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Apr 01, 2022

IROs warned ESG is Trojan Horse for activists

Small caps especially susceptible to activists, note panelists at IR Magazine Think Tank – West Coast

Attendees of the IR Magazine Think Tank – West Coast were urged to develop good, consistent messaging to their investors before an activist does, as activist campaigns are starting earlier than ever before.

IROs at the in-person event in Palo Alto heard that ESG is a Trojan Horse for activists and ‘part of the activist playbook’, to be used as leverage for profit and not in genuine support of ESG values. The panel’s advice was to get share prices up and be better and consistent with messaging. It was never too early to keep management in the loop about an activist threat, attendees heard.

IROs were advised to recruit allies within their company to help get the ESG story they want to present. They were told to pick bite-sized aspects that are practical and material to their company and identify what brings the most risk or opportunity to the business. ‘This is not an all-or-nothing exercise,’ delegates heard. ‘Whatever you pick, make sure it is consistent throughout your messaging – reporting and disclosures.’

IROs agreed that competition for the time and resources of investors and management is the highest it has ever been, and that they need to be more discerning of the meetings they set up.

‘Higher-quality meetings are always better than treating it like a numbers game,’ a panelist noted. ‘Work with your brokers to reach your goals – allocate them the time, understand their financial motivation, understand how you can give them a win while also getting the meetings you want. Own your targeting efforts.’

‘Content is king’

Attendees were called on to be prepared to talk about all kinds of ESG metrics. No longer is it just about climate change or greenhouse gases. IROs need to be ready to answer questions about executive compensation, diversity and inclusion metrics, too.

‘Don’t water down your message with multiple metrics; focus on being clear and consistent with the ones that are material to your business – and part of the new SEC requirements,’ delegates heard.

When it comes to messaging, content is king. Irrespective of the channel used – be it an in-person event or virtual – good content will shine. Social media was hailed as a great way to get messaging out but the advice was to work on the ROI for each channel to decide which is best for the IRO. ‘If content is king, consistency is the queen,’ delegates were told. ‘You will know you have arrived when an analyst starts to parrot your messaging.’

The IR Magazine Think Tank – West Coast involved a series of panels followed by roundtable discussions on a variety of topics. Each table gave invaluable feedback to the whole audience.

The IR Magazine Think Tank – East Coast returns in person to New York on May 18. The invitation-only event is exclusively for senior IR officers and free to attend. Request your invitation here.

James Beech

James Beech joined IR Media Group as editor-in-chief of IR Magazine and Corporate Secretary in January 2022. He was a multimedia journalist, editor, client relationship manager, awards host and public speaker at Campden Wealth, for and about the...