Event Highlights | Rewiring the Ecosystem for Resilience: Q&A session with investors
On the 7th July we held our third webinar in the series on ‘Rewiring the Ecosystem for Resilience.’
In it, Sallie Pilot, Chief Insight and Engagement Officer at Black Sun, spoke to investors Mirza Baig from Aviva and Sacha Sadan from Legal & General. The live Q&A approach allowed our panel to answer a range of questions about the evolving needs of investors and share their advice to corporates and Boards who want to communicate more effectively.
The full video of the session is available here and a brief summary follows below:
ESG in the limelight
Sacha and Mizra commented on how a few years ago, ESG conversations were rare, but now they are mainstream – touching all kinds of investor engagement. 79% of our event participants confirmed that ESG issues are coming up more often with investors. The two panellists noted that unfortunately, some company actions during COVID-19 seemed very short term, such as restructuring employment contracts or pressurising suppliers. Actions like these may erode confidence in a company’s abilities to regroup and prosper in the longer term when the economy bounces back, and better integration of ESG considerations would help avoid this. Sacha summed this up saying, “from an investor point of view, the way companies react to this [crisis] often impacts how they create value, and how successful they are for the next decade. So in the changes being made, don’t get rid of the muscle when you get rid of the fat.” Encouragingly, 50% of participants believe that their Board currently see ESG as a Board-level issue, and almost all the others confirmed that their Boards are beginning to see it as a Board-level issue (43%).
Do investors read the annual report?
When asked if investors actually read the report, Sacha commented that investors use the reports in the good times and bad. They will pick out nuggets of insight and sample portions of the report to compare with others in order to inform their view. In his opinion, it’s a good place to start the corporate conversation because it remains an audited repository of consistent data, and also an area where corporates can control the narrative. This is important in an era of mass media and social media, where owning the narrative is increasingly challenging. Mizra agreed, emphasizing the role of the report as a ‘shop window’ where the building blocks of a company’s investment case can be set out. He highlighted examples such as explaining industry trends that have impacted the business, promoting confidence in the leadership team, laying out the competitive advantages of financial and non-financial assets, and showcasing the results of the strategy. Annual reports have the capability to explicitly and implicitly build a trust and confidence in the long term prospects of the business.
The Six Principles are gaining increased importance
Sallie outlined the Six Principles of Trust from the ‘Rewiring the Ecosystem for Resilience’ research. Black Sun believe that these are more than communication considerations, but rather overarching principles that should be on the Board agenda to enable companies to prosper over the long-term while contributing positively to society. The Six Principles are Purpose, Culture, Cognitive Diversity, Stakeholder Engagement, Responsible Business, Transformational and Long-term thinking.
Our panel highlighted the inter-connectivity between each of these and how the Principles have likely never been as relevant as they are today, especially in light of COVID-19 and the growing desire for corporate to contribute to ‘building back better.’ Mizra commented on Trust and Responsible Business in particular, saying how “Investment is about delegation, and delegation is about trust to deliver the outcomes that our clients need. All of the Principles are vital and interdependent but if I was to pick out one, it would be Responsible Business. Responsible conduct is the manifestation of a responsible corporate culture.” An excellent summation from Mizra, was that for any investor “disclosure, accountability and behaviour are inextricably linked.”
Sacha highlighted Culture and Purpose among the Principles, explaining that purpose with effective linkages to strategy is vital. “[Purpose] should be reflected throughout the company and should something that people within them can stand by and support. When you ask people about purpose at various levels of the business, they should give you a similar answer and a similar view of how it affects the business.”
Tell a consistent story
Investors of all kinds rely on qualitative and quantitative data to make their decisions. When it comes to quantitative data, investors want to see industry metrics over time and they should be comparable, which is contributing to frameworks like TCFD and SASB becoming more mainstream. Although there is growing support for standardisation and alignment of global frameworks to support more relevant data, they advised that corporates need to listen to their top investors and to take the lead to communicate about the issues and metrics that matter most to them.
- Will green bonds become more commonplace? According to Sacha, yes - they will be bigger and will get more attention, but they will not be a game changer.
- Your view on virtual AGM’s? Mizra stated that they don’t mind hybrid AGM’s, but never a completely remote. “It’s an important accountability tool and AGM’s are essential for anyone, not just investors, to come up and ask questions.” According to Sacha “It’s also great to have websites and investor slide packs that are integrated, referring data/information back to the Annual Report for credibility. It’s also encouraging to see more Board and Executive level ESG events where conversations about a company’s committee actions, for example, can be discussed.”
- Corporate websites vs Annual reports for primary information? Sacha said “The Annual Report is our start as it is audited, the corporate website is useful for more dynamic updates.
- Will investors continue to use alternative data sources? Yes, these supplement the perspective of the company, often providing additional information that may not always be positive, but that remains relevant. For example employee opinions of CEO’s on platforms such as Glassdoor can be useful. Sacha mentioned that these softer communication touchpoints will be more important going forward.
- Do investors think that ESG rating agency questionnaires are effective? They can be, but look at what your top 15 shareholders look at and focus on these. Also, make sure your details are correct, sometimes the information is not accurate and needs to be amended.
- What do you think will get increased attention going forward? Tax transparency - especially in light of COVID-19, Diversity and ethnicity reporting, Company’s demonstrating that they are positive agents of change in a wider ecosystem and because of that – improved consistency of messaging. The latter is likely to manifest most in statements and communications from the CEO and CFOs as they are often the “accountable face” for the business’s performance.
How we can help?
- Led by insight - We provide research-led consultancy insights to enhance communications and support better practice reporting. This includes regulatory advice, consultancy for ESG and Sustainability, as well as benchmarking. We can also help frame and inform your COVID-19 report communications, and give advice and guidance on how to best communicate and engage with your stakeholders through various platforms.
- Communications planning – We can work with you to develop a communications plan that ensures a coherent and consistent suite of messages are delivered in a seamless and integrated way through all your touchpoints.
- Connecting through film - One of the most powerful ways to reach remote audiences is to harness the power of film. We would recommend including rich media such as video or animations in your communications mix.
- Engaging your remote workforce – This will remain one of the biggest challenges facing organisations even beyond the pandemic. We can help you connect and engage with your employees by developing internal communications programmes and by opening new digital engagement channels such as employee Apps.
- Sustaining your voice through digital marketing – We can help to sustain your external communications, across social media, through broadcast channels such as email, and ensure that you stay relevant and connected with your stakeholders.
- Measuring engagement and interactions - As more communications go online, your company will need to understand how people are engaging with you. We can help you develop measurements and analytics that give you the insight to continuously improve the effectiveness of your communications.
If you would like to find out how else we can support you, please contact our Senior Business Developer Naomi Hawkins.
Black Sun is a stakeholder communications company. We help businesses to communicate authentically how they deliver value to inspire, engage and influence their important stakeholders. We believe that inspiring strategic communications can spark positive change and drive long-term, sustainable performance. We want to work with companies who want to build better businesses through better communications.