Advisory Intelligence: IROs see remit grow during tumultuous year
Amid the tumultuous events of 2020, the remit and influence of IR teams expanded considerably, according to new research from Nasdaq: the Global IR Issuer Pulse survey, which polled more than 450 IR professionals, finds 96 percent manage responsibilities outside of IR.
Underlining the growing focus on non-financial information, 35 percent of additional duties relate to ESG, corporate responsibility or corporate sustainability – a sharp rise from 14 percent in the 2019 survey. IROs also report duties in corporate communications, strategy, financial planning & analysis, treasury and M&A, among other areas.
‘The IR role continues to evolve alongside the way market dynamics are shaping up,’ says Foli Pontillo, global head of perception at Nasdaq IR Intelligence. ‘IR professionals are more empowered than ever. They are playing a significant and sustainable role in strategic decision-making.’
Conducted at the end of last year, the survey gave IROs the chance to look back on a dramatic year marked by the Covid-19 outbreak, a global recession, protests over racial inequality and significant political uncertainty.
For IR teams, one of the biggest impacts of the pandemic has been the shift from in-person to virtual meetings and events. Nasdaq’s report underlines the extent of this change: 46 percent of respondents either held a virtual investor or analyst day in 2020, or plan to hold one in the first half of 2021.
IR teams had to ‘figure out’ how to stay engaged with the investment community amid the switch to virtual, says Daniel Bannister, a senior perception analyst at Nasdaq IR Intelligence. The embrace of virtual events shows the desire to ‘re-establish control of the narrative,’ he explains.
Pontillo says some of the executives her team works with have become accustomed to the virtual environment and a future challenge for IROs – when societies open up again – may be convincing management to get back on the road.
‘In the past, we always thought about in-person [meetings] as the best way to communicate with the investment community,’ she says. ‘But that’s definitely changing because of the efficiency and convenience [of virtual outreach]. Investors have shared similar experiences – they’ve been able to do more meetings than ever.’
The research further asks IROs what they view as the greatest challenges facing the profession. While attracting capital remains a key focus, two areas have grown in importance since the previous year: understanding and navigating the ESG landscape, and messaging around guidance and forecasts.
‘We have more and more corporates that are really singling out ESG as a point of focus,’ says Bannister. ‘A lot of companies feel this is an opportunity to be differentiated, and they’re trying to integrate ESG into their overall equity story.’
Turning to guidance and forecasts, he says this was an area where many companies reached out for support over the last year: ‘We received a lot of queries around how to not only guide, but also message around delayed strategy execution due to Covid.’
While it depends on the sector, Bannister says many companies still face a tremendous amount of uncertainty and this is making it difficult to bring back guidance. ‘Investors are saying it’s okay to not put out guidance if there’s not the visibility to do so. But once there is clearer path forward, it would be extremely useful to express confidence about where the company is going and re-establish control of the narrative,’ he explains.
Pontillo encourages IR professionals to use the Global Issuer Pulse insights to validate the work they are doing. The research is a benchmarking tool for IR programs and an effective way to get buy-in from senior management on a refreshed agenda based on best practices, she explains: ‘The results can certainly be used to shape and elevate the IR program.’