Boards need to be prepared to convince investors to take the leap of faith. We don’t dare to do this anymore, we are so focused on the next quarter – but if you are really able to explain to investors that this paradigm will work, then you can take the long term view and stick to it.
INTERVIEW - Meet the editorial board: Constant Korthout
‘I am curious to hear from Constant as a board member who depends upon long term availability of funds for the future success of companies, while at the same time acting on the board of a financial institution serving businesses and asset owners in their long term ambitions.’
What is your personal motivation to SHIFT TO?
I’m not someone who does things overnight – I really want to build things, and this is why I am happy to be part of SHIFT TO, which is focused on the long term. I believe in value creation and personally that is what I have always done in my career. I have always taken jobs where I could build something. I like to work towards a certain goal – and whether it takes me two years or four years or six years, this is my approach, it’s long term, and it’s how I work.
How does this fit into your professional ambitions?
As part of the management of Van Lanschot and Kempen, I believe that apart from being a commercial organisation, we can bring something to the investment world that is relevant; and at the same time we can bring something good to society.
In your opinion, where should the financial industry be in seven years’ time?
At that point the financial industry should be providing long term, high quality solutions that really add value to society and the economy. In recent years the financial industry has been accused of many bad things, and that has taken the attention away from the good it can do. For example banks are really important to society and the economy, because they can generate growth – when banks stop lending, it hurts the economy.
My hope is that we get rid of the accusations, and get back to being an industry that is seen as providing long term solutions to society. This whole long term theme is relevant to our industry, and also important to ‘put on the map’ so to speak; we’re still a little bit off track as to how the financial industry is seen, so we have to demonstrate we can add to long term economic and societal prosperity.
Who should we definitely hear from in this newsroom?
In general I think we should hear from investors from pension funds and insurance, who really have to deal with these issues in practice. For them it’s most difficult to stick to a long term view - every day, every month, they are haunted by the challenges of shifting to long term thinking. For them the temptation to have a short-term view may be higher. How are they coping? What will it take to get them to thinking and acting long term?
Which issue is most urgent in your view/field of work?
I think for the entire financial industry and for our company, re-establishing trust is the most urgent issue. The only way we can do it is by showing we have value; it’s also the solution in the sense that we are in a period of low yield. And we have more and more people in society who depend upon the kind of yield we provide for them - they have to live from it. So we can really show that we can add value over the long term, and by doing that we can re-establish trust. It’s urgent because the financial industry has also been a little too focused on the short term in the recent past.
Questions from Daniëlle Melis:
What kind of board behaviour that is not existent now is needed in the boards of companies, investment institutions and asset owners/pension funds as well as regulators to make the paradigm shift to long term investing?
I think that it is having the guts to explain to the stakeholders that we have to be prepared to look beyond the short term impact of decisions, and explain to them that there is a real long term view. Boards need to be prepared to convince investors to take the leap of faith. We don’t dare to do this anymore, we are so focused on the next quarter – but if you are really able to explain to investors that this paradigm will work, then you can take the long term view and stick to it.
Are there dilemmas to be foreseen in promoting long term investing?
Same answer. For me from the investment point of view, boards should be prepared to execute; and the investors should also be part of this discussion. They should be prepared to give their investments time to unfold rather than looking at every quarter and if they think, ‘Oh, this is off track’ taking immediate (short term) action.
'There is a lot of concern among employees about the question whether the current pension system is financially sustainable. What kind of role do you see for unions to address these concerns?'
The members of the editorial board of SHIFT TO all have professional but also very personal reasons to join this initiative. In a ‘relay interview’ we learn more about their motivations as they ask each other: ‘Why do you want to SHIFT TO?’