Given the intense investor and stakeholder focus on climate risk, ESG and long-term value creation, engagement with shareholders and stakeholders should be a priority. Transparency, authenticity and trust are not only important to investors, but increasingly to employees, customers, suppliers and communities – all of whom are holding companies and boards to account.
To best understand the views of its key stakeholders, the board should request periodic updates from management as to the effectiveness of the company’s engagement activities:
- Does the company engage with and understand the priorities of its largest shareholders and key stakeholders?
- Are the right people engaging with these shareholders and stakeholders – and how is the investor relations (IR) role changing (if at all)?
- What is the board’s position on meeting with investors and stakeholders? Which (independent) directors should be involved?
- What is the culture on the ground? What’s the employee experience?
In short: Is the company providing investors and other stakeholders with a clear, current picture of its performance, challenges and long-term vision – free of “greenwashing”? Investors, other stakeholders, and regulators are increasingly calling out companies and boards on ESG-related claims and commitments that fall short – and all indications are that they will continue to do so.
Strategy, executive remuneration, management performance, climate risk, other ESG initiatives, human capital management and board composition and performance will remain squarely on investors’ radar during the 2022 AGM season. We can also expect investors and stakeholders to focus on how companies are adapting their strategies to address the economic and geopolitical uncertainties and dynamics shaping the business and risk environment in 2022.
While activist investors may be less active in continental Europe than in the US or UK, for example, having an “activist mind-set” can still be a useful tool. Whether you’re listed or unlisted, looking at your company from an activist point of view can help you challenge yourself and your board to think differently and find where you can unlock value.