ESG roadshows: C-suite isn’t a necessity, says corporate access firm InterAxS Global
‘The head of sustainability or inclusion and diversity, company secretary or head of IR are all sufficient,’ Cathy Norbury, co-founder of InterAxS Global, tells IR Magazine, talking about corporate access for ESG-driven meetings. And because ‘ESG roadshows do not need to involve the C-suite, you’re not leaning on management for more time,’ adds Lucy Richardson, the corporate access firm’s other co-founder.
Although dedicated ESG roadshows aren’t quite the norm, they are certainly on the rise: 15 percent of companies held an ESG roadshow in the 12 months covered by the IR Magazine Global Roadshow Report 2020 – but 40 percent said they were planning to hold a dedicated ESG roadshow in 2021.
‘There are a lot of ESG analysts, dedicated specialists and thematic funds that don’t get the time they need with companies,’ explains Richardson, adding that ESG has historically been just one or two questions at the end of a traditional meeting. ‘I don’t think you need to steer away from that: the portfolio managers who meet companies at fundamental roadshows still require that time.’
But there’s a lot to cover in ESG, and Norbury and Richardson say holding a dedicated ESG roadshow rather than trying to incorporate sustainability across all meetings means you can go into that extra depth – as well as meeting new investors from an ever-growing list of sustainability-focused funds.
It also makes sense to split the two because, traditionally, ESG portfolio managers might invest in a large number of companies across different sectors, explains Norbury: ‘Mainstream analysts might cover 10 companies in a sector. An ESG manager may not cover one particular sector, and could cover multiple companies across sectors.’
What that means is that these investors and analysts may not have the in-depth company knowledge a sector analyst would and therefore highly appreciate an ESG-dedicated meeting.
‘We often advise IROs and sustainability heads to use the first 10 minutes of the meeting to give a quick overview of the company and its sustainability approach,’ Norbury continues. ‘This would not be required for a mainstream analyst who’s known the company for many years.’
Norbury recommends companies undertake a sustainability roadshow twice a year, but stresses that these don’t have to be governed by the timing of results. Richardson adds that from InterAxS Global’s point of view, uptake is good. ‘[These] roadshows are well received. We do not struggle to fill sustainability roadshows with dedicated ESG representatives,’ she says.
These investors also value the time they’re afforded, and the pair note that feedback is often very detailed. ‘ESG investors appreciate the outreach and are very happy to reflect on what they would like to see next from a company,’ explains Richardson.
So why aren’t more companies putting on dedicated ESG roadshows? One factor is that people sometimes feel out of their depth given how broad an umbrella ESG can be. InterAxS Global has been working with SRI-CONNECT on a project for the World Business Council for Sustainable Development to build a resource hub for IROs wanting to better communicate around sustainability issues. But Norbury and Richards say ESG investors don’t expect companies to have every answer to hand and issues outside of the main focus of the meeting can be covered in other materials.
The pair note that often, companies already have everything they need to communicate their ESG strategy to investors. ‘You’ll often find that if you go onto a company’s website, it will have some sort of branding around sustainability strategy,’ says Richardson. ‘It’s really just pushing that out in a constructive way and making sure the firm meets the right fund managers – because there is sustainability money, and there are funds that are actively looking to deploy capital around sustainability strategies. In our experience, giving those analysts and portfolio managers airtime with the right people within a corporate is highly valued.’