Q: Tell us about your most recent ESG/SRI engagement. 

Sust-IR: This is a marked change from two years ago and something that we have heard a number of companies reflect on.  What it means for investor relations teams, of course, is that they need to prepare their senior management team to be able to answer any questions that may come up in this regard.

Most recently, we participated in Oddo's investor conference - online, of course - where we met a wide range of different investors over 2 days. What was interesting about this is that the conference was a 'mainstream' rather than specialist ESG conference and yet we received ESG-related questions in all meetings. In fact, the lowest number of ESG-related questions we received in any given meeting was three.

Then last year we spoke at the Goldman Sachs FMCG conference on a panel that focused on putting the 'product' at the centre of the sustainability strategy - notably around reduced risk nicotine products, low / no alcohol beer and reduced sugar in soft drinks.  Interestingly, the subjects discussed extended beyond the products themselves into the supply chain (and the reformulation challenges) and also into how investors should measure performance on 'better for you' products.

Q: What issues are investors most interested in?

Sust-IR: This is to be expected. Mainstream investors will show interest in the sustainability issues that are most financially-material for a company.
While 'double materiality' may be emerging as a concept in reporting, we should always expect investors to be most interested in financially-material issues.
We would always encourage companies to push back when investors purport to show interest in issues that are of lower financial and lower sustainability relevance for the company.
If it really isn't material on either basis, we discourage companies from 'playing the game' Although, we recognise this is sometimes hard to do.

So, I track investor 'hot topics' which I then share with management.  (So, they can play 'Investor Bingo' in meetings).

Given the nature of our business - there was most interest in our response to the issues around sugar and packaging.  As you would imagine, we have well-developed policies in these repects.  However, we also receive questions about carbon and water.

Most investors have now found their range and are largely focussing on issues that are very relevant.  To us this includes: calories and plastic - as metioned - and also the link between ESG factors, governance and remuneration.  We are seeing employee wellbeing and the social impact of the supply chain move up the agenda, particularly in the last year. This is also reflected in the letters from major investors.  Larry Fink's (Blackrock) annual letter mentioned both people and planet so did the letter from Aviva while the letter from Schroders focused on 'net zero'.

Q: How about the ESG ratings agencies.  How are you getting on with them at present?

We're doing OK at the moment, I think.

Sust-IR: This is a tricky area to navigate - for exactly the reasons that Sarah describes.
Pragmatism demands that companies can't respond to every incoming request that they receive. However, the principle of giving open information to all market participants guides towards universal disclosure.
For this reason, we prefer a 'mainstream' model whereby companies report to the market (in written form) … and then make themselves available by presentation and webcast to all market participants … but don't complete proprietary questionnaires.

We participate in CDP and MSCI processes  and we still receive a lot of questionnaires and requests from research providers and are considering whether to add one more participation to our list..

From previous experience, you have to be careful here.  Britvic is not a massive company and we don't have unlimited resources for this.  So, we have to be thoughtful before committing to new time-consuming exercises.

Q: And the 'sell-side' research providers.  Are they interested?

Yes.  We have good relationships with some of the sell-side analysts that are becoming increasingly interested in sustainability issues.  We have had a few meetings with them and a number of notes came out last autumn from Societe Generale, RBC and Berenberg.  (Of course, other sell side houses are available!  And we're, obviously, happy to talk to them all about these issues.)

Q: Who takes responsibility for managing sustainable investor communications at Britvic?

It's the IR team - specifically my colleague, Steve Nightingale.  However, here we have three significant advantages.

Sust-IR: This is, indeed, a huge advantage.  Most companies face the challenge of how to prepare their CEO or CFO for when sustainability issues crop up unexpectedly … or - as Sarah's earlier comment indicates - increasingly frequently.

• Firstly, our CFO chairs our ESG Committee. This means that we are able to put balanced scorecard recommendations to the CEO and full exec to make ultimate decisions and that she is fully up-to-speed with the issues we face and the actions that we are taking and can therefore answer investor questions as and when they arise.
• And our CEO is fully engaged, leading investor roadshows in line with the financial calendar with the support of our CFO. With both the CEO and CFO on board, we can really drive our Healthier People Healthier Planet agenda and make it something for all 4,500 employees to deliver - not just 4 of us in the central team.
• Finally, I have worked in IR for much of my career. So, Steve and I can sometimes divide investor-facing work on sustainability issues. Steve and I will go together to meetings with some investors but then I often handle some investor / analyst meetings on my own.

Q: How do you report on your sustainability exposures and management practices?

Our Annual Report lies at the root of all our disclosure and contains our full Sustainable Business reporting within it.

This is extracted and published as a Sustainable Business report online.  Alongside this online reporting we also publish a separate datasheet for Sustainable Business data.

We had our first go at TCFD reporting in in our 2020 Annual Report and are looking to build on that next year and we reported according to Streamlined Energy and Carbon Reporting (SECR) requirements in our most recent report.

Then, we include Sustainable Business updates at interims and prelims…I do not want to us talk about these quarterly - because not enough moves over that time period.  Also, it is counter-intuitive.  We want investors to start thinking over the longer-term - in other words over the next 5, 10, 15 + years, not next quarter!!!

Q: What's next on the agenda for you?

The same as for many companies, I expect.

We're working on TCFD - although, internally, we call this Climate Risks and Ops.  We don’t just see this as a regulatory tool, but a tool that we can internalise and use to make climate risk tangible for our business

Also, we are planning our first ESG investor event…

Q: What 'must dos' and 'must avoids' would you recommend to other companies?

Do:

• Mean it - Have a passion for what you do
• Be honest and humble - we don’t have all of the answers to all of our challenges and the landscape is continually evolving
• Start small - and learn as you go

Don't

Sust-IR: Yes.  Companies should push back when investors purport to show interest in issues that are of lower financial and lower sustainability relevance for the company.  If it really isn't material on either basis, we discourage companies from 'playing the game'.  Although this is sometimes hard to do.

• Try to cover everything - stick to your material issues
• 'Green wash' – transparency is key and you will be found out
• Wait – just start the conversation, those businesses that demonstrate that they are working to become better businesses will be the successful businesses in the future

Sust-IR: Bring it on!  We fully agree

Support

Sustainable-IR thanks Sarah Webster of Britvic for her support in writing this case study.