Environmental, social, and Governance (ESG) investing may not be making the same waves as it did during the pandemic, but these principles continue to guide investor decisions.
Incorporating ESG into your IR strategy can help you enhance your financial performance, tapping into investors who want to support social justice programs, boardroom diversity, and climate change.
While ESG funds may have fallen significantly this year, don’t give up your ESG initiatives. Here are four advantages to communicating your ESG story today.
1. ESG Engagements Tells an Investor Story
ESG events and webpages are ripe with information that can help you understand your shareholder base better. Site traffic and event attendance reveal insights into institutions that follow your ESG story.
IR consulting firm Q4 makes it possible to integrate these engagement metrics into your overall IR platform. You can compare ESG data against other actionable indicators with Q4 engagement analytics software.
Engagement analytics software aggregates all your IR intelligence into one place, making it possible to track our performance against your ESG content. Comparing your ESG initiatives this way can help you see what content lands — and what doesn’t. You can follow these indicators and tweak your story to resonate better with investors who follow your content.
Engagement analytics also give you the insight to identify with individuals and institutions who interact with your brand across your platform. In many cases, these investors are ready for outreach, giving you the means to reach out at the perfect time.
2. The Value of ESG Funds Are on the Upswing
Some headlines suggest ESG funds have plummeted in value, forecasting a gloomy outlook for the future of ESG investing. According to CNN reporter Nicole Goodkind, “ESG investing is dying.”
Despite these alarmist predictions, respected consulting firms such as Price waterhouse Coopers and Bloomberg paint a different picture.
According to a recent PwC report, ESG-based assets under management (AUM) will more than double in the USA. By 2026, PwC expects ESG funds will reach a whopping $10.5 trillion, up from just $4.5 trillion in 2021.
3. Shareholder Resolutions and Activism Focus on ESG
ESG issues are behind a record-breaking number of shareholder resolutions this proxy season. This reflects the growing number of activist campaigns putting pressure on boardrooms around the world. This activity makes it clear that investors favor action on ESG initiatives. Failing to align your IR strategy with these hot-button issues could increase your risk of poor performance or even activism.
4. New Reporting Rules
Regardless of the interest in your ESG initiatives, you have to get on top of reporting. Soon, you will have to share environmental impact by law.
The U.S. Securities and Exchange Commission proposed tightening regulations on the way IPOs and publicly traded companies can disclose their impact on the climate. With this new rule all but finalized, your company will have to share information about the direct and indirect greenhouse gas (GHG) emissions produced by your business.
In Europe, similar reporting changes are going through the EU with the Corporate Sustainability Reporting Directing enforced at the start of 2023. This reporting rule will apply to any non-EU company, including US issuers that will follow the SEC’s new regulations.
Bottom Line
ESG is still an important factor in your investor relations platform. Not only will the SEC enforce mandatory ESG reporting, but it can be a boon to your IR strategy, flooding your system with invaluable IR intelligence. Keep this in mind as you handle your ESG initiatives in the future.
