How to make financial analysis more long term; new study

The 2030 Agenda for Sustainable Development constitutes a roadmap for where we, as a society that includes the private sector, need to go in just over ten years until 2030. A new study from Stockholm Sustainable Finance Centre and Swesif shows that half of buy-side analysts as well as corporate investor relations officers think that sell-side financial research has a detrimental short-term focus. More than a third of sell-side financial analysts agree with this.

The study initiated by Swesif and published in Stockholm on 28 May was prompted by a general concern over undue short-termism in financial markets generally and financial analysis specifically. It is set in Sweden and based on a survey from both buy-side and sell-side analysts as well as investor relations officers. Questions aimed at finding out what each group sees as a long-term perspective, to what extent respondents perceive long-term questions to be addressed in investment analysis, and what factors they see as standing in the way of a more long-term perspective.

“We have looked at how different actors in investment analysis define ‘long-term’ for themselves, and how they address long-term questions in investment analysis,” said Emma Sjöström, SSFC Deputy Director of and one of the report’s three authors. “We arrive at a number of propositions to actors in investment analysis that could help bring more of a long-term perspective into the capital market conversation.”
  • Text Hover

The authors, Emma Sjöström, Hanna Setterberg and Gregor Vulturius hope this study will spur this much-needed discussion. They also acknowledge the key role which broad-based initiatives such as the European Commission’s Action Plan on financing sustainable growth, and the Task Force on Climate-Related Financial Disclosures (TCFD) have in realising more long-term focus. 

“The quest for politicians, businesses and investors to think broader and beyond the usual horizons is more significant than ever, as the window of opportunity to deliver on the goals agreed in the 2030 Agenda, and the targets set forth in the Paris Agreement is closing,” said Anita Lindberg, Chair of Swesif. “With this research, we wanted to inform the conversation on how ‘long term’ is defined by different actors in investment analysis and hope to address some of the barriers in our work forward.”