Investing for long-term value creation

Dirk Schoenmaker and Willem Schramade

Journal of Sustainable Finance & Investment, 2019, vol. 9, issue 4, 356-377

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.

Date: 2019
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Citations: View citations in EconPapers (15)

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Working Paper: Investing for Long-Term Value Creation (2018)
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DOI: 10.1080/20430795.2019.1625012

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