How to engage with your investors
Most mainstream investors remain unconvinced that sustainability leadership translates into profits and marketplace success. It is widely recognized that there is a gap between the importance placed on understanding how sustainability trends are shaping corporate value by companies and interest by investors.
A recent Accenture / UN Global Compact survey of over 100 investors and 1,000 corporate CEOs found that, although 88% of investors saw sustainability as a route to competitive advantage, companies were not communicating this effectively.
It is clear that investors should be engaged on the need for long term value creation over short termism.
Key questions for your organization:
- How sustainable is your business model?
- Do you have an integrated strategy?
- Is sustainability integrated into your governance arrangements?
- How is it reflected in remuneration?
- What targets and performance measures do you use for regular management and external reporting?
These areas provide a clear signal in terms of how serious you are – and are clear giveaways if sustainability is not a core part of how you run the business.
Steps finance professionals can take
The A4S CFO Network have developed a set of overarching principles which can help guide how you can communicate and interact with your investors to help ensure that your efforts are effective:
- Link to strategy: Build communications around the long term corporate strategy – this provides a hook and shows how differentiation from competitors
- Provide context: The more you quantify the consequences of sustainability trends, the more your investors can respond
- Have a long term focus: Contextualise short term results in terms of long term goals – this helps focus discussions on the business fundamentals
- Adopt a commercial tone: Communicate bottom line relevance – link sustainability to revenue growth, cost reduction and risk management etc
- Integrate: Presenting sustainability as a standalone issue leaves it to your investors to work out the relevance and suggests it’s not business critical
- Be consistent: Consistency year-on-year and across different communications gives a clear signal that management are confident and in control
- Use standards: Use recognised standards to report sustainability performance and get external assurance for the key metrics
Before initiating investor discussions, give thought to how integrated sustainability really is into how your business is run.
These questions and principles make up part of the CFO Leadership Network's Essential Guide to Enhancing Investor Engagement.
