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25 September 2020
Trading in the US as of September 2020, the Long-Term Stock Exchange (LTSE) requires companies to maintain and publish policies that provide insight into their long-term strategies, practices, and measures. The exchange says long-term focused companies must use principles that consider a 'broad group of stakeholders, measure success in years and decades, align compensation of executives and directors with long-term performance, engage directors in long-term strategy... and engage long-term shareholders.' Founder Eric Ries, who first suggested the concept in his 2011 book The Lean Startup, hopes that companies will choose the LTSE over the NYSE or Nasdaq because the new exchange focuses on building sustainable and purposeful businesses.
Even before the pandemic highlighted rising inequality, people around the world were dissatisfied with capitalism, with 78% of respondents to Edelman’s Trust Barometer (released in February 2020) agreeing that elites are getting richer while regular people struggle. Since then, low-income workers have borne the brunt of economic fallout of the pandemic, while the wealth of US billionaires rose by an average of 29%.
The LTSE won’t solve all these issues. Gaining a foothold in the stock market is notoriously difficult: according to the Financial Times, IEX – the last new platform to be approved by the Securities and Exchange Commission 2016 – has since built a market share of about 2%. But Ries’ aim isn’t financial. In an interview with Quartz, he claimed the goal was to get companies and incumbent stock exchanges to adopt the LTSE’s framework and ‘to copy our listing standards and steal all our business’.
Maybe you’re not looking to overturn the stock exchange. But the idea of building frameworks and processes that create a more sustainable mode of business is more important than ever. Even better if it’s a concept you can give away or rally your entire industry around. Remember when Allbirds calculated the carbon footprint of every sneaker style in the brand’s collection and challenged others to do the same? Or when Netherlands-based Tony’s Chocolonely launched an open-source platform to help stop the use of slave labor in the cocoa industry? How will you build a better future and then invite other brands (including your competitors) to join you in that journey? After all, the future of humanity is something you’ll never solve alone.
The TrendWatching content team