5 Tips for Talking to Shareholders
Investors are listening—is your company’s investor relations team prepared to talk about corporate responsibility?
By Karin Kane
A recent thomson Financial survey showed that 89 percent of institutional investors rate corporate responsibility as a primary or secondary influence in their decision making. In North America alone, portfolio managers representing more than $13 trillion in assets take corporate responsibility concerns into consideration. With the investor relations department as the main point of contact for this group, investor relations officers (IROs) must be aware of current trends in corporate responsibility and be prepared to deal with investors’ concerns. Unfortunately, IROs are rarely aware of shareholder concerns in this area or how to address them when they arise.
In fact, although 66 percent of investment relations professionals believe their board is not paying enough attention to shareholders’ corporate responsibility concerns, few know what steps to take or how best to communicate the company’s practices in the area. Indeed, 72 percent note that their annual report will not include a section on corporate responsibility, and few firms offer this information on their investor relations website. More open communication between the corporate responsibility and the investment relations departments can enhance corporate communications and foster stronger shareholder relationships.
From the investment relations side, understanding that investors are increasingly focused on corporate responsibility and being prepared to address this focus can help management respond in a more effective and timely manner and address key issues. From the point of the corporate responsibility officer (CRO), encouraging awareness of corporate responsibility issues ensures communications will be synchronized and that management will be more informed. The CRO will also be able to pass socially responsible investor and other shareholder concerns back to the IRO, who will be better prepared to answer queries.
Fortunately, the bulk of shareholder proposals about corporate responsibility tend to be centered on increased transparency and disclosure of information, making it easy for companies to begin to comply with shareholder suggestions. Following this five-step plan will ensure healthy corporate responsibility communications:
FIRST, the IRO and CRO need to identify each other and outline what corporate responsibility information is available.
SECOND, define a communications program. If there are activists agitating for change, reach out to them, identify their key concerns, and if possible, work with them to address these issues. If the company already issues a corporate responsibility report, ensure the report includes most of the information investors are looking for. Consider following the GRI guidelines; most funds will be interested in information that falls into this realm.
THIRD, consider how best to communicate your corporate responsibility plan. Investors and activists will not necessarily fault a company for not having all the information immediately; in fact, most will be pleased with an earnest attempt to increase transparency. Focus on communicating about issues that are relevant to your company. If you have issues that need to be addressed, publicly outline the steps you are taking to address them.
FOURTH, create an online portal for corporate responsibility material (either a stand-alone page or part of the existing investor relations site). It should include up-to-date news, company data and information on corporate governance.
FIFTH, continue to monitor and update information as your company’s corporate responsibility policy and practices change.
Corporate responsibility communications are becoming a best practice in investor relations. Of the Global Fortune 250, 64 percent are currently issuing corporate responsibility reports; 79 members of the S&P 100 Index now have corporate responsibility websites. By following a few simple steps, both CROs and IROs can ensure their firms remain at the forefront of this growing trend.
Karin Kane is a contributor to Thomson Financial’s Strategic Research Group, which provides market-based research and insights for 4,500 corporations worldwide.