Parisian takeaways: France’s IR community tackles Mifid II, MAR and ESG

Regulation, activism and ESG topped the agenda at IR Magazine’s inaugural France Think Tank, held earlier this month in Paris.

The think tank was held in association with French IR body Cliff, whose membership includes many of France’s leading listed companies, several of which had representatives on panels or in attendance at the event this year.

It was very fitting, therefore, to have proceedings kicked off by Olivier Psaume, head of IR at information technology firm Sopra Steria in addition to his role as Cliff’s Chairman. Beyond welcoming the 100+ attendees to the event, he gave an overview of Cliff’s latest activities, including its recent conference, and an overview of the challenges facing IR in France.

One of those challenges was identified as the changing face of the sell side, particularly in the wake of Mifid II. Every IRO’s favorite piece of EU legislation had been in play for nine months at the time of the conference, and it proved central to a morning briefing on regulation delivered by Guillaume Cerezo, head of IR at insurance services firm APRIL. Having joined his firm in 2016 just as the new Market Abuse Regulation (MAR) was introduced, Cerezo had helped oversee early compliance and had plenty of tips for the audience about using new regulations as an opportunity to set your firm apart. Among them was using internal stakeholders to not only achieve compliance but also improve efficiency.

The topic was then turned over to the audience to discuss in small groups. Several IROs shared stories of how they were reacting to both MAR and Mifid II, with many saying that the regulation had affected their day-to-day work – but not necessarily for the worse. One consistent story at both mid- and small-cap companies, however, was that the level of research coverage from brokers was falling, and steps needed to be taken to combat this.

Action against activism

Following coffee and pastries – another French tradition that IR Magazine’s traveling contingent was very glad to experience – the forum welcomed DF King’s David Chase Lopes to the stage to grill Ubisoft’s Jean-Benoît Roquette about his experience in organizing a 30-month defense of his company from an activist investor.

The nature of IR Magazine’s think tanks means a lot of the information disclosed is confidential, but Roquette still took the audience through the multi-layered approach that worked for Ubisoft. In particular he highlighted the amount of preparatory work that went into the effort, accounting for company strategy, governance, internal communication and how to work alongside journalists. As Ubisoft is a video game software firm with a finger firmly on the pulse of online and gaming culture, Roquette’s presentation also made use of internet jokes to bring it to life: ‘innovative use of memes’ could yet become an award category at an IR Magazine Event near you…

The next session also focused on smaller discussion groups but adopted a format that is new to several IR Magazine Events this year. Best practice roundtable discussions were scattered around the room, each tackling a different topic – debt IR, crisis management, roadshow planning and targeting strategies – each with a different IR expert at the helm. Attendees could choose three tables to visit for 20 minutes at a time before swapping to another topic, with each session leader summing up his or her table’s takeaways for the audience at the close of the session.

It sparked some interesting conversation, particularly at your correspondent’s table: IROs swapped stories of difficult brokers, of events gone wrong and of the lengths they had gone to in order to track down new pools of equity.

All things ESG

After lunch, Vincent Dufief, CSR IR manager at energy firm Total, led a panel that examined the role of ESG and how it relates to long-term value creation. Dufief described an appreciation for these factors and your company’s long-term health as, in fact, a recognition of your firm’s raison d’être, and said giving investors an insight into your management’s long-term vision would always be a rewarding exercise.

Dufief was joined by ESG-focused representatives from the buy side and sell sides who offered insights into the metrics they used to assess companies, the questions they would like IR to tackle and how the industry is moving from an exclusionary investment approach toward integrating ESG factors into its decision-making. Each panelist agreed the IR website was, as well as a window into the soul of a company, the best place to start tackling ESG engagement.

The theme continued into the afternoon, with the final session of the day providing an opportunity for the audience to hear from the source about what governance issues investors are interested in: Cédric Lavérie, head of French research at ISS, took the audience through the changing face of ESG’s ‘G’ and the changing role of proxy advisers.

He pointed out that for those investors interested in promoting good governance, the same issues continued to crop up in 2018’s proxy season. The ongoing impact of France’s Sapin II law – introduced in June 2017, aiming to promote transparency and curb corporate corruption – is still being felt, but was leading companies to improve disclosure, while ISS is still engaging many French firms on matters relating to ‘le say on pay’.

Lavérie also took time to review the summer’s update to the Afep-Medef corporate governance code for listed corporations, which tasks boards of directors with prioritizing ‘long-term value creation’ and requires regular corporate reviews of how governance information is disclosed. Ultimately, Lavérie said, proxy advisers should not be perceived as the enemy, but rather as a window into those investors whose interests they represent, as well as a valuable source of intelligence for IR.

His words provided a fitting backdrop for the end of a day inn which budding ideas, best practice guidance and – hopefully – life-long contacts were made in the pursuit of a common goal: to strive to improve France’s capital markets and, in particular, its IR function. IR Magazine looks forward to coming back next year to do it all again.