By Alan Murray and David Meyer
November 16, 2018

Good morning.

I’ve spent a lot of time recently talking to corporate leaders about how to encourage business to better serve the needs of society. Those conversations inevitably turn to the importance of time horizon. In the short term, pressure to earn a profit often conflicts with the interests of customers, employees and the communities in which they live. But in the long term, the two converge. A company that ignores the latter will eventually run short of the former.

That’s why I’ve watched closely the efforts of the Coalition for Inclusive Capitalism, led by Lynn de Rothschild and EY CEO Mark Weinberger, to devise new metrics to measure companies’ long-term focus. We all know what gets measured gets managed. (And what doesn’t doesn’t.) So getting businesses—and investors—to adopt metrics that gauge commitment to the future can be a powerful force for good.

This morning, the coalition is releasing its first report. CEO Daily got an early look, and likes what it saw. Top of the list is a focus on talent. How companies manage their all-important human capital can be a critical indicator of commitment to the future. Measures of things like employee engagement, voluntary turnover, diversity of leadership, and investment in training can all be signals of long-term health. Also important: measures of “innovation”—i.e. efforts by the company to fulfill the unmet needs of consumers and society; a focus on external stakeholders, with an eye on environmental and social effects; and effective governance, to ensure that management is given incentives to keep its eye on the long-term prize.

There’s no silver bullet in this report. But it is an important step in the right direction. I would encourage you to read it, here. This issue deserves every business leader’s attention. The future of capitalism is at stake.

By the way, the work reflects the input of an all-star group of CEOs, including Aetna’s Mark Bertolini, BASF’s Martin Brudermuller, DowDuPont’s Ed Breen, Ecolab’s Doug Baker, J&J’s Alex Gorsky, Nestle’s Mark Schneider, Novartis’ Vasant Narasimhan, Unilever’s Paul Polman, and PepsiCo chair Indra Nooyi. Hats off to all.

More news below.

Alan Murray


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