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ESG issues are absolutely on the minds of investors. But that doesn’t mean they have the time or wherewithal to sift through big, flowery ESG reports. Here’s how to satisfy your investors, improve your ESG ratings – and save yourself some time in the process.
Gain some perspective The ESG arena covers a lot of ground. But don’t feel pressured to dig into every question on the myriad of queries you’re likely receiving from various agencies. Instead, focus on the hottest topics in your industry and the issues that are top of mind for your investors –perception studies can help you determine what these are – then dedicate your resources to gathering the details on these key issues. It’s also a good idea to understand which issues are most important to ESG rating leaders MSCI and Sustainalytics. You can request a free copy of your report from these agencies and see where you’re earning or losing the most points. Remember that the agencies base your score on information that is publicly available. You may find that you’re already excelling in several areas these companies care most about; you just need to play up those strengths in the right communications channels. You may also uncover some easy wins. For example, if you’re being dinged because you don’t have a publicly disclosed policy on child labor or because you’re not talking about your safety or diversity programs outside of the office, it’s easy enough to correct the problem and start sharing that information more widely.
Establish an ESG task force and hold members accountable Companies can no longer afford to put ESG communications on the back burner. You need a team of people specifically responsible for making pertinent information publicly available in a timely manner. The team should include heads of marketing and communications and those with inside knowledge of the company’s ESG policies, such as supply chain and HR executives. Your general counsel and corporate secretary are also good people to involve. All members can help with researching and supplying details on the key issues that need to be shared with investors.
Get the information out there – and time it right ESG information needs to be shared via mainstream investor communications. The IR portion of your website is probably the easiest and best place to post it, especially as websites can be updated whenever there’s a need instead of waiting for the proxy or an annual publication. Topics should also be part of CEO commentaries, especially in the annual report letter, and the most important issues can be covered during investor roadshows and on quarterly earnings calls. It’s important to know the reporting cycles of the major rating agencies and when they will be reviewing information for your company and industry, so you can time your website updates for the greatest impact.
Make critical details available It’s easy to get overwhelmed by ESG, especially if you’re receiving endless questionnaires from countless agencies on a daily basis. But when you focus the right people on the right topics and the right channels, you can succinctly tell a story that will satisfy your investors and help your company get the credit it deserves for your most critical ESG efforts.
About Clermont Partners
Clermont Partners excels at helping companies in transformation more effectively engage their investors and take full advantage of every communications opportunity that impacts equity valuation. We build partnerships with our clients, so we can exclusively represent and protect their interests, not the interests of their financial advisers. Our independent relationships foster compelling, unfettered stakeholder narratives that tell the story you need to tell, maximizing investor engagement and confidence, and driving your equity valuation in the right direction.