to contemplate and prepare for well-known scenarios you may encounter, as well as leveraging the experiences of peer IROs. Te NIRI Code of Ethics Principle #1 states, “NIRI members


shall observe and abide by all applicable federal, state, and local laws and regulations.” Te case study illustrates how this principle can be tested in real life and how an ethical conflict can be handled.


Hypothetical Case Study #1: Sarah, on the Right Side of the Deal Sarah, a seasoned investor relations (IR) professional, was thrilled to land a new client, Meteoric Motors, a young electric vehicle company. Meteoric Motors was on the rise, and Sarah saw this as a golden opportunity to enhance her career and reputation. However, during her first meeting with Meteoric’s CEO, Alex, a red flag popped up. Alex casually mentioned wanting to “down- play” a recent safety issue with one of its car models to avoid spooking investors. Sarah was immediately uncomfortable with the suggested


approach from the CEO. Te NIRI Code of Ethics, specifically the principle of following all applicable laws, came to mind. Downplaying a safety issue could be a violation of securities laws, not to mention potentially endangering consumers. But turning down a high-profile client could hurt her career. Faced with this ethical dilemma, Sarah reached out to the


NIRI Ethics Council. Te Council reminded her that NIRI has a zero-tolerance policy for illegal activity. Tey advised Sarah to explain the legal risks to Alex and offer to craft a truthful press release that addressed the safety issue and the steps the company was taking to address current and future safety concerns while at the same time maintaining investor and consumer confidence. Sarah met with the CEO again and explained the legal rami-


fications of downplaying the issue and the potential damage to Meteoric’s reputation if this safety issue were to be disclosed later. She emphasized that transparency is key to building long-term trust with investors. Addressing a challenge head-on can be painful for compa- nies in the short term, but eventually the company that deals with an issue in a straight-forward manner will recover with its reputation intact. Management credibility is one of the key tenets of investor confidence. Alex, initially resistant, gained a better perspective on the risks and ultimately agreed to a more transparent approach. Sarah’s commitment to the NIRI Code of Ethics not only pro-


tected her own integrity and career, but also potentially prevented a safety hazard and ensured truthful information for investors.


niri.org/ irupdate


About the NIRI Ethics Council


The NIRI Ethics Council was formed by the NIRI Board of Directors to elevate the impor- tance of ethical issues and provide additional resources to the membership on implement- ing best practices in investor relations. The Council serves as a confidential sounding board and mentor to members regarding ethical matters that may arise during their practice—both for investor relations profes- sionals and those providing products and services to the investor relations community. Information about the NIRI Ethics Council and the NIRI Code of Ethics can be found at www.niri.org/about-niri/ethics-council. To reach the Ethics Council, please email ethics@niri.org.


Tis experience solidified her belief that ethical practices are not just the right thing to do, but also make good business sense.


Lessons Learned Tis story illustrates the importance of NIRI’s principle of following the law. Adhering to the principle does the following: • Protects Investors: Investors rely on accurate information to make informed decisions. NIRI members, to the extent they are included in the communications process, ensure that investors receive clear and transparent information.


• Maintains Market Integrity: Securities laws are intended to prevent manipulation and promote fair markets for the benefit of both public companies and the investment community.


• Mitigates Risk: Abiding by the law protects companies from legal repercussions and reputational damage.


• Upholds Professionalism: Ethical conduct strengthens the reputation of the IR profession. IR


Raj Mehan, P. Eng, CTP, CMA, IRC is Vice President, Finance & Treasurer at Steelcase Inc. and Vice Chair of the NIRI Ethics Council; rmehan@steelcase.com.


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