A manifesto for the long term

This Comment is part of our Spotlight series highlighting the most engaging articles submitted to the Comment space on Circle from Fellows. If you have an article you would like to share with the Fellowship, click the link to upload it now.

UK Prime Minister Rishi Sunak, in his party conference slogan and in the words he put into the King’s Speech, is promising “long-term decisions for a brighter future”. The crises facing the world through climate change, biodiversity loss and inequality (domestic and international) are certainly crying out for long-term decisions: but will we get them?

As we approach a UK general election, all the signs are that “politics” is playing its usual part in ensuring that we will get policy announcements aimed at short-term electoral advantage, although they may also have long-term implications. This behaviour is not peculiar to the UK, but our first-past-the-post voting system drives an essentially two-party system and narrows the options put before the electorate.

This is compounded by endless polling, demographic segmenting and focus groups all driving the search for short-term tactical advantage.

Shareholder short-termism

Short-termism is not the preserve of politicians. The primacy of ‘shareholder value’ means that  immediate profit is prioritised over long-term growth and dominates corporate and financial market behaviour. This was evidenced by a 2020 report looking at ESG investments from the European Securities and Markets Authority, which identified “the misalignment of investment horizons in financial markets and the remuneration of fund managers and executives that rewards short-term profit-seeking” as a source of short-termism. 

Misalignment of investment horizons does not have to be profit-driven. It is a feature of public infrastructure investment too. Discounted cash flow calculations can mean, depending on the discount rate, benefits accruing more than seven or eight years ahead are largely ignored. That doesn’t help investment in tidal barrages even though they offer predictable renewable energy for generations, or, for that matter, barriers against sea level rise in 30 years’ time, even though it is inevitable.

These are difficult nuts to crack. The RSA’s Sustainability and Oceania networks ran a successful series of events on long-termism, which attracted participation across the whole Fellowship from Seattle to Sydney. We established that there is plenty of good and challenging thinking on how we change mindsets from short to long term.

We heard from Roman Krznaric about his powerful appeal to the good ancestor; from Kate Raworth on doughnut economics; and from indigenous thinkers, Tyson Yunkaporta, Norm Sheehan and Alana Marsh, who told us how indigenous knowledge systems are based on an ethics of care and custodianship, which has helped Aboriginal and Torres Strait Islander people live in harmony with their environment for millennia. At a recent event we were reminded that “regenerative agriculture” was something we had for most of history. The need to re-invent it is relatively recent.

These were all great insights. The question is how do we get people, but more particularly governments, institutions and businesses, to understand the need to move from short-termism and create an environment that requires longer-term costs and benefits (economic, social and environmental) to be important in their decision-making? 

The RSA is proposing to create a 'Day One' Manifesto for Change that can be injected into the debate in the forthcoming election. Since the Prime Minister has made long-term decision-making his campaign slogan, the RSA’s Sustainability Network is suggesting that one element of the manifesto should include a measure to make that real. 

The Welsh way

Another contributor to our long-termism series was RSA Fellow Jane Davidson who, as a former Welsh Environment Minister, oversaw The Well-being of Future Generations (Wales) Act 2015. This pioneering act, built on the requirement in The Government of Wales Act (S79) – the Welsh Constitution – which states that “Welsh Ministers must, in the exercise of their functions, make appropriate arrangements to promote sustainable development”. 

The 2015 act identifies seven pillars of wellbeing that align well with the UN’s Sustainable Development Goals. The act applies to all public bodies. It creates a commissioner to monitor performance and increases the possibility of legal challenge for failure to follow the requirements of sustainable development. 

The act has shortcomings (most acts do). One is that it applies only to Wales. Surely, it is time to press for this approach to be adopted across the UK. We do have experience of legislation of this sort in the UK. The Climate Change Act is a current example. The reports of the Climate Change Committee, an independent body formed under the act, are influential and provide independent evidence with which to challenge, but not overrule, government decisions. This has been the case currently with proposals on oil and gas licensing.

But the act is focused on carbon budgets – the government having removed the provisions on waste reduction. It does not provide a platform for a regenerative economy or attempt to impose duties on all public bodies that will change their decision-making processes. 

Procurement progress

The Public Services (Social Value) Act of 2012 is another example. It requires relevant authorities when buying goods or services to consider “how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area”. The requirement is supported by guidance from the Treasury on how this should be done. 

While welcome, the scope of the legislation is limited, not least because it came from a private member’s bill and the requirement is focused on the immediate not the long-term impact of the procurement. It does not require the procurement of goods or services that will bring long-term benefits.

Neither these acts nor the Welsh act address the shortcomings of financial markets or business practices generally. A duty on government to promote the wellbeing of future generations, however, should affect the way businesses and markets are regulated and how they report to shareholders and the public. The European Commission's Action Plan on Sustainable Finance which relies heavily on greater transparency. It’s probably not enough, but is a start and should be a second strand of our manifesto. 

Phillip Ward is the leader of the RSA Sustainability Network. Information on how Fellows can submit their manifesto ideas can be found here.