Traditionally, IR professionals are accustomed to traveling frequently to meet with investors and analysts, collecting valuable feedback to deliver to the C-suite to help shape messaging for forthcoming disclosures and corporate events. But 2020 was no ordinary year, and the same could be said for 2021 so far. However, there are some lessons learned in 2020 that can help IROs successfully navigate 2021, such as addressing market volatility, maintaining communications with the investment community, and focusing on ESG efforts.
Addressing Market Volatility and Focusing on Long-term
While it may be enticing to “keep calm and carry on” during times of uncertainty, being as transparent as possible and communicating with investors is paramount. Proactively communicating with the investment community will help to calm any fears while providing the opportunity to reinforce your company’s long-term value.
Helen Parris, Director of Investor Relations at G4S, shared that “in past experiences dealing with a crisis, like with the Olympics, even if you can’t give information and numbers, it’s still really important that you carry on communicating. People take comfort and reassurance from you speaking to them, even if you can’t give all the details.”
Remind your audience that your company exists to run a business and generate shareholder value over the long-term. This includes emphasizing your strategy, your financial condition, your ability to execute, and the long-term market opportunities driving your business. Resist the urge to comment on current valuation, as the current price of your shares does not affect your growth opportunities, competitive advantage, or performance.
Although there may not be a corporate statement to communicate, investor relations team members can reach out to their top shareholders and work to understand their views on the recent market activity. Understanding the views and concerns of your top holders is critical knowledge that you can share with your management team to help inform future communications. In the end, investors who are aligned with your vision are likely to be with you for the long haul. So, maintain a voice of calm and reason with investors, highlighting the opportunity that lays ahead.
Leveraging All Digital Channels Available
The importance of clear and consistent communication was a key driver in the adoption of virtual meeting technologies. Despite travel restrictions and lockdowns, IR teams still had to find a way to effectively connect with their investors and analysts. Meeting volumes skyrocketed, first due to the demand for information from investors in light of the COVID-19 effect on the markets, and then due to the increased comfort with the technology and ease of communication. In fact, roughly two-thirds of companies in North America (67%) and Europe (64%) hosted virtual roadshows in 2020, according to IR Magazine’s Global Roadshow Report 2020.
However, virtual meetings and events aren’t the only way of communicating with the investment community. Leveraging your existing IR website helps ensures that the investment community can easily access relevant information and critical company details. Having a single source of information can help guide conversations and ensure any information shared is in line with the company’s current status.
Maximizing the impact of your company’s social media accounts is another way to keep your investors up to date. Social media platforms, like Twitter, are particularly effective for providing real-time updates to a broad audience and are a valuable tool in communicating critical updates in a timely way. These channels can also be used for monitoring purposes to determine the messages and values that are most important to your investors. This leads to the final take away from 2020; an increasing focus on ESG.
ESG-related Investor Interest Remains Strong
The pandemic placed a greater emphasis on social issues that had previously received less of a focus, such as employee safety and engagement, while the Black Lives Matter protests prompted significant discussion around what corporations can do to create a more diverse and equitable society for everyone. The sheer scale of demonstrations against racism and social injustice prompted responses from 217 S&P 500 companies denouncing all forms of discrimination and highlighting the company’s values.
“The explosion of ESG-related information is one of the key characteristics of 2020,” says Mikkel Skougaard, Head of ESG Reporting at MOL Group. “Regardless of who you speak with in IR, whether they are an ESG specialist or not, they will have seen a significant increase in the interest in non-financial data so that investors can better judge the resilience of the business model – both when it comes to the climate but also around other socially disruptive factors.”
Companies that appear to choose profit over ESG are coming under close scrutiny from existing and potential investors. Most recently, some well-known companies opted out of advertising during the Super Bowl to reallocate their ad spend toward COVID-19 relief efforts. This includes Coca-Cola, who has traditionally been a staple of Super Bowl commercial season, but instead chose to sit out this year to invest “in the right resources during these unprecedented times.”
Whether your company is doing well or not, there are so many people suffering right now. So, paying the high ticket price of a Super Bowl ad could be perceived as wasteful and the company risks being the recipient of negative public backlash, like Robinhood. Nevermind the fact that the company moved forward with the decision to run a knowingly expensive advertisement even though they made claims that they didn’t have enough cash to continue trading.
This leads to a growing dialogue around linking executive compensation to ESG metrics – an emerging request from many institutional investors. Ahead of its annual meeting, Apple announced in its proxy statement that its executive compensation will increase or decrease by up to 10% based on the company’s performance against different environmental and social targets. It’s a big step for a company to make, but one that will surely retain investors for the long haul.
The early signs are that 2021 isn’t going to be straightforward, either. While we hope that strides are made with the COVID-19 vaccine rollouts around the world, it’s fair to assume that the future holds a significant amount of uncertainty and the traditional priorities of investors have changed. But by embracing the learnings from 2020, telling a clear and meaningful story on ESG, and communicating frequently and transparently, IR teams will be well-positioned to tackle any surprises that 2021 may have in store. Learn more by watching our 2021 Strategic IR Planning webinar on-demand.