Market guidance in the world of volatility is changing.
Research indicates the most sophisticated high-performing companies taking deliberate steps for curating their engagement with long-term focussed institutional investors. And at the same time, the major global-scale investors such as BlackRock, State Street and others have been upgrading their stewardship and investor relationship teams to seek further and better information from the companies they are invested in.
The practice is shifting.
Client-investor meetings have traditionally involved variations of the investor looking deeply into the eyes of the CEO and/or Chair to determine if they truly have confidence in their company’s future. If the executives and board don’t have confidence in their ability to weather volatility and succeed – why should the investor?
But new practices are now able to change this conversation from “do the company leaders believe in their future prospects” to “do the company leaders have reason to believe in their company’s prospects”.
This is like moving from “do they believe their published financial accounts”, to “have the auditors confirmed that they have the practices in place that are required to have confidence in the accounts they published”. No one wants to know if the CEO believes the financial numbers… they want the auditor to confirm there is a due and proper basis for the reports.
New practice now enables us to determine if a company has due and proper basis for having confidence in their creation of future value. Not emotional confidence. Mathematical confidence. Do they track and report their level of certainty of their ability to deliver future value from their existing portfolio of activities?
Not “how much capital have they invested in their future”, but “what is the reliable and comprehensively applied certainty-mitigated valuation of the future outcomes from their actions”. Have they got the practices in place to assure their “Future Fiduciary” obligation to “be optimally invested in their own future” – and does this refined and measured effort mean they are working towards creating value – or staying still.
This might all seem futuristic, or idealistic, or even utopian – but the research shows:
- There are fit-for-purpose practices that deliver this outcome – including for the service, digital and intangible parts of the economy.
- There are extremely high performing organisations using these practices now
- There is precedence for market reporting of the certainty of achieving future value from undeveloped portfolios that has been used in the mining sector for decades in their asset valuations, that influences the allocation of 10’s $Tns dollars globally every day.
- The major global investors are saying they want improved guidance