IR strategies are evolving in response to shifts in investor behaviour, heightened market volatility, and continued pressure regarding ESG reporting and engagement. Read our 14th Global Annual IR Survey to find out what Investor Relations Officers (IROs) from 282 leading companies across the world have told us about their current approach and key priorities for the coming 12 months.
Our findings present a challenging juxtaposition. Companies are accelerating efforts to increase engagement with a broader investor base and are striving to refine their story and tell it through wider ranging channels. At the same time, they find investors preoccupied with macroeconomic and geopolitical developments at the expense of fundamental analysis, and are increasingly challenged when it comes to getting face-time with investors. When investors are ready to take notice of company fundamentals once again, they will find management teams eager to share their newly refined investment cases and board chairs willing to give up more time than ever before to meet with investors to discuss governance matters. What leadership teams may be less eager to discuss is the disconnect between the ESG commitments they have made and the accountability for their ESG performance, as the misalignment with executive remuneration persists. With so much noise in the market, it may seem like no one is paying attention, but the reputational risks of abandoning clear, consistent and authentic communications have never been higher.
Sandra Novakov
Head of IR
Our research findings echo CDR’s own advisory experience over the past year of supporting our global client base as they developed their ESG narratives and navigated the communications challenges of the pandemic. Remarkable progress has been made in sustainability reporting, particularly in Europe, and we expect companies to continue to build on this. But with COP26 highlighting the urgent need to move away from an ‘all talk, no action’ approach, there is more pressure than ever on companies to demonstrate management authenticity and accountability when it comes to ESG strategies. The advantages of being a responsible, forward-looking company should more than offset the time and effort required to make the necessary internal changes to future-proof the business. As long-awaited regulatory changes to ESG disclosure start to emerge, companies must embrace this period as an opportunity to become leaders in the field.
Sandra Novakov
Head of IR
Gaining traction
Engagement tools
Market volatility
Cost of living crisis
Shareholder base evolution
Governance focus
ESG accountability
ESG reporting & engagement
The challenge of gaining traction with potential investors
Reinforcing existing and building new relationships is the main priority for companies over the next 12 months. However, thanks to both management and investor reluctance, obtaining face-to-face meetings can be a real challenge. Companies also report a broader challenge of gaining traction with targeted investor groups, such as those located outside their home market or following a specific investment strategy.
Key tools deployed to drive engagement
We see continued popularity of Capital Markets Days (CMDs) as a key tool to reignite engagement. Our findings show that these events have evolved, with the hybrid format increasingly seen as standard and virtual elements, such as remote speakers and virtual site visits, increasingly being incorporated into events. Social media use for investor engagement remains mainly limited to LinkedIn and Twitter posts highlighting key developments, or sharing of video content via YouTube.
The impact of heightened market volatility
Volatile macroeconomic and geopolitical conditions across the world are presenting a myriad of challenges for listed companies, which cite negative market sentiment and short-termism among investors as a key obstacle to achieving their goals. IR teams complain of investor apathy and lack of fundamental analysis among potential shareholders, as well as challenges when it comes to expectation management and achieving differentiation from investment peers.
Cost of living crisis response
Stakeholders are scrutinising the way in which companies are responding to rising inflation and interest rates, and the resulting pressure on household incomes. Our findings show a key focus on cost cutting as an immediate response to mitigate these impacts, with initiatives to address a broader range of issues taking more time to emerge.
Implications of evolving shareholder bases
The meteoric rise in passive investment since 2005 and growing number of retail investors have had significant implications for IR strategies around the world. Over a third of our respondents have increased their engagement with passive shareholders over the past 3 years by proactively offering meetings and offering to discuss ESG strategy and performance. In response to increased retail investor activity, companies are simplifying investor facing materials, increasing use of social media and video content, participating in retail investor events and hosting dedicated events of their own.
Top 5 ESG issues
Although companies are not seeing an increase in activism overall, there is increasing engagement with companies on ESG issues. The top ESG issues where companies are seeing increased investor pressure are executive remuneration, GHG emissions, board composition, employee engagement, D&I, and supply chain management.
The importance of governance in challenging times
Outside of GHG emissions, other top issues driving investor engagement focus on social and governance concerns. The increased focus on governance is reflected in how often chairs meet investors outside of AGMs, with a third of respondents reporting that their company chair spends 3 or more days meeting investors outside of the AGM.
Continued rise of the sustainability committee
The number of companies with a dedicated sustainability committee at board level is up to 58% (74% among large cap companies). However, many boards remain light on experience in managing sustainability issues.
Implications of evolving shareholder bases
The meteoric rise in passive investment since 2005 and growing number of retail investors, have had significant implications for IR strategies around the world. Over a third of our respondents have increased their engagement with passive shareholders over the past 3 years by proactively offering meetings and offering to discuss ESG strategy and performance. In response to increased retail investor activity, companies are simplifying investor facing materials, increasing use of social media and video content, participating in retail investor events and hosting dedicated events of their own.
Top 5 ESG issues
Although companies are not seeing an increase in activism overall, there is increasing engagement with companies on ESG issues. The top ESG issues where companies are seeing increased investor pressure are executive remuneration, GHG emissions, board composition, employee engagement, D&I, and supply chain management.
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The importance of governance in challenging times
Outside of GHG emissions, other top issues driving investor engagement focus on social and governance concerns. The increased focus on governance is reflected in how often chairs meet investors outside of AGMs, with a third of respondents reporting that their company chair spends 3 or more days meeting investors outside of the AGM.
Continued rise of the sustainability committee
The number of companies with a dedicated sustainability committee at board level is up to 58% (74% among large cap companies). However, many boards remain light on experience in managing sustainability issues.
Slow progress in addressing accountability for ESG performance
At most companies there is still no meaningful link between executive pay and ESG-related KPIs. 75% have less than 10% of executive remuneration linked to ESG targets (2021: 81%) and of this, 42% have 0% of executive pay linked to ESG targets.
The challenge of keeping up with ESG standards
As companies grapple with increased focus on ESG issues more generally, 29% of IR teams see ESG reporting and engagement as one of their key challenges at present. GRI remains the most popular choice, with 54% of respondents adhering to this in their sustainability reporting, followed by the UN Sustainable Development Goals (42%) and TCFD (41%).
Increasing integration of ESG into overall narrative
Although many companies cite this as a challenge, an ever-rising number are integrating their sustainability narrative into ongoing reporting and newsflow - 53% now regularly reference sustainability in their results materials, up from 45% last year.
Growing popularity of dedicated ESG events
Dedicated ESG events continue to gain in popularity as companies seek to proactively communicate their achievements to the market – 35% of companies have attended a dedicated ESG conference over the past 12 months, while 12% have hosted their own ESG event.
Rising IR budgets and responsibilities
Following a period of declining budgets and for the first time since the launch of CDR’s IR survey in 2009, 36% respondents reported an increase in IR budgets versus the previous year. The responsibilities of IR teams are also evolving, with 65% of respondents having additional responsibilities alongside their core IR role.