IR teams can play a key role in helping senior management understand the growing importance of ESG information. That was one of the messages from Kurt Kuehn, former IRO and CFO at UPS, speaking at the IR Magazine Global Forum 2019, which took place in Paris on October 2-3.
Kuehn, who is now a sector chair for transportation and infrastructure with the Sustainability Accounting Standards Board, said there is still a lot of skepticism among CFOs about the value of sustainability reporting.
‘I think that is one of the biggest opportunities for IROs, to understand how the market is changing. The investment community is not consistent – [companies] are all at different points of learning what to do with ESG, but there is a demand for it now,' he said.
IROs can help their CFO 'understand that there is information that the market wants,' said Kuehn. ‘This won’t be the primary decision – you still have cash flow and momentum going on – but the need for insights into the major factors, whether that’s human capital or climate-change impact, is going to be increasingly a part of investment decisions.'
A proponent of sustainability for much of his career, Kuehn helped UPS launch its first sustainability report in 2002. He said a big difference today is that all investors are interested in sustainability, not just specialist funds.
‘They have a huge need for consistent information, year over year, or across companies, and that’s really what SASB is doing,’ Kuehn said. ‘It’s creating a limited set of metrics that investors want, specific to 77 different industries. So it’s really just creating consistent information, much like financial standards do, around sustainability.’
Kuehn also discussed how the IR role has changed during his career. ‘There’s been quite an evolution,’ he noted.
‘When I became an IRO, as UPS went public in 1999, it was certainly not as well defined a profession, the sell side had a lot more power than it does today, and information didn’t flow as much. But there are a lot of common factors: the ability to communicate clearly, to be credible and to know the business for the company you are representing – [these] are critical skills.’
After helping UPS launch the biggest IPO of the 20th century, Kuehn was promoted to senior vice president of worldwide sales and marketing, and later CFO. He said if IROs are doing their jobs ‘fully’, they have a great number of skills that can suit them in other roles.
‘The ability… to communicate credibly and concisely is a big skill that becomes more and more important the higher you move up the ladder,’ he explained.
‘The IRO who is just a mouthpiece perhaps doesn’t grow into that. I think one of the big opportunities for investor relations officers is to get feedback to management on messaging [and] understand the company’s strategy and be able to communicate it. Those skills are a lot of what it takes to be in the C-suite.’
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