Investor Engagement in a Shifting Landscape: How Corporates Should Plan for the Challenges and Opportunities that Lie Ahead
Over the course of 2021, Nasdaq IR Intelligence hosted several virtual events in conjunction with AIR and IR Club.ch, the Italian and Swiss Investor Relations associations. Panelists featured Marco Vironda at Azimut Investments S.A., John Gilmore at Martin Currie Investment Management Ltd., Neal Howell at Nasdaq IR Intelligence and Anna Maria Scaglia, Head of Investor Relations at Italgas S.p.A. As we optimistically looked ahead and beyond the pandemic, our buy-side and corporate panelists shared their perspectives on the future of investor engagement, and in particular, the challenge for corporates to attract long-term capital from international and generalist investors. We discussed how investors have adjusted to the new virtual landscape and what they foresaw as a return to normal from a corporate access perspective.
Hybrid investor engagement approach is here to stay
The Covid-19 pandemic has changed the ways in which companies communicate with shareholders and prospective investors. Panelists commented that while the virtual landscape has helped corporates and investors to be more efficient in their engagement activities and virtually meet investors in geographies further afield, it has also presented challenges, especially in meeting new investors.
“For new investments, it has been a challenge in the due diligence process to get the same kind of depth of management access and the authenticity and quality of interaction, which can suffer in a virtual format where you don’t have that long-standing relationship. It’s been more challenging to translate the quality of those interactions into investment decisions where the relationships haven’t been as long-tenured,” said John Gilmore of Martin Currie.
Neal Howell from Nasdaq’s IR Intelligence team commented how corporates have leveraged new corporate access technology to schedule virtual meetings with existing and prospective investors. “During the pandemic, we’ve seen increased usage of Nasdaq ConnectIR corporate access enablement technology as IROs have sought to schedule virtual meetings with investors more efficiently. In fact, we are approaching 10,000 booked meetings by corporates with investors, a milestone that certainly shows how popular this tool has become for IR teams.”
The pandemic has reshaped the mechanisms between asset owners and companies.Marco Vironda, Azimut Investments S.A.
All panelists agreed that a gradual return to in-person meetings for prospect investors and key shareholders will be important in the future. Anna Maria Scaglia of Italgas concurred, saying that in-person meetings help to establish that relationship of trust that an investor needs to invest in a company. “There is a degree of an established relationship—especially with long-term investors—that is very important,” according to Scaglia.
Investor conferences are critical idea generation opportunities
We asked panelists to share their views on investor conferences as marketing tools and whether they still add value. Overall, feedback was positive that investor conferences and capital markets days are very valuable, especially from an idea generation standpoint and for corporates to engage with prospective investors.
As a corporate, investor conferences that are well attended can be useful for the exchange for everyone; idea generation flow is actually a flow. It’s also an opportunity for the CEOs to see their peers.Anna Maria Scaglia, Head of Investor Relations, Italgas S.p.A
Martin Currie’s John Gilmore encouraged companies to plan hybrid investor events to allow investors the choice to attend some meetings in person or virtually. “I would encourage corporates that are planning an investor day to have them as a hybrid event that will be very valuable. You will get some in-person attendees, but full normalization might take until 2022 until we ramp up.”
However, as both asset managers and corporates are under pressure to reduce carbon emissions due to new regulatory requirements and frameworks such as TCFD, panelists highlighted that business travel is likely to be scrutinized with an aim to reduce carbon footprint and eliminate unnecessary travel. Although the EU has delayed the second phase of its Sustainable Finance Disclosure Regulation (SFDR) until July 2022, new mandatory ESG disclosure obligations are coming, and asset managers are increasingly scrutinizing the carbon emissions related to business travel.
Martin Currie as a business has been looking at our own carbon footprint, and a significant proportion of our emissions are as a function of business travel. We will be looking to leverage technology to attend virtual events where they are not the highest priority events. We will be keen to maintain the flexibility to have a hybrid of both virtual and in-person meetings.John Gilmore, Martin Currie Investment Management Ltd.
ESG materiality and corporate societal contributions
Finally, panelists discussed how ESG factors continue to be increasingly important and have moved mainstream globally. For corporates and investors, challenges exist as both sides face new regulation and reporting requirements from regulators, ESG rating agencies and frameworks.
“ESG is a journey,” according to Anna Maria Scaglia at Italgas S.p.A. “We are at a point where there is a lack of standardization, and a lot of requirements are coming, but we don’t always have all the details to fulfill those requirements. There is a degree of complexity, and we are adapting like everyone.”
Martin Currie spoke of the importance of management teams focusing on the most material ESG aspects to a company’s specific business, despite the expanse of ESG data requested by data providers and ESG frameworks.
“The data requested from a data provider and regulatory perspective has increased, but the very heart of what we are trying to do hasn’t changed at all,” says Gilmore. “My advice is to really focus on making sure that senior leadership own that narrative and can show how that’s being integrated into the strategic development of the business overall. That makes that communication around ESG much more authentic to end investors and much more impactful.”
We are really interested in the most material aspects of that ESG data and context for your business. This is an opportunity for management teams to input and control the narrative around ESG.John Gilmore, Martin Currie Investment Management Ltd.
Lastly, emerging ESG trends include a greater investor focus on a companies’ societal contributions and the positive impact they have on communities.
“Increasingly, we are looking to do more structured work on the positive impact that companies create,” says John Gilmore of Martin Currie. “Not just in terms of companies’ behavior, but in terms of the contribution they have in terms of key societal challenges. We think that is something investors will want to hear about over time.”