Take control of SRI/ESG investor communications

Companies can organise SRI roadshows themselves or they can use the specialist support services of sell-side brokers or independent consultants.

SRI-CONNECT aims to support companies whichever option they choose.  However, in most circumstances, our advice would be for a company to use:

• The (free) services of a ‘sell-side’ broker to organise meetings with ‘buy-side’ investors
• The (paid for) services of an independent consultant to organise meetings with ‘sell-side’ and SRI agency analysts
• SRI-CONNECT’s tools to support the whole process and to ensure that they get value for time / money from these service providers

Organise it themselves

Organising a roadshow itself gives a company total control over the process and the way that it is managed.  However, it has two major disadvantages:

• Companies rarely have up-to-date contacts at investment institutions or knowledge of their current interests.
• It obliges a company to organise all logistics themselves – a job which should not be underestimated!

Using ‘sell-side’ brokers

‘Sell-side’ brokers will arrange for companies to meet with ‘buy-side’ analysts and portfolio managers for free.  (For this, they are paid, by the ‘buy-side’ via trading commission);

They bring four specialist capabilities to this task:

• they have the ‘Who holds whom’ information needed to prioritise investors;
• they have up-to-date information on investor contacts and their interests;
• they can leverage their in-house 'corporate access' capabilities to manage the logistics;
• they can gather feedback (anonymously) after the event.

On the ‘mainstream’ side of their operations, brokers have a tendency to prioritise their own priority clients (fast-trading hedge funds) over the priority investors for the company (long-term ‘buy and hold’ investors).  However, this is not an issue in SRI.

So far as we can see there is no downside in companies using these (free) services.

See here for a listing of brokers offering specialist investor/corporate access services

Use a generalist (or ‘house’) broker

Although some companies turn to their usual ('house') broker to organise sustainability investor communications, this is very rarely successful.  Unless a broker professes a specialism in SRI, they are unlikely to have either the desire or the tools to execute the job effectively.

Indeed, they are often incentivised to show that there is no investor interest in order to cover up their own deficiency of knowledge in this area.

For this specialist task, we recommend that companies use SRI specialists even if it means ignoring their own ‘house’ broker.

Using independent consultants

There are an increasing number of independent consultants able to help companies with the following aspects of SRI roadshows:

• Development of strategy, identification of targets and shaping of messages
• Selection a suitable ‘sell-side’ broker as host for the ‘buy-side meetings
• Organisation of ‘sell-side’ and ‘agency’ meetings
• Gathering of feedback

In these respects, they are able to do things that the sell-side cannot.  However, they are not paid by commission and will therefore need to be paid by the company.  For this reason, they are not likely to be used for organising meetings with ‘buy-side analysts and portfolio managers’

(See here for a listing of consultants offering specialist investor/corporate access services)

SRI-CONNECT support

SRI-CONNECT aims to enable companies to plan and execute their own investor meetings with ease.  Specifically:

• SRI-CONNECT Profiles - enable companies to build a better picture of which investors and interested in them and what subjects they wish to address
• This report - aims to give them considerable guidance on how to manage the process and to structure their presentations
• The SRI-CONNECT Events function – helps companies to manage the invitation process for group events

However, we still recommend that, for efficiency and reach, companies exploit the added value of a specialist SRI broker and use SRI-CONNECT alongside these services.