The investor relations officer and ESG
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Issue #80: A weekly update on responsible investment.
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\\ Weekly Insights \\
As I spend time speaking to more and more companies about their ESG processes… I have noticed a common trend. Responsibility for ESG often sits with the investor relations officer(IRO)? Why? Just consider that nearly every week this newsletter includes a hockey stick growth graph (like the one below by Wall Street Journal) showing the explosive growth of ESG assets under management.
What reasons have we typically heard from companies on why they care about ESG? 1. Pressure from investors, 2. Strategic move by senior leadership (in part due to pressure from investors), 3. Falling behind a peer group in the rating agencies scores, used by investors. Typically, among the first to field this flooding of inbound questions are the company’s IRO.
I really enjoyed this Harvard Business Review article discussing this changing role:
“With investor activism increasing and world markets gripped by uncertainty, CEOs need a new breed of skilled investor relations officer (IRO) to bridge the gap. CEOs must empower the IRO to be a proactive leader, building constructive relationships throughout the shareholder base to help the company mitigate various risks. They need to give the IRO a clear mandate to quarterback investor dialogue and get buy-in around all of the elements of management’s long-term strategy. The IRO must be part of a unified board and C-suite investor planning group, and their responsibilities should include building and sustaining credibility with long-term investors, and providing useful information on a timely basis.”
The 4 major changes they view as needed?
- Articulating strategy: IRO must crisply articulate this alignment to investors with a clear and cogent rationale for long-term value creation.
- Intelligence gathering: The new IRO must become an intelligence agent who has identified the hot-button issues investors care about.
- Cultivating the right investors: IROs must take the offensive, foretelling the decision-making trends among the buy-side analysts.
- Sounding the alarm: IROs must be able to master analytical models as well as white papers written by activists that argue for an alternative business portfolio scenario for the company.
\\ Nossa News \\
Rise FinTech wrote a report on Climate FinTech and we are featured!
“Nossa Data, an alumnus of the 2021 New York Barclays Accelerator, powered by Techstars is streamlining the ESG world for corporates, simplifying all parts of their long and complex reporting journey. Nossa Data provides companies with a platform with simple ESG reporting templates, data collection, workflow optimisation, and robust peer and investor analytics.”
\\ Companies Making Statements \\
- HSBC — Launches $100 Million Climate Finance Initiative. ESG Today.
- Finance for Biodiversity Pledge — Read which financial institutions have joined the pledge.
- Ceres — What should companies be disclosing: (By Ceres).
- Short-, medium-, and long-term targets that are aligned with a 1.5 C pathway
- A credible transition plan for achieving targets,
- How much of the target will be met through the use of carbon credits or carbon removals,
- The GHG crediting programs, suppliers, and projects from which they source carbon credits, and
- Whether their carbon credit purchases are certified under a social and environmental standard.
\\ Top Stories \\
Business schools wake up and smell the (ESG) coffee
By taking a commodity and turning it into a luxury product, Nespresso has generated billions in sales from its coffee pods. Boosted by the endorsement in its adverts of actor George Clooney, the company, owned by Swiss multinational Nestlé, has an annual turnover of SFr5.9bn ($6.3bn). However, Nespresso has come under heavy criticism over the environmental impact of the aluminium pods that end up in landfill, because the metal is not biodegradable. It can be recycled, though. Nespresso turned to NYU Stern School of Business in New York to create a custom executive course, run most years since 2016, to help employees understand coffee sustainability.
Financial Times.
Young voices grow louder in company strategies and values
As these younger generations move up through the workforce everywhere, they will inevitably have a growing influence on how companies are run. Forward-thinking leaders, therefore, are paying attention to how young people think, and what they set as goals or aspirations. Younger people can be better at challenging the status quo. There are many changes in society that companies have to adapt to. There is an increased focus on sustainability where the younger generation has become a driving force for innovative solutions.
Financial Times.
Governance failings impede Asian companies ESG efforts
Asian regulators should tell companies how to reform their boards to better address environmental, social and governance (ESG) challenges, according to recommendations published on Thursday by a regional corporate governance group.” There has been a marked improvement in ESG standards in Asia over the past two years, but corporate governance mechanisms remain fragmented and connections between CG and ESG policies are unclear, limiting meaningful ESG and sustainability efforts,” Jamie Allen, the ACGA secretary general.
Reuters.
ESG-stacked Oatly deputs at $13bn valuation, but execs say plant-based industry ‘still has work to do’
Oatly, the Swedish oat milk company, started trading on the Nasdaq stock exchange today after raising $1.43 billion via an initial public offering. Oatly’s IPO lead underwriters, Morgan Stanley, JPMorgan Chase & Co. and Credit Suisse, will likely have promoted Oatly’s ESG credentials among investors who are reportedly struggling to find enough supply of publicly traded companies to fill ESG quotas. Oatly fits squarely into an ESG portfolio, especially in comparison to many companies being touted as ESG bets.
Agfunder News.
KKR buys sustainability consultancy ERM at $3 billion valuation
International investment firm KKR has acquired a majority stake in global consultancy ERM, in a deal that values the sustainability specialist at as much as $3 billion. Environmental Resources Management (ERM) is a multinational consultancy headquartered in London. The company bills itself as the largest pure-play sustainability consultancy, supporting its clients across their green ambitions from boardroom to boots, with a focus on sustainability strategy and execution, health & safety, and implementing environmental, social and governance (ESG) best practices.
Consultancy UK.
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\\ Weekly Report Feature \\
Decision-useful climate-related information for investors
This paper seeks to highlight the specific climate-related information, in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, that investors consider to be useful when it comes to their own decision-making process. This in turn should guide preparers in the areas that should be focussed and the existing resources available to support them.
Key takeaways
- Reporting is iterative with investors keen to see that the right steps are being taken with climate-related matters and there is a clear pathway to full TCFD reporting;
- Qualitative and quantitative reporting are equally important;
- Climate-related disclosures need to be specific to the company;
- To aid comparability use standardised methodologies when it comes to metrics and scenario analysis;
- Integrate climate-related matters into the mainstream report like they have been integrated into the company’s business process, but appropriately signpost where relevant TCFD disclosures are located.
Unleashing the Potential of Faith-Based Investors for Positive Impact and Sustainability Development
Practitioner report by Taeun Kwon, Blended Finance Research Lead at CSP, and Vitoria Samberger, MA in Strategy and International Management at the University of St. Gallen
Key points:
- Secular investors have a lot to learn from the structures faith-based investors have put in place to align values with investments. These include ethics committees and regular reflective discussions.
- Both types of investors struggle with the lack of knowledge, leadership support, and rigid notions of return when implementing impact-driven investment strategies.
- Negative screening is increasingly supported by engagement activities leading to more tangible and systematic impact. Still, more knowledge on how to bridge aspirations with actions is needed.
\\ Leading Across ESG \\
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Hi, I want to say thank you for subscribing to Nossa Data’s weekly email on ESG. There is a growing expectation that the same way a company’s financial information should be accessible, so should a company’s ESG or non-financial information.
This is why we spend time every week to shine a light on ESG.
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Thank you for joining us on our ESG journey,
Julianne
—
Julianne Sloane
Co-founder of Nossa Data
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