AT THE BELL
Is ESG Dead? W
John Moten, IRC NIRI Chair SVP, Investor Relations Aventiv Technologies
e don’t think so. Addressing environ- mental, social and governance (ESG) issues is just good business practice.
Recent criticisms of corporate ESG initiatives as “socialist” or “woke” companies are not supported by the data. A recent analysis by the Drucker Institute at
Claremont Graduate University suggests that companies incorporating ESG into their cor- porate strategy are more effective and efficient than those that don’t.1
The institute model is ENDNOTES
1 Wall Street Journal, Forget the Term “ESG”. But Don’t Ignore the Power of the Concept. January 25, 2024
2 IR Update, Witnessing an Evolution: Investors Driving Demand for Sustainability Disclosure, September 2017.
3 Bloomberg Professional Services August 8, 2023.
4
https://www.niri.org/ NIRI/media/NIRI/ Advocacy/NIRI_ Updated-ESG_Policy_ Statement_Approved_ Final_2022_1.pdf
2
based on the late management scholar Peter Drucker and measures how companies per- form across five key business areas: customer satisfaction, employee engagement and devel- opment, innovation, social responsibility, and financial strength. The institute’s model shows that focusing on these five areas can influence each other and result in beneficial “reciprocal causation.” In layman’s terms, a corporate strategy incorporating corporate social respon- sibility within their sphere of influence and sus- tainability results in higher cash flow, stronger risk management, and better value creation. NIRI has been a long-term proponent of companies disclosing ESG information pub- licly on matters affecting their business and longer-term strategy. As discussed in a 2017 NIRI IR Update article, “Disclosure isn’t driven by what the company wants to disclose but what investors want to know.”2
Given the sub-
stantial growth in ESG and sustainability asset flows now exceeding $7 trillion in assets under management,3
shareholders and, more broadly,
stakeholders want to know more about com- pany ESG strategies. As investor relations pro- fessionals, we are the nexus between our com- panies and stakeholders. ESG is not a noun but a verb. It is the power of the concept to make
WINT E R 2 0 24 ■ IR UPDAT E
companies more transparent, accountable, and valuable to the stakeholders we serve. More details are available in the “NIRI 2022 Policy Statement on ESG Disclosure” in the Advocacy section of the NIRI website.4
In this Issue In this issue of IR Update, you will find several articles discussing ways to raise your IR program’s visibility. The article, “Taking Investor Days from Good to Excellent,” (page 18) provides tangible suggestions for creating a successful investor day. According to the article, an investor day is a leading source of information about the company. It can highlight the strategic blueprint of the com- pany for stakeholders. It also focuses on practical aspects of creating a successful day, from C-suite messaging to marketing and stagecraft. One of the great tips from the piece is the importance of preparation for Q&A sessions during the day. Many investors report that the Q&A sessions pro- vide great insights about the company. I also found the article, “Alternative
Research Techniques,” (page 26) interesting. It discusses how investors and stakeholders uti- lize primary research methods to understand companies of interest better. While traditional disclosures, such as SEC filings (10-K, 10-Q, and DEF 14A) are traditional methods to understand companies, increasingly, inves- tors are using primary methods of research methods such as online customer review data, onsite visits, and artificial intelligence (AI) to gain greater insight into companies. The article highlights how savvy investor relations professionals can evaluate this data to align better corporate messaging as well as provide corporate intelligence to C-suite executives. Happy Reading! IR
niri.org/ irupdate
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