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Gore Says Quarterly Reporting Undermines Sustainable Capitalism
February 17, 2012
Al Gore has released a white paper through his sustainable investment firm suggesting companies should move away from quarterly earnings reports in order to focus on more long-term, sustainable thinking in the boardroom.
Gore produced the paper, called “Sustainable Capitalism,” with David Blood, his founding partner at Generation Investment Management. The paper recommends five key actions for immediate adoption to accelerate the mainstreaming of sustainable capitalism by 2020.
1. Identify and incorporate risks from stranded assets
2. Mandate integrated reporting
3. End the default practice of issuing quarterly earnings guidance
4. Align compensation structures with long-term sustainable performance
5. Encourage long-term investing with loyalty-driven securities
Public companies in the U.S. are required by law to provide quarterly reports. However, the white paper argues that quarterly reporting leads executives to focus too much on short-term measures “at the expense of the longer term, more meaningful measure of sustainable value creation."
The Guardian in its coverage of the report notes that Unilever (which has an international reputation for sustainable practices) did away with quarterly reports in 2009, and other corporate leaders have spoken about the adverse impacts of quarterly reporting requirements.
The white paper also puts forth five broader ideas the authors believe merit further support and attention:
- Reinforce sustainability as a fiduciary issue
- Create advisory services for sustainable asset management
- Expand the range and depth of sustainable investment products
- Reconsider the appropriate definition for growth beyond GDP
- Integrate sustainability into business education at all levels
Bart King is a PR consultant and principal at Cleantech Communications.