Investing for long-term value creation

Dirk Schoenmaker, W Schramade

Research output: Contribution to journalArticleAcademicpeer-review

15 Citations (Scopus)
2 Downloads (Pure)

Abstract

In the transition to a sustainable economy, companies are increasingly adopting the goal of long-term value creation, which integrates financial, social and environmental value. However, institutional investors struggle to invest for long-term value creation and perform the social function of finance. Traditional investment approaches, based on the neo-classical paradigm of efficient markets and portfolio theory, only capture financial value in their financial risk and return space. Attempts at ESG integration are typically too shallow to overcome this problem. In this paper, we examine the set of issues that make this problem so stubborn and we outline the contours of an alternative paradigm, based on adaptive markets, that is better able to pursue long-term value creation. This long-term investment approach includes short investment chains, active management that assesses companies’ transition preparedness, concentrated portfolios, and deep engagement.
Original languageEnglish
Pages (from-to)356-377
Number of pages22
JournalJournal of Sustainable Finance and Investment
Volume9
Issue number4
DOIs
Publication statusPublished - 12 Jun 2019

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