viewer.zmags.com/publication/a1b195ee?page=75"> Lim Chow Kiat GIC’s Long-Term View For Singapore</a> <a title="Perspectives on the Long Term page 76" href="http://viewer.zmags.com/publication/a1b195ee?page=76"> INVESTING In theory, long-termism shou</a> <a title="Perspectives on the Long Term page 77" href="http://viewer.zmags.com/publication/a1b195ee?page=77"> investment losses tend to arise from procy- clica</a> <a title="Perspectives on the Long Term page 78" href="http://viewer.zmags.com/publication/a1b195ee?page=78"> INVESTING performance measurement is five y</a> <a title="Perspectives on the Long Term page 79" href="http://viewer.zmags.com/publication/a1b195ee?page=79"> Our incentive scheme closely follows the out</a> <a title="Perspectives on the Long Term page 80" href="http://viewer.zmags.com/publication/a1b195ee?page=80"> INVESTING / Euan Munro Getting Beyond The Data P</a> <a title="Perspectives on the Long Term page 81" href="http://viewer.zmags.com/publication/a1b195ee?page=81"> of because they haven’t looked at the larger shap</a> <a title="Perspectives on the Long Term page 82" href="http://viewer.zmags.com/publication/a1b195ee?page=82"> INVESTING frequently underplayed. You have </a> <a title="Perspectives on the Long Term page 83" href="http://viewer.zmags.com/publication/a1b195ee?page=83"> strategy and that this is just a short-term aberr</a> <a title="Perspectives on the Long Term page 84" href="http://viewer.zmags.com/publication/a1b195ee?page=84"> INVESTING / Charles Tilley Reporting for The 21s</a> <a title="Perspectives on the Long Term page 85" href="http://viewer.zmags.com/publication/a1b195ee?page=85"> integrated reporting can aid value creation by pr</a> <a title="Perspectives on the Long Term page 86" href="http://viewer.zmags.com/publication/a1b195ee?page=86"> INVESTING reports but also those that refle</a> <a title="Perspectives on the Long Term page 87" href="http://viewer.zmags.com/publication/a1b195ee?page=87"> various forms of capital transparent enables a mo</a> <a title="Perspectives on the Long Term page 88" href="http://viewer.zmags.com/publication/a1b195ee?page=88"> INVESTING tional processes, and the impact </a> <a title="Perspectives on the Long Term page 89" href="http://viewer.zmags.com/publication/a1b195ee?page=89"> A Framework for Integrated Reporting To facilita</a> <a title="Perspectives on the Long Term page 90" href="http://viewer.zmags.com/publication/a1b195ee?page=90"> INVESTING / Lei Zhang A Single Ladle from A Flow</a> <a title="Perspectives on the Long Term page 91" href="http://viewer.zmags.com/publication/a1b195ee?page=91"> A FOCUS ON ENTREPRENEURS Having partners who are </a> <a title="Perspectives on the Long Term page 92" href="http://viewer.zmags.com/publication/a1b195ee?page=92"> INVESTING that would have generated a 25 to</a> <a title="Perspectives on the Long Term page 93" href="http://viewer.zmags.com/publication/a1b195ee?page=93"> simply to indulge our curiosity and get closer to</a> <a title="Perspectives on the Long Term page 94" href="http://viewer.zmags.com/publication/a1b195ee?page=94"> INVESTING / Michael Sabia Building a Business-Ow</a> <a title="Perspectives on the Long Term page 95" href="http://viewer.zmags.com/publication/a1b195ee?page=95"> modities. They play critical roles in allocating </a> <a title="Perspectives on the Long Term page 96" href="http://viewer.zmags.com/publication/a1b195ee?page=96"> INVESTING We have more than CAD 215 billion</a> <a title="Perspectives on the Long Term page 97" href="http://viewer.zmags.com/publication/a1b195ee?page=97"> against an index over a long horizon, it is not b</a> <a title="Perspectives on the Long Term page 98" href="http://viewer.zmags.com/publication/a1b195ee?page=98"> INVESTING industry. We have hired engineers</a> <a title="Perspectives on the Long Term page 99" href="http://viewer.zmags.com/publication/a1b195ee?page=99"> Risk Equally important is a robust assessment of </a> <a title="Perspectives on the Long Term page 100" href="http://viewer.zmags.com/publication/a1b195ee?page=100"> INVESTING / James P. Gorman The Long-Term Impera</a> <a title="Perspectives on the Long Term page 101" href="http://viewer.zmags.com/publication/a1b195ee?page=101"> These trends will alter the complexion of ou</a> <a title="Perspectives on the Long Term page 102" href="http://viewer.zmags.com/publication/a1b195ee?page=102"> INVESTING billion against a balance sheet o</a> <a title="Perspectives on the Long Term page 103" href="http://viewer.zmags.com/publication/a1b195ee?page=103"> six dollars under professional management in the </a> <a title="Perspectives on the Long Term page 104" href="http://viewer.zmags.com/publication/a1b195ee?page=104"> </a> <a title="Perspectives on the Long Term page 105" href="http://viewer.zmags.com/publication/a1b195ee?page=105"> GOVERNING Governance And Stewa</a> <a title="Perspectives on the Long Term page 106" href="http://viewer.zmags.com/publication/a1b195ee?page=106"> GOVERNING / David Walker Governance And Stewards</a> <a title="Perspectives on the Long Term page 107" href="http://viewer.zmags.com/publication/a1b195ee?page=107"> TIME TO REFOCUS BOARDS Boards face several import</a> <a title="Perspectives on the Long Term page 108" href="http://viewer.zmags.com/publication/a1b195ee?page=108"> GOVERNING behaviors, which, though hard to </a> <a title="Perspectives on the Long Term page 109" href="http://viewer.zmags.com/publication/a1b195ee?page=109"> THE ROLE OF STEWARDSHIP: Fund Managers and Asset </a> <a title="Perspectives on the Long Term page 110" href="http://viewer.zmags.com/publication/a1b195ee?page=110"> GOVERNING / Angel Gurría Minding The Gaps Why we</a> <a title="Perspectives on the Long Term page 111" href="http://viewer.zmags.com/publication/a1b195ee?page=111"> BIG STRUCTURAL CHALLENGES: Short-Term Impact, Lon</a> <a title="Perspectives on the Long Term page 112" href="http://viewer.zmags.com/publication/a1b195ee?page=112"> GOVERNING unprecedented. The increasing dep</a> <a title="Perspectives on the Long Term page 113" href="http://viewer.zmags.com/publication/a1b195ee?page=113"> © F.J. JIMÉNEZ VIA GETTY IMAGES 2. Facilitating </a> <a title="Perspectives on the Long Term page 114" href="http://viewer.zmags.com/publication/a1b195ee?page=114"> GOVERNING 3. Using Regulation to Foster Lon</a> <a title="Perspectives on the Long Term page 115" href="http://viewer.zmags.com/publication/a1b195ee?page=115"> work covers, notably, the international- investme</a> <a title="Perspectives on the Long Term page 116" href="http://viewer.zmags.com/publication/a1b195ee?page=116"> GOVERNING / Ronald P. O’Hanley Long- Termism Beg</a> <a title="Perspectives on the Long Term page 117" href="http://viewer.zmags.com/publication/a1b195ee?page=117"> fluctuations beyond the control of manage- ment. </a> <a title="Perspectives on the Long Term page 118" href="http://viewer.zmags.com/publication/a1b195ee?page=118"> GOVERNING The Sarb</a> <a title="Perspectives on the Long Term page 119" href="http://viewer.zmags.com/publication/a1b195ee?page=119"> broadening diversity on the board. Diversity of t</a> <a title="Perspectives on the Long Term page 120" href="http://viewer.zmags.com/publication/a1b195ee?page=120"> GOVERNING to the long term. Yet, the typica</a> <a title="Perspectives on the Long Term page 121" href="http://viewer.zmags.com/publication/a1b195ee?page=121"> Donald Kaberuka Taking the Long View on Africa S</a> <a title="Perspectives on the Long Term page 122" href="http://viewer.zmags.com/publication/a1b195ee?page=122"> GOVERNING have had a positive impact on ave</a> <a title="Perspectives on the Long Term page 123" href="http://viewer.zmags.com/publication/a1b195ee?page=123"> © BORGOGNIELS VIA GETTY IMAGES Along with i</a> <a title="Perspectives on the Long Term page 124" href="http://viewer.zmags.com/publication/a1b195ee?page=124"> GOVERNING ments take a strategic view of in</a> <a title="Perspectives on the Long Term page 125" href="http://viewer.zmags.com/publication/a1b195ee?page=125"> Domestic tax sources, however, are not enoug</a> <a title="Perspectives on the Long Term page 126" href="http://viewer.zmags.com/publication/a1b195ee?page=126"> GOVERNING / Julie Hembrock Daum and Edward Speed </a> <a title="Perspectives on the Long Term page 127" href="http://viewer.zmags.com/publication/a1b195ee?page=127"> ers impatient for short-term results or whether t</a> <a title="Perspectives on the Long Term page 128" href="http://viewer.zmags.com/publication/a1b195ee?page=128"> GOVERNING CEOs who have to hold their </a> <a title="Perspectives on the Long Term page 129" href="http://viewer.zmags.com/publication/a1b195ee?page=129"> chairman should properly reflect the signifi- can</a> <a title="Perspectives on the Long Term page 130" href="http://viewer.zmags.com/publication/a1b195ee?page=130"> GOVERNING up time for more expansive debate</a> <a title="Perspectives on the Long Term page 131" href="http://viewer.zmags.com/publication/a1b195ee?page=131"> Angelien Kemna The Impact Of Regulation Pension </a> <a title="Perspectives on the Long Term page 132" href="http://viewer.zmags.com/publication/a1b195ee?page=132"> GOVERNING Wit</a> <a title="Perspectives on the Long Term page 133" href="http://viewer.zmags.com/publication/a1b195ee?page=133"> tory gaps will ultimately depress long-term inves</a> <a title="Perspectives on the Long Term page 134" href="http://viewer.zmags.com/publication/a1b195ee?page=134"> GOVERNING Real estate, too, should be</a> <a title="Perspectives on the Long Term page 135" href="http://viewer.zmags.com/publication/a1b195ee?page=135"> regulation of over-the-counter derivatives has, f</a> <a title="Perspectives on the Long Term page 136" href="http://viewer.zmags.com/publication/a1b195ee?page=136"> AUTHOR INDEX NICHOLAS CARR The Human Adv</a> <a title="Perspectives on the Long Term page 137" href="http://viewer.zmags.com/publication/a1b195ee?page=137"> </a> <a title="Perspectives on the Long Term page 138" href="http://viewer.zmags.com/publication/a1b195ee?page=138"> 2015 | FOCUSING CAPITAL on the LONG TERM</a>