Through 2021, InterAxS managed a Sustainable Investor Access (SIA) programme to test the concept of efficient direct communications between companies and investors.  We offered a subsidised programme of sustainability-focused company ó investor access to 10 companies*.

The good news is that it works! … but it is a bit more complicated than that 😉

Direct communications between companies and investors are beneficial for both sides because the approach:

• enables a focus on material issues (in ways that questionnaires and ratings don't)
• allows sustainability issues to be planted firmly within the context of a company's real business operations
• gives companies the opportunity to gauge analysts and investors' understanding of their business, clear up existing gaps in knowledge and prevent other misunderstandings from developing
• Finally, using a third party to organise the process, gives massive leverage and increases efficiency hugely - although we would say that wouldn't we 😉

Given the rise of ESG and sustainable investment and regulation, we expect that most listed companies will now be considering how to communicate their sustainability exposures and management practices to investors over the year ahead.

So, to help all of these companies with their own planning and execution for 2022, we share some of the situations that we encountered and the solutions that we found.

We plan to extend our programme of work in this area into 2022.  So, do This email address is being protected from spambots. You need JavaScript enabled to view it. if you would be interested in working directly with us.

"But will direct communications really help our sustainable investment communications?"

Situation encountered: At the outset, we encountered some nervousness and a little scepticism from companies about the process of direct communications on sustainability with analysts and investors.  While many companies know that their current communications activity is not as efficient or effective as it might be, it still takes some confidence to try a different approach.

Solution found: Ultimately, experience is the only thing that really helps in this respect.  For the first companies in the programme, the process was experimental - but as the programme progressed, we were able to highlight to newcomers the positive experiences of their predecessors.  Specifically, we were able to give clear (and current) answers on how investors and analysts are identified, how message development is supported, how logistics work etc.

“Who is the audience?”

Situation encountered: While companies know that there is growing interest from investors in their sustainability exposures and management practices, they often don't understand the full range of investor and analyst interest.  Typically, they will know about ESG ratings agencies and some of the ESG interest of the asset managers that already hold them.  However, we found that they often don't know about the interest of 'sell-side' firms, of credit ratings agencies and of many of the larger and more integrated asset managers.

At an individual level, most companies know the mainstream financial analysts that cover them.  Few companies, however, know the names of the ESG / sustainability fund managers or analysts that cover their sector or company in particular.

Solution found: Some parts of this were easy - we started with a Register of SRI Interest provided by SRI-Connect.  These 'Registers' list - for each company - the investment firms that hold them and that might be interested in them and - for each of these, the analysts that cover their industry sector.

Some parts were harder - as some asset managers and research firms don't disclosure who covers which sectors and issues.  In these cases, there is (unfortunately) no substitute for time spent on emails and on the phone chasing and chasing and chasing again.

It is worth noting here that the volume of assets that are managed according to sustainable investment principles is growing rapidly, there are new funds being created almost daily with analysts and portfolio managers moving between asset managers.  Knowing who is where can feel like a full time job (and we understand why it is not one that companies want to do themselves).

Although the tracking can be hard work, it is ultimately a positive process. 

Investors were willing to take meetings and companies were keen to broaden their touchpoints within the institutional investors they already hold a relationship with as well as engaging with new potential pools of capital.

“Today’s schedule has been terrific with incredible engagement across the board, you pulled together a day of meetings with some of the most influential investors in the sector.”

“We felt the 1x1 investor meetings in particular were very rewarding; really engaging and insightful conversations (two ways!), with investors eager to learn more and understand the process and strategy more than anything.”

“This was a great first ESG roadshow. And we have come away feeling encouraged that we are on the right track, and more deeply engaged with some of our largest investors.”

“How do we tell our story?”

Situation encountered: Although most companies already have sustainability or CSR activity to tell investors about and are generally keen to engage directly with them, many have questions and concerns around how best way to convey messages and to tell their story.  They worry about the enormous range of topics under the E, S and G umbrella and are concerned about how they can encourage focus on the issues that are most material to their business.

“What if I am asked questions on topics where I don’t know the answer”.

Solution found: With a number of companies, we found that our first job involved advising them on messaging and on how to focus their meetings on the most significant issues for them and for investors.  Typically, these meetings took an hour and involved us guiding companies to combining any recent strategy presentations with any recent sustainability material … and sharing a little trick we have learned about the tactical use of appendices.

"Who should present from our side?"

Situation encountered: Many companies didn't know whom to put forward as presenters.

Solution found: This one was easy.  All the roadshows on the programme consisted of virtual meetings were headed by the Head of Sustainability and the Head of Investor Relations.  This was well received by investors - as this enabled them to ask more detailed questions on sustainability themes and issues than they are typically able to in 'mainstream' roadshows.

To other companies, we would suggest thinking about involving a Head of Inclusion and Diversity or heads of other key areas within the wider CSR team.

We don't think there is need for senior 'C-suite' executives on these roadshows unless they actively want to be involved, unless the roadshow is specifically focused on corporate governance or unless the company faces sustainability challenges or opportunities of a scale that makes it appropriate for the C-suite to demonstrate their level of commitment to sustainability issues.

“Show me the money”

Situation encountered: One company on the programme said they found it hard to reach out pro-actively to sustainability-orientated pools of active capital.  They had frequently experienced sustainability investors focused on downside risk but challenged us to ‘show me the sustainable money’ - in other words, identify the investors that they might attract for the first time by highlighting their sustainability activities.

Solution found: This request led us to extend the project significantly to create a listing of asset managers that are actively allocating capital towards sustainability solutions or substantive sustainability transitions. For more information on this, please see the report published by SRI-Connect here: Show me the (sustainable) Money

"At ESG agencies, who is responsible for my stock and how do I reach them?”

Situation encountered: Companies often don't know the names of the analyst that covers their company at each ESG agency.  Their primary point of contact is often the 'issuer relations team'.  This is great if the company wants to understand the process deployed by the ratings provider.  However, it is not so useful if the company wants the ratings provider to understand their firm and their activities.  For this, they need the lead sector analyst.

Solution found: Finding the lead analysts on sectors at ESG ratings agencies was - initially - challenging.  However, as we delivered more meetings that these analysts found valuable, we were able to build relationships at these agencies such that we now know the analysts on many sectors and get support from them to identify their colleagues on other sectors.

"What's next?"

Situation encountered: Having been through one iteration of sustainability roadshowing, companies have asked "What's next?"

Solution found: "What's next?" is exactly the right question to ask.  One of the main lessons that - we think - companies have taken from this experience is that relationships matter in sustainable investment communications just as much as they matter in 'mainstream' investor communications.

As a result, we advise all companies to use the first year of communications to lay foundations for a sustained level of investor communications over the years ahead.  We strongly discourage companies from embarking upon massive programmes in year one and then to fall silent in year two.

Overall, we think that the Sustainable Investor Access project enabled participant companies to maximise the impact of their outreach to investors and research analysts on sustainability issues and did so at little time or financial cost to them.  (In fact, it is more likely that it delivered time- and cost-savings once you take into account the time saved correcting ratings and organising ad hoc investor meetings).

More significantly, we think direct communications changes the quality of communications structurally (from box-ticking to strategic dialogue).

“This was a great opportunity to not only tell our sustainability story, but also establish an active dialogue with investors.”

Corporate access has always been a key element in the investment decision process and now within this evolving sustainability landscape, it has been revitalised.

We hope that the answer to "What's next?" is "More of the same, please".

For any company thinking about sustainability communications, please contact us: This email address is being protected from spambots. You need JavaScript enabled to view it.

* The Sustainable Investor Access Programme

Through the Building Bridges programme commissioned by the World Business Council for Sustainable Development and funded by the Gordon and Betty Moore Foundation, InterAxS Global and SRI-Connect offered 10 companies with exposure to the food & fibre value chain a subsidised programme that included investor & analyst identification, preparation support and the organisation of a one-day virtual roadshow with sustainability investors alongside a webinar with ESG agency analysts.