Strategy & planningPerspectives

Good relations

  • The relationship between CSR and IR teams is the most significant determinant of a company's success in communicating sustainability issues effectively to investors.
  • In many companies, however, the relationship between these two teams does not function
  • There are reasons for this and solutions - but until the problem is fixed companies cannot hope to communicate sustainability effectively to investors

Effective sustainable investor communications involves a combination of 'content' and 'process'.  Clearly, the 'content' needs to be suitable, interesting and relevant… however, equally the process needs to be effective and efficient.

IR teams are generally excellent at IR process, because they do it all the time.  When dealing with mainstream investors, they also tend to be good at content - because they understand what information investors want and how to deliver it to them most efficiently.  When it comes to sustainable investor communications, however, they can struggle due to unfamiliarity with the concepts of sustainable development.

By contrast, their CSR colleagues are usually sustainability subject matter experts … but are dreadful on investor communications process - because they are new and unfamiliar to them.

The skillsets of these two groups are, therefore, perfectly complementary.  Working together, IR and CSR teams could identify which sustainability issues are relevant to investors and deliver their key messages strategically, proactively and efficiently.

Unfortunately, the relationship between the two teams often doesn't work.  They often don't like each other very much and they often don't like working together.

Let's understand why not?

Disempowerment

Disempowerment works on both sides:

  • sustainability professionals feel disempowered by their limited understanding of investors and investment processes
  • IROs feel disempowered by not understanding sustainability issues

'Disempowerment', however, is easy to fix. We have produced three videos to empower:

We hope that these resources bridge the gap between sustainability and IR and enable many more companies to become much more efficient about their investor communications on sustainability.

Organisational silos & reporting lines

Sometimes, the whole reporting structure of companies discourages communication between investor relations officers and CSR managers:

  • Investor relations teams often report to the CFO
  • Sustainability teams often report (sometimes via production, communications or policy functions) to the CEO.

There is often no management layer - beyond the most senior in the company that exists to bring the two together.  This results in unhelpful passing of the buck and an inclination to compete rather than co-operate especially where resources are at stake.

This is easy to fix: it simply requires the CEO & CFO to issue a clear mandate to improve sustainable investor communications … in a measurable way.

Resource competition

This one is the craziest … and most frequently seen.

  • Deploying basic investor relations processes to sustainable investor communications might take an IR team three or four DAYS a year
    • (For example, simply by targeting investors, prioritising research providers and deciding which questionnaires to ignore)
  • Doing this could save their CSR team three or four MONTHS a year (through reducing the number of questionnaires that they complete)

"… but that's going to cost me three days of my budget - even if it saves three months of yours, I don't see where those three days are coming from."

A simple conversation about time spent on SRI/ESG communications usually fixes this one.

Personality reasons

The people in sustainability and IR teams are different - they often came into their roles for different reasons; they have different priorities; they read different newspapers; they have different hobbies; they vote differently; they believe in different things.

… and so, this is probably the hardest one to fix … but this is an investor relations website - not a dating platform.  So we'll leave that problem to you.

So where does it work?

Good question. From our observation, sustainable investor communications works at companies where:

  • IR and CSR sit within the same communications team
  • ESG is allocated as a role/responsibility within IR - as is the case in a number of French companies
  • Sustainability issues are communicated from the board downwards as part of the entire strategy and business of the company so they are not seen as a separate topic