- Twilio and Asana have signed on to dually list their shares at the Long-Term Stock Exchange.
- Led by tech investor Eric Ries, LTSE aims to promote long-term thinking among investors and issuers.
- A “sea change” around ESG investing is afoot in the markets, Ries told Insider.
Silicon Valley’s stock exchange has landed its first listings.
Now, the question becomes whether or not investors will buy into its long-term vision for the US equity market.
The Long-Term Stock Exchange has revealed that Twilio and Asana plan to list their stocks on its platform in addition to their current listings at the New York Stock Exchange. The news marks a critical step for the Eric Ries-led LTSE as it looks to rewire how everyone from C-suite executives to big and small investors alike think about the markets.
Born out of Ries’ best seller “The Lean Startup,” the exchange is designed to address the US financial market’s perceived focus on short-term gains, an issue that has long vexed business leaders like Warren Buffett and Jamie Dimon. With no listings to date, LTSE has not been able to widely enact its mission. But Ries told Insider that Twilio and Asana’s listings are representative of the “sea change” taking place in what investors care about today.
“A number of investors see this as the next generation of ESG,” Ries said of listing at LTSE. “It’s not a reporting framework. It’s not just a pledge. It’s really a company saying, ‘We’re going to bind ourselves.'”
Climate change, board diversity, and other environmental, social, and governance matters have recently taken on newfound weight with big-name investors, after being viewed as niche issues for decades. In turn, the amount of assets sustainably invested in the US reached $17.1 trillion at the beginning of 2020, a 42% increase from 2018, according the US Forum for Sustainable and Responsible Investment.
Investors have run into a mix of problems in the burgeoning sustainable investment landscape, though, including a lack of uniformity in everything from how companies define ESG to discrepancies in ESG rating systems.
LTSE thinks it can bridge that gap for like-minded issuers and investors.
The startup exchange’s long-term listing standards, which cover issues including diversity, the environment, and even how companies’ executive compensation plans align with their future success, could help provide more uniformity and accountability to investors, Ries said.
“People are having more and more of a hard time believing corporate propaganda,” Ries said. “We take ESG out of the realm that you have to do it or you feel guilty by not doing it [and turn it] into something that has very tangible and real benefits. … It’s a way of winning trust with investors.”
How much the exchange’s role plays in influencing whether investors buy into those names remains unclear.
For University of Florida finance professor Jay Ritter, investing is a matter of the issuer, not its exchange. And while ESG has become a force in and of itself, Ritter is not sure companies need to list on a particular stock exchange like LTSE to benefit from the boom of sustainable investing.
“The Long Term Stock Exchange is a solution in search of a problem,” Ritter said.
Nonetheless, the dual listings of Twilio’s and Asana’s stocks on LTSE do signal its mission’s rising credibility.
Corporate listings can be a ferocious business among stock exchanges. Yet, LTSE’s Ries is focusing on educating issuers on the benefits of thinking about issues like ESG for the long run, whether they opt to join his exchange or not.
“There’s a generational shift in the markets that this is just the beginning of,” Ries said. “When we look back, we’ll say that this time was a real break from what was before and something that was much more 21st century.”
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