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A practical guide for investor relations teams to engage on the drivers of sustainable value
There are important pre-requisites to convincing your investors that sustainability matters. Before initiating investor discussions, give thought to how integrated sustainability really is into how your business is run.
- How sustainable is your business model?
- Do you have an integrated strategy?
- Is sustainability integrated into your governance arrangements?
- How is it reflected in remuneration?
- What targets and performance measures do you use for regular management and external reporting?
These areas provide a clear signal in terms of how serious you are – and are clear giveaways if sustainability is not a core part of how you run the business.
Once you have started to put the fundamentals in place, then you can develop the narrative for investors and share it with them.
Why the project was chosen
It is widely recognised that there is a gap between the importance placed on understanding how sustainability trends are shaping corporate value by companies and interest by investors. Most mainstream investors remain unconvinced that sustainability leadership translates into profits and marketplace success.
A recent Accenture / UN Global Compact survey of over 100 investors and 1,000 corporate CEOs found that, although 88% of investors saw sustainability as a route to competitive advantage, companies were not communicating this effectively.
The investor engagement project was chosen to develop practical guidance to assist companies as they seek to engage investors on their individual business models for creating long term value.
We have developed a set of overarching principles which can help guide how you can communicate and interact with your investors to help ensure that your efforts are effective.
- Link to strategy: Build communications around the long term corporate strategy – this provides a hook and shows how differentiation from competitors
- Provide context: The more you quantify the consequences of sustainability trends, the more your investors can respond
- Have a long term focus: Contextualise short term results in terms of long term goals – this helps focus discussions on the business fundamentals
- Adopt a commercial tone: Communicate bottom line relevance – link sustainability to revenue growth, cost reduction and risk management etc
- Integrate: Presenting sustainability as a standalone issue leaves it to your investors to work out the relevance and suggests it’s not business critical
- Be consistent: Consistency year-on-year and across different communications gives a clear signal that management are confident and in control
- Use standards: Use recognised standards to report sustainability performance and get external assurance for the key metrics
- Put sustainability at the heart of strategy (if you don’t believe it, nor will your investors!)
- Be clear why sustainability matters to your business
- Embed sustainability into how you do business
- Set targets and report against them
- Reward management for long term success
- Focus efforts on long term investors
- Work with your corporate pension funds (they are investors too)
- Make your communications long term focused
- Work to increase proportion of longer term shareholders on the share register
- Stick to it – be consistent!