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In today’s world, everything is based on instant gratification as a result of growing technology – and in turn, it has made people impatient to develop and work towards long-term goals, and as a result, much of the majority has opted for short-termism.
In fact, McKinsey conducted a study that revealed that a whopping 63% of respondents felt pressure to generate strong short-term profits.
Short-termism aligns with much of today’s instantaneous world, as it focuses on short-term goals as opposed to long-term projects.
In this article, we’ll explain what short-termism is, the negative impacts of short-termism, and how we can transition away from short-termism.
Short-termism refers to the notion of focusing on short-term goals, often at the cost of hindering one’s ability to achieve their long-term goals, success, and stability.
Our world has become a place which values fast fashion, excess consumerism, social media, grocery deliveries – and more immediate conveniences, which has helped contribute to the development and establishment of short-termism.
Overall, short-termism is the concept of focusing on short-term goals rather than putting your time, energy, and resources into long-term stabilisation.
The main difference between short-termism and long-termism is that short-termism focuses on what can be gained immediately, whereas long-termism is focused on long-term decision-making, strategy, and planning.
Think of when someone chooses an investment that will make them a lot of money in a short amount of time, as opposed to choosing a stock or bond with steady and stable growth. This highlights the main difference between short-termism and long-termism.
Here’s a breakdown of the differences between short-termism and long-termism:
Remember, short-termism values quick wins and prompt results at the expense of building long-term sustainability.
Remember, long-termism focuses on sustainability and strategic planning, even if reaping the rewards will take longer.
The table below will compare side by side the differences between short-termism and long-termism:
Short-Termism | Long-Termism |
---|---|
Focuses on immediate financial results | Emphasises sustainable growth over time |
Prioritises quarterly earnings and stock price | Invests in future innovation and stability |
Often leads to cost-cutting and underinvestment | Encourages reinvestment in R&D and workforce |
Decision-making driven by short-term incentives | Considers long-term stakeholder value |
Higher risk of volatility and market fluctuations | More stable and resilient business model |
Can lead to ethical and environmental compromises | Focuses on sustainability and corporate responsibility |
While short-termism can provide quick advantages, long-termism often leads to more sustainable and meaningful success.
There are several negative impacts of short-termism, such as how it can hinder investments from their full potential, impact economic growth and innovation, and further exacerbate existing environmental and social issues.
Here’s a breakdown of the negative impacts of short-termism:
Since short-termism prioritises short-term objectives over long-term goals, it can have a severe impact on business performance and financial goals. For instance, it can cause companies to fixate on quarterly goals and cut back on funding for research and development (R&D), which could actually help a business expand its operations via innovation.
As a result, short-termism could actually be what puts a company out of business – as long-term objectives are imperative for a long-term, profitable business.
If our global economy is to be stunted by short-termism, it could result in reduced innovation and overall economic growth – as long-term investments will cease and make it more difficult to fund ongoing projects that could aid in sustainable development or technological advancement.
As a whole, this can impact economic development as new industries will struggle to get their feet off the ground – and existing ones will struggle to meet supply and demand without new search and technology.
Short-termism can also have an impact on existing environmental and social issues, as businesses and policymakers will be more driven by short-term, fiscal gains than by protecting the environment, health, or working rights – meaning that long-term sustainability or work inclusive initiatives may be neglected.
This could include ignoring the importance of efforts towards:
As a result, putting aside these types of initiatives could ironically cause more long-term damage in terms of environmental degradation and social inequalities – seeing as the necessary investments and policy measures will be overlooked in favor of short-term economic gains.
Several companies have already suffered from the consequences of short-termism, such as Boeing, General Electric, and AirBnB.
Think of when you’re sitting at a restaurant, and the meal is taking a little bit longer to prepare than you’d expect. Would you rather the meal be reheated as leftovers, or made from scratch and fresh, high quality ingredients? Most people prefer the longer wait if it means the meal will be better, and the same goes for those who adhere to the aspects of long-termism.
Here’s a breakdown of some well-known companies that have suffered from short-termism:
Overall, these examples demonstrate how even well-established companies can bear the consequences of short-termism – and that long-termism would have actually proven more efficacious for their business.
If we’re going to battle climate change, ensure environmental safety, and social justice – it’s best that all businesses make an effort to shift away from short-termism.
However, it is important to note that businesses that have relied on short-termism mechanisms may struggle to adjust in the beginning – but the long-term benefits would be worthwhile.
Here’s how your company could work towards long-termism and away from short-termism:
Overall, short-termism is a major problem for a variety of reasons – as it can have an impact on our environment, economy, and society. However, we can make an effort to employ the ideals of long-termism, stray away from short-termism, and work towards a more sustainable future.
If reading this article about bioplastic has inspired you to consider your company’s own carbon footprint, Greenly can help.
At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. We offer a free demo for you to better understand our platform and all that it has to offer – including assistance on how to reduce emissions, optimise energy efficiency, and more to help you get started on your climate journey.
Learn more about Greenly’s carbon management platform here.
CFA Institute https://rpc.cfainstitute.org/policy/positions/short-termism
LinkedIn https://www.linkedin.com/pulse/corporate-short-termism-mohamed-yazid-naim-
McKinsey https://www.mckinsey.com/featured-insights/long-term-capitalism/where-companies-with-a-long-term-view-outperform-their-peers
University of Cambridge https://www.cisl.cam.ac.uk/business-action/sustainable-finance/investment-leaders-group/promoting-long-termism
Financial Times https://www.ft.com/content/95008728-986c-4dcf-95aa-16fbb4ef4bfd
Quotation https://quotation.io/quote/can-things-cheap-way-simple-way-short-short-term
AJ Bell Invest Centre https://www.investcentre.co.uk/articles/problem-short-termism-investing
Skift https://skift.com/2025/03/14/short-term-rentals-airbnbs-dominance-and-bookings-gains-in-1-chart/
Yahoo Finance https://finance.yahoo.com/news/airbnb-falls-5-buy-sell-171900757.html
Integrated Reporting https://integratedreporting.ifrs.org/wp-content/uploads/2017/03/SPLong-TermismversusShort-termism.pdf
IMD Business School https://www.imd.org/ibyimd/finance/how-to-shift-managers-focus-from-short-term-profit-to-long-term-social-impact/