It should not come as breaking news that investors are taking a growing interest in the environmental, social and governance (ESG) performance of the companies in which they invest.
The scrutiny is not only coming from the growing market of responsible investors; mainstream investors too are looking more closely at ESG and continue to look beyond short-term investment horizons to the creation of longer term shareholder value.
Issues like modern slavery, financial climate risk, energy transition, responsible tax practices and impact investment were simply not part of investors’ vocabulary just a few years ago, but are commonly discussed today. And the way in which companies proactively respond to the ESG expectations of their investors has a positive correlation on the cost of capital.
Analysts expect this trend to accelerate as the socially-conscious generations who grew up with global challenges like climate change and runaway population growth begin to wield greater investment power.
So, now more than ever, it’s critical for companies to engage with investors on ESG, and to shape their ESG messages to meet investors’ expectations.
This briefing document is primarily targeted at Investor Relations (IR) teams to help them successfully target ESG messaging to current and prospective investors.
Understanding investors’ expectations is an important task for management and the Board, it helps to guide management decisions on strategy and strategy related internal processes. But how should investors’ ESG expectations be answered?