It shouldn’t be difficult, should it?!
- There are companies whose products and services deliver sustainable outcomes and support sustainable economic transitions.
- There are investors who want to invest their capital into these companies.
However, somehow, all manner of complexity, bureaucracy, smoke and mirrors appears to get in the way of the simple process of:
- Companies knowing which investors are interested in sustainability (product and service) companies
- Companies communicating their (sustainable) equity story to these investors
- Investors heading this story and being able to communicate directly with these companies … and then – investing in them
Much of the blame for this appears to lie with the ‘over-ESG-ification’ of what should be simple.
To redress the balance, we propose:
Five simple, quick, free steps for companies with positive sustainability exposure …
Rather than supplying hundreds of ESG datapoints with often limited and sometimes no relevance to the company’s operations, we encourage companies to keep it simple by articulating clearly their contribution to sustainability and ensuring that it reaches the relevant target audience (managers of sustainability-themed portfolios) by following the following five simple steps:
Step 1: Create and post to the IR pages of your website a short (10-12 slide) Powerpoint presentation
This presentation should describe:
- What your business does (nature and scope of activity, divisional breakdown, summary of growth plans etc)
- How your business activities contributes to mitigating environmental, social or economic (sustainability) challenges
- (Where possible) quantitative measures of the contribution (as a percentage of revenues, of CapEx, of R&D spend … or whatever measure you deem most descriptive of your activities)
- Data on any basic sustainability metrics that you already gather. Keep it simple. Just disclose those that are easy to gather and act as baseline qualifiers for SRI/ESG funds. Don’t get dragged into ticking every box
Step 2: Identify investors likely to be interested in your story ... for free
Use this guide: Show me the (Sustainable) Money to find investment institutions and SRI-Connect’s Directory to find relevant individuals at these. (The latter requires registration with SRI-Connect but this is free and only takes two minutes).
Step 3: Ensure the IR pages of your website are easy for sustainable investors to navigate
Read and apply lessons from SRI-C's benchmarking of companies' sustainable investor communications practice
Contact
Step 4: Post a link to your latest CSR/sustainability report to SRI-Connect's Market Buzz ... for free
A link to your report will then be distributed to the 6,000+ sustainable investor / analyst users of SRI-Connect.
Step 5: Ignore the other demands
This is the hardest step.
Companies should be confident that – having disclosed the essential contribution of your core business to sustainability and a sufficient number (few) baseline metrics to demonstrate that you are acting in good faith – serious investors and efficient research providers will be satisfied with this.
You will be asked by others for 100 datapoints. However, stay confident that 10 is probably the largest number that any investor or research provider can meaningfully use. Actually only 1 or 2 are likely to be relevant ... but understandably they may want to monitor a few more.
Don’t over complicate things
The worst enemy of sustainable capital allocation is over-complication. This traps us all in a Kafka-esque maze of datapoints and ratios that everyone claims that someone else should use … but nobody actually does.
The (only) way for companies to escape the maze is to articulate clearly what they do and why it is sustainable and to ensure that this information (and people ready to answer any questions) are available to investors.
Other resources
Beyond this, companies can improve their visibility with sustainable investors by using the following resources:
- www.sri-connect.com
- www.sustainable-ir.com
- WBCSD: How to: Target investors & analysts
- WBCSD: How to: Organise ESG roadshows and capital markets days
- WBCSD: How to: Prepare messages and data for investors and analysts
- WBCSD: How to: Integrate sustainability into an equity story
- Free tips (for listed companies) on how to improve the efficiency and effectiveness of your communication on sustainability to investors and analysts.
- Sustainable Investor Relations Services from SRI-Connect.
