ESG roadshows: Preparing for tough questions
Hungry for ESG information, investors feel they’re not getting the types of answers they want. In fact, only around one third of investors, on average, think the quality of the ESG reporting they’re seeing meets their needs, according to a PwC global investor survey conducted in fall 2021.
Participants said they could not easily differentiate between firms when it comes to ESG-related performance. ‘Investors question whether much of today’s ESG reporting gives them the relevant, reliable, timely, complete and comparable information they need for effective decision-making,’ notes PwC.
This article is an extract from the recently published Best Practice Report: Conducting an ESG roadshow, sponsored by Nasdaq. Click here to download your copy now for information on why IR needs to be involved in the ESG roadshow, how different companies are setting up their ESG roadshows, whether virtual works for these meetings, and more.
Meeting investors’ information needs is an enormous challenge for executives on an ESG roadshow, especially given the breadth of possible questions a company may be asked. ‘In an ESG roadshow, you just have to be ready for anything,’ says Michael Bennett, vice president of investor relations at Schnitzer Steel.
Prepping for investor questions may even differ by region. ‘In the US, investors are focused on a thematic approach; they’re looking for a company like ours that’s contributing to decarbonization efforts,’ explains Bennett. ‘When we go to Europe, on the other hand, the question topics are much more specific.’
He recalls that at one meeting during his company’s May ESG roadshow in London, the firm held ‘a 15-minute discussion about how we were going to go about targeting Scope 3 emissions, so the conversations can be a little more intimidating.’
Fortunately, investor relations professionals have a wealth of experience preparing management for obscure or highly technical questions. Some minefields to watch for include failing to explain ESG performance or giving insufficient details about a particular ESG controversy. Investors are very attuned to greenwashing and want specifics rather than pleasant-sounding phrases.
Another no-no is concealing information. Remember that rankings by ISS, Glass Lewis and MSCI are public, so it’s extremely unwise to downplay problems a company may have had with these advisory firms.