Are You Ready for the ESG Big Leagues?

Written By Steve Adams, Managing Director, Chief of Staff & Joni Konstantelos, Managing Director

January 19, 2022

How to Know if an ESG-Exclusive Investor Event Is Right for Your Business

Today, the question isn’t so much if you should communicate ESG initiatives. It’s how. And given how red-hot the topic is, some issuers are considering an investor event solely dedicated to sharing their environmental, social, and governance story with current and potential investors.

While promoting your ESG strategy and initiatives is a good idea for every company, ESG-exclusive investor events may not be. It’s not that ESG doesn’t have a place at an investor event. It most certainly does, and we recently shared some tips on incorporating ESG topics into your traditional investor day agenda.

Rather, an ESG-only day simply doesn’t make sense for every company. Hosting an investor day takes considerable resources and thoughtful planning and you do not want the event to fall flat. Even worse, an imprudently hosted event could send the message to investors that your management team is focused on the wrong priorities.

Pull Out the “W” Questions Before Planning Your ESG Day

To avoid the pitfalls of an ill-advised event, it’s important to carefully consider the merits of such an undertaking for your specific business and whether or not an ESG day will ultimately have the intended impact. Here are the key questions to think through before taking this major step in your ESG communications journey:

Who is interested? Do you have the right audience necessary to execute a successful, meaningful event? In short, will your investors really care? The most important indicator to consider here is the extent to which investors are consistently discussing or asking questions about your company’s ESG performance. While it’s obvious that an ESG event doesn’t make sense for a company that never receives ESG questions, the same is true for companies that are only receiving periodic inquiries.

There’s no scientific threshold, but for now, ESG events should be reserved for companies that are seeing ESG discussions occurring in upwards of 40% to 50% of their conversations with “page 1” investors. If the topic is coming up less often than that, it may be an indication that ESG is not yet top of mind for your investors. In this case, it is probably best to table plans for an ESG event until the right issues begin to work their way into a larger portion of your everyday conversations with investors.

What is your message? Do you either a) Have something new and/or interesting to say or b) See an opportunity to educate your stakeholders on a misunderstood topic? Just because it’s ESG news doesn’t mean it’s event-worthy news. Apply the same rule of thumb that you use for a regular investor day to decide whether hosting an ESG event makes sense: only host it if you have messaging that can justify the fanfare involved.

Of course, what constitutes new or interesting is subjective. So use good judgment and consider asking a few colleagues or advisors to get their take on the “wow” factor of your story. Some examples of big deal topics include a new sustainability-focused product, a significant carbon reduction target along with an associated plan to achieve it, or a massive diversity and inclusion initiative. Topics that would not warrant an ESG event include a green bond issuance, an improved third-party ESG rating, or a change in corporate sustainability leadership. While all of the issues in the latter group can and should still be communicated, they are topics that investors can read about on their own. They don’t call for a designated event with formal presentations to get the message across.

On the other hand, complex or confusing topics can be very good fodder for a successful event. For instance, Microsoft’s carbon sequestration program is a detailed initiative that involves complex science and technology to allow the business to offset its entire history of carbon emissions. Similarly, BASF’s role in contributing to a sustainable future through its R&D is an equally complex concept. For topics of this caliber, focused events can provide the opportune format for educating the investment community and helping investors digest and better understand the information in a setting where they can ask questions and engage in discussion directly with company leaders.

Why are you hosting the event? What is the intended outcome? If your goal is to deepen existing shareholders’ understanding and cultivate familiarity for prospective shareholders, you’re likely on the right path. ESG-focused investor days serve as unique opportunities to strengthen the investment community’s perception of your company as a sustainable business and one that has reduced investment risk compared to competitors.

However, if you are primarily interested in hosting an event in the hopes that it will trigger investor interest that doesn’t exist today, you may want to consider more appropriate options for realizing that goal. For example, a traditional investor day, a video on your IR website, an ESG factsheet, or some other less intense communication effort can spark conversation without requiring such a significant investment of time, energy, and funding. Sometimes it can even be as simple as incorporating ESG messaging into your suite of investor materials, including your presentations and earnings scripting. Try these tactics first and save the event for when you have bigger news to share and bigger gains to make.

Save the “when” and the “where” for last. 

If you can satisfactorily answer the who, what, and why questions, then an ESG Investor Day might be exactly what your business needs to gain the most traction from sharing its compelling ESG story. That just leaves the specifics to iron out. ESG events come in many shapes, sizes, durations, and formats, but your answers to the other “W” questions will help point you in the right direction for tailoring your specific event to your message and your investors’ needs.

As always, we’re here to help. Whether now is the right time to go all out with an ESG-focused event or if you just need to start integrating ESG in your overall narrative, you can be sure that as more investors incorporate ESG considerations into their investment evaluation process, the demand for ESG information from your firm will only continue to grow. Reach out to see how we can partner with you to craft and deliver the right ESG messages at the right times for your business and your stakeholders.

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