Where to start with ESG roadshows
Brian Matt, director of research and analysis at IHS Markit, spoke to IR Magazine about ESG roadshows, among other topics, during a video interview at the ESG Integration Forum – Europe 2019, hosted by IR Magazine and online sister publication Corporate Secretary.
According to IR Magazine research, 16 percent of European companies were involved in an ESG roadshow last year, compared with just 2 percent in North America and 4 percent in Asia.
‘[In the US] you do occasionally see some folks involved more in the stewardship discussions, supporting the voting decision, getting out to see some of the larger passive investors,’ said Matt. ‘Really, dedicated ESG roadshows for the investment decision exist primarily in Europe. You see that as fairly common in London, in Paris.’
When planning an ESG roadshow, you should start with the existing relationships you have with portfolio managers and buy-side analysts, said Matt. ‘They’ll [often] arrange for the right people to be in the room from an E, S or G perspective, whether it’s a stewardship team that’s involved in the voting side, or someone [who works with] ESG data coming in,’ he said.
‘Working closely with those primary fundamental analysts is usually the way to start, but sometimes you want to reach outside of that. Sometimes there are thematic investors that run their own portfolios, separate from what fundamental investors look at. Sometimes reaching out to them separately and inviting them into the room makes sense, too.’
During the interview, Matt also discussed what role IR should play in ESG communications. ‘There are going to be companies where environmental or social functions are part of the bottom line, part of the business model,’ he said. ‘So sometimes you see a company that’s in the renewable energy business [that] has that entire function existing within an operational department.’
No matter how the company is set up, however, IR should have the final responsibility for deciding what’s public and non-public information. ‘IR does that better than anyone else in the company, so I believe it should own that where possible,’ Matt said.
IR teams can also bring market intelligence into the company about which ESG-related issues are most important to investors, he continued. The IR department can act as the ‘filter’ for that information and distill it down into ‘what the shareholder thinks we should possibly be adding to disclosure, or maybe things we should be changing in terms of our operations.’