ETF Edge: ESG and The Long-Term Stock Exchange | ETF Trends

With three new stock exchanges on the way in September, there’s a lot of interest in the Long-Term Stock Exchange (LTSE). It began trading this week, and it pledges to support companies who share a long-term interest in sustainability, inclusion, and diversity, along with treating employees fairly. This has a lot in common with the ESG guidelines.

Founder and CEO Eric Ries joins ETF Trends CEO Tom Lydon and Wallachbeth Capital’s Andrew McOrmand on CNBC’s “ETF Edge,” with host Bob Pisani, to go over the intensions of LTSE, and why it is a benefit for the economy, let alone modern reality.

As Ries explains, this partly comes out of ESG being one of the hottest categories on the market, with around $20 billion in flows this year. That comes from being an aspect increasingly demanded by shareholders and society.

Ries continues, “What we want to do is focus companies on that long term horizon, so that things like sustainability, good governance, treating employees fairly, and operating in a 21st century way in the communities where companies operate becomes a natural side effect of that philosophy of long-term thinking.”

The challenge will be, “Does the thematic platform offer similar or better economics, technology, and listing benefits compared to larger, well-established exchanges?”

Hear All About The LTSE

Lydon jumps in to note how fewer companies are moving from private to public these days, and when they do, that pressure is there. He adds that it would be great if there was less pressure on public companies to provide quarterly goals and guidance and have the freedom to focus more on long-term growth, but changing the shorter-term transparency culture operating today is a monumental task.

To elaborate further on how this innovation can become a benefit, Ries makes it clear that companies should have transparency and that long-term investors should be able to get privileged capital raising opportunities from companies whenever possible. The early days will make it harder to differentiate between some coming to take a look versus those who intend to stay.

However, time will come when mutual benefits can be reached as far as seeing LTSE in a stronger light, with managers who want to invest. Fortunately, the trend is in favor of ESG and the like.

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