The Long and Winding Road

The 2° Investing Initiative & The Generation Foundation have formed a multi-year partnership to explore and address the 'Tragedy of the Horizon', describing the potential suboptimal allocation of capital for the long-term due to the limited ability of the finance sector to capture long-term risks within short term risk-assessment frameworks. The project aims to assess artificial and natural factors that compress the horizons of market players, such that long-term risks—transmitted from physical assets through to asset owners and managers—get mispriced. Such a mispricing of long-term risks creates a 'void' between the assets and liabilities of long-term asset owners and can eventually amount to an asset-liability mismatch.