Long-term investing: mission impossible?


The energy ‘transition’ will require massive investments in the real economy. For this to succeed, the financial world must change its practices in order to restore trust and engage in long-term perspective.

In July 2012, Professor John Kay published the Final Report of his independent review to examine investment in UK equity markets and its impact on the long-term performance and governance of UK quoted companies.

The Report’s overall conclusion is that “short-termism is a problem in UK equity markets, and that the principal causes are the decline of trust and the misalignment of incentives throughout the equity investment chain”.

This coming Wednesday (October 17), Finance Watch is organising a conference titled “Long Term Investing: What Can the EU Learn from the Kay Review?” where Professor Kay will present findings from his report and his recommendations for the EU.

The Kay Report sheds a crucial light on the damaging effects of financial markets’ short-termism. Its recommendations are similar to those made by economist Gaël Giraud, author of a book titled « 20 proposals to reform capitalism ».

The stakes are high – a successful shift to a low-carbon economy is contingent upon strong financial market reforms. The Shift Project is thus making the French translation of the Report’s executive summary available on its french article.