The nature of short termism is hard to define. There is criticism of the shortening of stock-holding periods
of many investors, as well as their readiness to take short-term investment positions, which may lead to
short termism in companies. However, more significant challenges prevent institutional investors, who
theoretically should take a longer-term perspective, from taking such a perspective and promoting ESG
in companies in which they invest. The challenges include incentives that deter many from pursuing
a stewardship role based on engagement; an investment chain that has lengthened by outsourcing
management; and a lack of recognition that ESG factors influence an organization’s ability to deliver
adequate long-term cash flows and returns.