Most discussed topics in Investor Relations
January 11, 2022 | Pulkit Saini
1. Use of technology
AI, ML and the metaverse are the technology buzzwords of the moment. Articles discussing technology trends usually address the current hot topics with revolutionary zeal: the next big thing that will change the world as we know it. But the reality is more prosaic: often the technology that really makes a difference is much less exciting, but carefully designed to deliver incremental improvements in our daily workflow, such as well-designed CRM and an automated IR Website with interactive tools.
2. Focus on ESG
There has been genuine evidence coming out of communities that when the company focuses on ESG matters, the quality of investor experience and, therefore, investor relationship shows significant improvement. On the other hand, analysing the market today, using ESG as a risk management tool is critical, since companies need to be able to explain to the shareholders how it is handling some of the key ESG risk factors and how its not likely to deter the sustainable growth of the company.
Clear KPIs are definitely a trend, as companies are trying to hone in on the KPIs that are not only related to sustainable goals to show how their ESG efforts are improving, which helps them identify what are the aspects of the business that can be managed. The investing community and regulations are ultimately forcing the companies to target those KPIs and have a great opportunity to identify which one of those its important for them to highlight. Non-financial metrics are a great way to tell their story to investors and integrate into IR materials for more credibility. As we know, ESG is a big part of a company’s IR program and its always important to keep enhancing your strategy and to understand your stakeholders.
3. Communication with retail investors
Three Important aspects when it comes to communication with retail investors:
- Marketing Initiatives
- Investor Education
- Governance Communication
According to the 2022 BNY Mellon Retail Investor Survey, marketing initiatives are crucial to attract new investors. Opportunities suggested by the research include leveraging favourable analyst research/ ratings and engaging with financial professionals. It is also beneficial to improve brand awareness, thus issuers should leverage implicit third-party endorsements and amplify news flow on social media, if appropriate. Another important aspect is investor education. Stock purchases and shareholder loyalty can be driven by education about where to find on factors relevant to retail investor’s’ goals, such as stock’s growth and income drivers.
To better educate investors, issuers should improve their internet presence and host an attractive IR website with a modern look and feel. Additionally, governance communication is surely relevant to retail investors. For Example, the majority of retail investors consider governance important enough to learn more about and said they both read and vote their proxies. However, these investors dislike legalese and want proposals explained in plain, direct language.
Therefore, for improved governance participation, issuers should leverage user-friendly proxy voting technology and consider designing clear and concise governance documents, including proxy statements and annual reports.
4. Communication in a Bear Market
Difficult times in the Capital Markets need an effective IR program, so the company must keep an open dialogue with its investors, especially after quarterly earnings or any major announcements, contributing positively to the reduction of its cost of capital and increasing shareholder value. Therefore, investing in the technologies available in the market has become increasingly necessary to promote a better communication.
Importance of Corporate Governance, ESG, Strategy, and Communications
We hope this newsletter finds you well. In this edition, we will be discussing the importance of Corporate Governance, ESG, Strategy, and Communications for Investor Relations.
ESG and Enterprise Risk Management
Sixty-two percent of directors say ESG issues are a part of the board’s enterprise risk management discussions. Source: PwC, 2021 Annual Corporate Directors Survey, October 2021
Most discussed topics in Investor Relations
AI, ML and the metaverse are the technology buzzwords of the moment. Articles discussing technology trends usually address the current hot topics with revolutionary zeal: the next big thing that will change the world as we know it. But the reality is more prosaic: often the technology that really makes a difference is much less…
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