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Dec 28, 2023

Navigating the greener horizon: How IR will be transformed by COP28, and what you should do

Müge Yücel, who attended the climate conference, explores the implication of the latest agreement

I have just returned from the important COP28 in Dubai with profound observations that sound louder than the winds in the desert. As an experienced IR professional, I am constantly following the developments that are shaping the financial sector. I can confidently say that COP28 represents a significant turning point. It will not only have an impact on climate change but also on how we as IR professionals need to interact with investors in the coming year.

Theme one: Closing the finance gap

Do you remember the enthusiastic pledges made at COP28? The trillions pledged for sustainable projects? This is a considerable amount of money that is ready to be used. And where money flows, investment opportunities thrive.

In our case, this means a significant change in our conversations with investors. Sustainability will no longer be a side note, but a main focus. We need to be prepared to answer investors' questions about our companies’ environmental strategies, plans to tackle climate change and measurable impacts. It's time to abandon any sense of ‘greenwashing’ and embrace true sustainability not only for the good of the planet but also for our financial performance.

What should I do?

The time has come to go deeper. Work with your sustainability team to effectively demonstrate the extent of your company's impact on the climate. Develop investor information materials that accurately quantify your green efforts, such as minimizing carbon emissions, investing in renewable energy and participating in community outreach programs. Transparency and data-driven analysis are essential to building strong relationships.

Theme two: Loss and damage, risks and responsibilities

The undeniable truth of climate change was brought to light during COP28. Discussions around ‘loss and damage’, referring to the irreversible impacts suffered by vulnerable nations, were a reminder not only of compassion but also of the significant financial risks involved.

It is therefore imperative that we also consider vulnerability to climate change when assessing risk. The impacts of floods, droughts and extreme weather events go beyond environmental concerns; they can cause potential disruption to our operations and supply chains and ultimately affect our profits. It is vital that we anticipate requests from investors about our contingency plans and strategies to manage these risks.

What should I do?

Assess how climate change may impact your operations and key markets. Work with sustainability and risk management departments to develop comprehensive strategies to minimize the impact of climate-related risks. Ensure proactive communication with investors about your approach to climate risk management.

Theme three: A fair transition that leaves no one behind

The need to strive for a more sustainable future cannot be ignored by any segment of society. This resounding statement resonated at COP28 and emphasized the need to uphold social justice and strengthen the resilience of vulnerable communities.

For us, this means ensuring that our company's sustainability goals are aligned with social commitments. Shareholders today are more interested in employee wellbeing, community engagement and ethical sourcing practices. Show them how your company is actively working towards fair change, creating green employment opportunities and supporting communities affected by climate change.

What should I do?

Integrate social responsibility indicators into your sustainability reports. Demonstrate your commitment to diversity, equality, and inclusion in your company's green efforts. Encourage collaboration with non-profit organizations and community institutions to ensure a fair and seamless transformation.

Adapting to a greener agenda for IR

COP28 encompassed not only the need to preserve the planet, but also the need to create a roadmap for transforming the financial sector. For IR professionals, it is crucial that we actively guide our companies towards a more sustainable future. Here are some key steps to be successful in this endeavor.

Develop a broad understanding of sustainability terminology and concepts - distinguishing between terms such as 'net zero' and 'nature-based solutions'. You should also familiarize yourself with the ever-changing language around climate action.

Build a bridge between sustainability and finance - help investors understand the financial implications of climate change and the potential benefits of environmentally friendly endeavors.

Transparency and data-driven storytelling are paramount - it's important to not simply explain your efforts, but to showcase them through quantifiable means. By tracking your progress and presenting the compelling story of your company's green journey, you can demonstrate your commitment to sustainability to a knowledgeable audience.

Collaborate with your sustainability colleagues - develop a comprehensive storyline and effectively answer investor inquiries. Remember that collaboration with your sustainability team is critical in accomplishing these tasks.

Sustainability is the key factor that will determine the future of investment. COP 28 undoubtedly underlines this point. To survive in this changing landscape, we need to adapt our expertise, prioritize transparency and become fluent in the language of climate action. In doing so, we can not only guide investors towards green opportunities, but also secure our sustainable prosperity in this promising era.

Remember that change is imminent and it is vital that we embrace it with certainty and chart a course towards a greener future. We can be the voice of reason, the bridge between worlds and ultimately the architects of a more sustainable, profitable future. Let’s make COP 28 the catalyst for a greener IR revolution, shall we?

Müge Yücel

Müge Yücel is director of investor relations and sustainability at Galata Wind Enerji AS. Galata Wind is a renewable energy producer with wind and solar plants. It is known as the first green IPO in Turkey and went public in April 2021. Yücel is...
Director of IR and sustainability at Galata Wind Enerji AS