On the origin of short term attitude: Is it really against sustainable development?

By Shahab Sabahi – Energy and Environment for Development – Research Group

In the realm of socio-economic development, the short-term attitude is regarded as the enemy of sustainable development. So often, investors are blamed for their short-term attitudes. Do investors not really take into account long-term sustainable development? Do they look after immediate profits? If the answer is positive, why do they do so? Do short-term strategies really overlook sustainable development?

To answer these questions, first we should define the short-term attitude and then try to find out what trigger it. It is defined as humans’ attitude for acquiring profits or capital gains over a relatively brief time. Therefore this attitude fails to appreciate the scarcity of resources and the rights of next generations. Indeed, human nature and socio-economic system structures contribute the most into the emergence of the short-term attitude. Researches show that human’s brain functions in a way to choose short cuts in order to achieve certain objectives. Thus short-term attitude seems to be a common approach among all humans, not solely investors, which is a behavioral aspect of humans. Another aspect is to be the system structure through which a society organizes its internal and external interactions. Complex and less regulated systems often encourage the short-term attitude for survival reasons and attracting more resources. It is eloquently described itself through the lack of ethical and moral culture. Today’s financial systems, for example, promote higher gains through more risky operations that ultimately increase the chance of gains. It urges a comprehensive push is needed for regulating financial markets.

Societies and all stakeholders (including shareholders) should be more aware of ultimate purposes of businesses’ investment decisions. It does not at all mean that short term gains are immoral and ruin sustainable long term sustainable development. However regulation is needed to balance the positive-negative effects of the short term attitude. We should not forget that short term strategies are to react effectively to internal and external changes while long term strategies are to build sustainable future for a society.