In July 2022, Corporate Secretary and IR Magazine convened an audience for the ESG Integration Forum in New York City to talk about environmental, social and governance (ESG) matters, how they impact investor relations, brand loyalty, benchmarking, engagement and more.
As more and more companies and institutions focus on ESG issues, fearlessly communicating to stakeholders is critical to moving the needle and advancing ESG important work—and achieving true collaboration.
As IR Activations Director here at Cision, I had the privilege of attending the event, and now I’m excited to share some of the most salient takeaways I heard.
#1. Transparency and Transformation
A resounding theme of this year’s conference was the power of transparency to transform IR communications. Disclosing more information and improving transparency are paramount in communicating with the investment community—institutional and retail. Companies can raise the bar for openness and ultimately tell better investment stories when including ESG in their communications strategies.
Cynthia Curtis, SVP and Corporate Sustainability Officer at JLL, spoke about the importance of double materiality and how it could and should be used to respond to stakeholder demands for internal corporate transparency. Curtis suggested that understanding the impact of ESG efforts could and should help to frame and shape decisions of a company at all levels of the organization.
#2. ESG, Financial Models and Communications
On the subject of communicating to institutional investors, John Miller, Director, ESG and Sustainability Policy at Cowen Washington Research Group, offered valuable advice: Corporations should strive to incorporate ESG into their financial models. As revenue, capital and costs are affected by ESG, they should be clearly communicated in the reporting of financial results. When more ESG messaging is released, the ESG movement can accelerate to the benefit of all.
#3. Optimize Your Website, Optimize Your Transparency
SVP, Investor Relations and Treasurer at Valmont Industries Renee Campbell emphasized the role a corporate website can play in educating internal and external stakeholders. With messaging that is strong and consistent, both key audiences should have access to content and media that communicates a company’s goals. Further, when it comes to workplace culture, advancement and opportunities, all should look at optimizing the platform they already have.
#4. Climate-Aligned Comms
Fund compositions and disclosures can be highly sophisticated and often cater to institutional investors. Some retail investors may struggle to understand nuances of funds, and when matters of ESG are added to the mix, the material can be even more difficult to interpret. It has been noted that ESG and climate-related issues have, in fact, been an aligning factor between the two investment groups. More transparency and better disclosures can help align retail and institutional investors.
#5. Capital and Shareholder Value
ESG implementation can be a balancing act for public and private companies. Many are looking for ways to deploy capital in areas like ESG, while investors are still looking for improved financial results. Consider that capital can work both ways: Deployed correctly, capital can help an organization grow or improve efficiencies, and ESG work is no different.
Determining the level of capital that can be used for ESG initiatives versus operations is key. Companies have a fiduciary responsibility for improving shareholder value, and ESG goals add another level of obligation. Investors need to understand that investment in ESG is, ultimately, a means of improving that level of value—and be prepared to demonstrate how you will make it so.
The Bottom Line
Speak the language investors are accustomed to. Revenue and costs are impacted by ESG and should be reflected in the fundamentals of one’s financial reporting; this will help corporations tell broader, more transparent and sustainable stories.
Finally, a truly successful ESG strategy is one that is embedded in company culture and that management stands behind, rather than being a purely marketing strategy.