Nobody (Should) Put ESG in the Corner – Give ESG a Starring Role at Your Next Investor Day

Written By Victoria Sivrais, Partner & Clare Galbo, Senior Consultant

December 1, 2021

An investor day presents a unique opportunity to build confidence among current and prospective investors. Doing so effectively, while sharing the broader opportunity ahead for your company, makes the investment of your executive team’s time and effort, and conversely investors time, worth it.

Typically, investors expect that “new” information comes in the form of a look at the company’s strategic roadmap along with details on how the management team is executing on its long-term vision in the near term. If, like many issuers, your company has been less than forthcoming with this type of information due to uncertainties related to the pandemic, now may be the perfect time to bring together shareholders for the unveiling of your go-forward plan.  

But, as you’re planning your big reveal, make sure not to lose sight of the buried lede in many investors’ evaluation process: ESG.

Environmental, Social, and Governance issues are no longer a side show.

Entering 2022, investors are specifically looking for the next level of growth, and they want assurance that the current bull market will continue. Companies will need to engage meaningfully with investors to provide the level of information they need to feel confident. And, ESG is a critical component which must not be overlooked in this effort, especially as investors increasingly view ESG as an integral part of a company’s long-term strategy.

For all these reasons, investor days are rapidly evolving into an important platform for updating shareholders on a company’s ESG efforts, both from the perspective of driving financial performance and mitigating risk. By developing a comprehensive investor event that fully integrates ESG into the narrative, you can accomplish two imperative goals at once: 1) feeding investors’ appetite for new information on your enhanced strategy for the next several years, and 2) highlighting the relevant ESG topics that are top-of-mind for regulators and shareholders alike.

Here’s how to do it effectively.

5 Ways to Deliver an ESG-Integrated Investor Day

  1. Prepare with a deep dive into your current and potential shareholder base. Enhancing your investor story begins with fully understanding audience sentiment, including the people who own your stock now, as well as those you’d like to enter the stock.
    • A perception study, especially if you haven’t conducted one in a while, will help you catch up on the key issues investors care most about now. Fully expect ESG topics to come up on the list of investor priorities, along with key financial metrics and valuation drivers. Use the insights gleaned to outline your investor day agenda, highlight the most impactful information, and position key messages so that they assuage your attendees’ biggest concerns.
  2. Build out your roadmap and be sure to include ESG milestones. Investors will absolutely expect to see your company’s strategic roadmap for the next several years, including details about anticipated financial performance in both the near and long term. And remember, now that the pandemic is no longer a new headwind, companies cannot use it as grounds for withholding information. It’s time to share your post-pandemic trajectory and focus on what investors are looking for in terms of growth, cash generation, M&A, and capital allocation.
    • All of this will funnel into your long-term strategy and targets. And ESG, of course, should be woven into every aspect of that narrative. Investors will want to specifically see how ESG issues mesh with the other elements of your strategy. Consider sharing longer-term ESG goals that go beyond the next year, describing what you hope to accomplish in the next 5 or even 15 years. Then, explicitly connect the dots between these ESG targets and your bigger picture financial and business goals. Doing so sends a clear message that ESG is a core value for your firm and that your commitment to it will translate into better returns for your investors both now and down the road.
  3. Speak specifically to progress around the ESG issues in the headlines right now. While ESG should be an embedded theme throughout the entire investor day, it’s worth carving out time to give ESG-specific progress updates. In anticipation of new environmental mandates from the SEC, investors expect your company to be ahead of the curve and taking action to ensure your organization will be compliant when new regulations come. Consider showcasing actions, standings, goals, or even ESG ratings, particularly in the following areas:
    • Climate change disclosure
    • Human capital disclosure in the 10-K
    • Environmental risk disclosure
    • Disclosure around any other material ESG risks for your business
  4. Share your strategy for engaging with investors during your next phase of growth. Once you’ve given investors a look at your past progress and future plans, let them know how you’ll stay engaged going forward. This is especially important if your roadmap and goals are particularly aggressive. Too often, companies set 10-year goals and never check in with their investors to provide appropriate updates along the way. So, get out in front of this by telling investors when and how you plan to formally communicate, and share information about where investors can find your latest information online.
  5. Gather audience feedback. An investor day is a significant undertaking in any situation. In the current environment, with ESG topics so hyper-charged and investors eager to hear post-pandemic growth plans, your next investor day may be your most critical one yet.
    • Plan on measuring the success and finding out how you did right away with immediate feedback. The insights you gain by following up with your investors will help you understand how well the message resonated and what (if any) parts of your story may need to be tweaked or expanded upon moving forward. It can also help you identify the most critical content for repackaging and repurposing into other investor materials.

Plan an investor day that does double duty.

In a business environment where ESG issues truly touch every part of a company’s operations and financials, it’s no longer an option to treat ESG as an isolated aspect of your investor relations program. These events, perhaps more than any other vehicle for investor communications, are prime opportunities to illustrate how ESG is fully embedded in your company’s financial narrative.

If you need help planning an ESG-integrated investor day or baking ESG more fully into all elements of your investor communications strategy, let’s talk. As ESG continues to gain momentum with investors, now is the time for your company to make a statement that clearly shows how much it matters to you.

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