Survey highlights increased investor focus and board level discussion of social issues and a marked European-North American divide in ESG reporting and investor interest
Despite the short-term emphasis on financial resilience and viability following the global breakout of COVID-19, new research from Citigate Dewe Rogerson’s Investor Relations Practice shows the pandemic is accelerating the long-term shift towards sustainable investing with 73% of companies expecting it to bring increased investor focus on non-financial performance metrics over the next 12 months.
Nearly 80% of companies in Citigate Dewe Rogerson’s 12th Annual IR Survey report an increase in ESG-related questions from investors, with 27% reporting a significant increase in such questions. Despite some North American investors becoming increasingly vocal on the importance of ESG, the findings highlight a continuing marked divide between Europe and North America in the level of investor interest. While 34% of companies in Europe reported seeing a significant increase in ESG questions over the past year (UK: 40%), in North America that figure was only 10%.
The current crisis and widespread social unrest have highlighted the importance of social issues in particular, with 67% of companies reporting increased investor focus on issues including diversity, data protection and privacy, employee engagement, labour standards, and human rights. 24% of companies now include social issues on every board agenda, ahead of environmental issues at 20%.
In response to these trends, 64% of investor relations teams intend to improve ESG disclosure over the coming year, up from 47% twelve months ago.
The survey findings also show growing pressure for companies to enhance board oversight of ESG performance. 37% of companies questioned have now formed a Sustainability Committee, while 43% state that at least one of their board members has experience in managing ESG issues.
Commenting on the findings, Sandra Novakov, Head of Investor Relations at Citigate Dewe Rogerson, said: “Rather than putting ESG issues on the back burner, the COVID-19 pandemic has accelerated the long-term shift towards sustainable investing, particularly outside North America. As institutions take a deeper, more qualitative, analytical approach to investment decisions, demand for greater transparency, engagement and oversight with respect to ESG issues will undoubtedly grow further still.
“This is a critical time for listed companies, many of which are dealing with a myriad of challenges at present. Those which see the clear risks and opportunities presented by current trends, however, are pushing ahead with their ESG agenda, looking to enhance their narrative and leverage ESG accomplishments to achieve differentiation from their investment peers.”
Citigate Dewe Rogerson’s 12th Annual IR Survey incorporates feedback from 377 Investor Relations Officers (IROs) at leading companies across the world and is now available to download here.
Efforts by IROs to enhance ESG reporting and engagement, particularly outside North America, are also evident across the research findings:
• 77% of companies globally either produce an integrated report or standalone sustainability report; however, nearly half of North American companies do not report on sustainability.
• 69% of companies report on ESG in line with one or more frameworks, with GRI Standards the most popular (used by 39%), followed by UN Sustainable Development Goals (33%), and the Sustainability Accounting Standards Board’s Standards (13%).
• Just 35% of companies make regular references to ESG in their financial results materials. In Europe, 49% of IROs state they do so regularly, contrasting strongly with North America (16%).
• While only 8% of companies currently host ESG events, 16% have plans to do so going forward.
• 19% of companies are targeting ESG investors specifically, up from 13% in 2019.