An Enduring Path: Long-termism & the FCLT Gold Standard

By Victoria Tellez, Associate Director, FCLTGlobal Research 

 

The call for long-term decision-making has never been louder.[1] Evidence clearly demonstrates that investors who embrace a long-term outlook tend to outperform in the markets, and companies with a long-term mindset consistently deliver superior revenue growth, earnings, and job creation.[2] So, why do short-term pressures often prevail? In an era marked by rapid economic shifts, where changes seem to happen in the blink of an eye, the pressure to deliver short-term results can feel overwhelming.

What Does “Long-Term” Really Look Like?

When we talk conceptually about the long term, it’s more than just adhering to a set time horizon. It’s about integrating long-term principles into decision-making processes, company strategies, and investment behaviors. But how do we ensure that long-termism isn’t just a buzzword or a theoretical aspiration? 

The FCLT Gold Standard is a project launched in September 2024 by FCLTGlobal, a non-profit research organization whose mission is to help companies and investors focus capital on the long term to support a sustainable and prosperous economy. It provides a clear framework to help organizations adopt and maintain a long-term vision. Developed in collaboration with FCLTGlobal’s 65 member organizations, it identifies best practices for creating long-term value and aligning behavior with future goals. Practically, it serves as a guide to help investors and companies navigate the challenges that come with sustaining a long-term approach in today’s fast-moving world. 

The Four Strategic Pillars of Long-term Investing

The FCLT Gold Standard is built on four core strategic areas—governance, incentives, engagement, and metrics—that are critical for achieving long-term success.

Governance:

The foundation of any successful long-term strategy. Strong governance ensures that decision-making aligns with the company’s or investment organization’s long-term objectives. In this regard, the FCLT Gold Standard assesses organizational governance structures, investment capacity management, client commitment frameworks, and team diversity considerations. It examines whether the organization maintains independent oversight through a board or advisory committee beyond regulatory requirements, if it implements strategic closure of capacity-constrained investment strategies, and whether clients typically commit capital for extended periods. It evaluates if key investment decision-makers reflect diverse backgrounds, experiences, and skills that represent both current and future demographic trends, potentially enhancing cognitive diversity in the investment process. These elements collectively provide insight into the organization's strategic commitment to long-term objectives.

Incentives:

The structure of compensation and rewards plays a huge role in fostering or hindering long-term thinking. The FCLT Gold Standard emphasizes that incentives should support the organization’s long-term interests—the questionnaire explores the connection between compensation structures and long-term value creation. It examines whether investment professionals face meaningful accountability through extended performance evaluation periods of at least five years, creating a framework that transcends short-term market fluctuations. This connects directly with portfolio manager fund ownership practices and whether key decision-makers maintain substantial personal investment stakes with extended holding requirements, potentially creating a natural alignment between professional judgment and client outcomes. On the client side, the FCLT Gold Standard advocates for relationship management compensation incorporating long-term investment performance rather than transaction-based metrics alone. Together, these questions reveal how an organization's incentives might encourage capital allocation approaches that prioritize long-term value creation over immediate performance pressures.

Engagement & Dialogue:

The nature of the investor-corporate dynamic—whether focused on long-term strategic considerations or quarterly performance metrics—can profoundly shape corporate strategy, performance, and time horizons. Research from FCLTGlobal's library reinforces this concept, revealing that comprehensive long-term roadmaps can effectively counterbalance short-term pressures. Their study found unanimous investor support for companies sharing extended planning horizons, with an overwhelming majority of investment decision-makers (over 86 percent) specifically seeking performance metrics projected at least three years into the future. This research suggests a potential disconnect between perceived investor demands and their actual preferences, indicating opportunities for more productive engagement frameworks.

Metrics:

Traditional performance metrics that focus on quarterly results can drive behavior that undermines long-term objectives. Forward-looking investors increasingly incorporate future externality pricing—particularly carbon costs—into present-day decision-making, reflecting a sophisticated understanding that tomorrow's regulatory environment will likely transform current valuations. As FCLTGlobal research indicates, this represents an evolution where investment institutions increasingly accept responsibility for externalities generated by portfolio companies rather than simply externalizing these costs. The FCLT Gold Standard also contrasts time-weighted returns with client-centric asset-weighted performance metrics. This distinction is crucial, as asset-weighted returns capture the actual investor experience by accounting for the timing and magnitude of capital flows, providing a more comprehensive picture of real client outcomes. Together, these metrics reflect a more nuanced evaluation that prioritizes sustainable value creation and authentic client outcomes over conventional performance snapshots.

Why Does It Matter?

Short-term wins may boost immediate performance and shareholder approval, but true success lies in the long game. Research shows that those who take a long-term approach outperform their peers.[3] The FCLT Gold Standard offers a way to guide companies and investors toward decisions that build the foundation for lasting success.

Long-term decision-making requires more than just good intentions; it demands a clear, actionable approach. By aligning governance, incentives, engagement, and metrics with long-term goals, companies and investors can weather the storms of short-term volatility while continuing to build value for the future. The FCLT Gold Standard isn’t another compliance exercise or reporting framework—it’s about creating a shared understanding that empowers organizations to make decisions that benefit both them and the broader economy over the long term.

If you’d like to hear more about how the FCLT Gold Standard works in practice, check out Episode 1 from the latest season of Capital Decanted, featuring Sarah Williamson, CEO of FCLTGlobal. 

About the Contributor
 

Victoria Tellez is an Associate Director at FCLTGlobal. Previously, she worked at the TPG Rise Fund, where she conducted impact assessments to guide capital allocation in sectors such as education, healthcare, and climate. Victoria holds a B.S. in Labor Relations from Cornell University and an M.Sc. in Social Policy from the University of Pennsylvania, where she received the singular Wilson-Spigner Social Policy Excellence Award. 
 

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