The January 2003 “Stay Tuned” column authored by Hank Boerner.


HANK BOERNER’S ST AY TUNED...


Stay Tuned . . . toTHE NEW YEAR!!


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Ahh, what a decade this will be to reflect on when the history of this era is written. Just two years into the 21st century and we have experienced a recession, the collapse of a roaring bull market, the re-emergence of Old Economy investing rules, seemingly endless corpo- rate scandals, the humiliating resignation of the SEC chairman, unprecedented accounting practices reform, state attorney general-enforced dis-assembling of tradi- tional financial research units at leading investment banking houses, passage of the most sweeping securi- ties protection laws in 60 years, and on and on and on. In 2003, IROs will be inundated with more news, information and gossip about new laws, changes in operating rules of the road, stricter securities/consumer protection regulations, and rigorous enhancements of the codes of conducts for licensed professionals. The long-term effects of Sarbanes-Oxley legislation will hang in the air over most developments in the practice of investor relations. So what is it that you should tune in to in the new year? Here’s our checklist:


Stay Tuned to . . . the owners of the enterprise.


Yes, the “owners” really do count. Many of the provi- sions of S-O, SEC rules now evolving out of the new law, the New York Stock Exchange’s pending listed company rules and other formal/official guidelines for corporate behavior center on restoring confidence and trust in the markets. Whose trust? The shareowners! There are 100 million Americans who invest on a direct and indirect basis in the equities markets, NIRI President Lou Thompson has made it clear in speeches across the nation — they are upset and angry about the $7 trillion they have lost in the market over the past three years.


14 JANUAR Y 2003


The good news is that IROs can be the Jimminy Crickets of their companies in 2003 by constantly whis- pering in management’s ear: “It’s about the shareown- ers!” Companies can avoid trouble in 2003 by asking, “Are we doing the right thing for the owners?” Regulators will be reminding everyone of the impor- tance of this by issuing proclamations, rulemaking actions, enforcements and directives; here is your chance to get ahead of the events.


Stay Tuned to . . . new sheriffs on the beat. You


won’t be alone in advancing your internal warnings. S-O has the potential to change the way corporate lawyers do their job. In effect, the new law “federal- izes” and deputizes corporate counsel and requires (just how depends on the final rules adopted) lawyers to bring certain wrongdoing to the attention of senior cor- porate officers and if that fails, to the board of direc- tors. S-O fundamentally envisions the lawyer’s client as the shareholder—not management, not the board. New cops on the beat could also include whistleblow- ers. Not only are they afforded greater protection under S-O, but anyone who interferes with them could find themselves facing criminal prosecution as well as civil lawsuits. Board audit committees will be developing rules for hearing the concerns of employees regarding accounting or auditing issues. Some companies are already hiring outside independent private sector inspector generals to handle whispers, a new form of cop-on-the-beat for public corporations.


Stay Tuned to . . . new rules governing boards of


director behavior. First, the key word to remember is “independence.” Think of this as board mantra: We will


INVESTOR RELATIONS update


more of the same but more fast-paced and with much more complex characteristics. Rapidly evolving global environmental,


social and governance (ESG) reporting poli- cies and mandates—combined with new and often converging reporting standards focused on material ESG topics and issues— will pull IROs deeper into this complex and maturing playing field. Regulations out of the European Union


(EU) such as the Corporate Sustainability Reporting Directive are empowering the cre- ation of new standards such as the European Sustainability Reporting Standards, which build on voluntary frameworks (GRI Stan- dards and the GHG protocol, among others). With the creation of the IFRS Founda-


tion International Sustainability Standards Board global baseline for investor focused ESG disclosure, the organization has now formally absorbed the voluntary frameworks of the Task Force for Climate Related Dis- closures, (created by the Financial Stability Board) and the Sustainability Accounting Standards Board (created by U.S. investors). Here in the United States, the Securities


here are his own” and that “he welcomes questions, comments and notes.” So we took Hank up on that offer, asking him to comment on what he wrote in 2003 and what is different and what is similar from that earlier era. Hank is now Chair & Chief Strategist at


the Governance & Accountability Institute. Here’s what he says today:


For a decade I wrote the “Stay Tuned” column inIR Update, examining trends that


niri.org/ irupdate


would result in near-term and long-term changes that would in various ways shape the very nature of the IR function and the nuts and bolts of corporate financial disclosure. In the 2003 column, I was advising to stay tuned to the needs and expectations of “owners.” Writing today, I would say “stake-


holders”—we are firmly fixed in the era of stakeholder capitalism (yes, a primary stakeholder is our investor). What I see today is as profoundly impacting on the IR function and corporate disclosure with


and Exchange Commission (SEC) is poised to issue a Final Rule for financially related climate change disclosure designed to fully integrate corporate financial and climate reporting. Te EU is busy creating report- ing rules for companies and investors that many firms in the United States will be required to file. Te EU rules will be similar and way, way beyond what we may see in the SEC rule. If you found my 2003 column useful in


characterizing the changes coming, think of what’s coming as the Sarbanes-Oxley Act of 2002 on steroids. Stay closely tuned to ESG disclosure and reporting—it will change your work over the next decade! IR


Al Rickard, CAE, is Editor-in-Chief of IR Update; arickard@associationvision. com.


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