How to Crush Every Investor Relations Challenge in Your Path

We’re not even halfway into 2023, and the year is proving to be a challenging one for investor relations officers (IROs). They face a multitude of issues that are converging to make the life of the IRO more difficult – but also more exciting. These factors include: 

A complex ESG regulatory environment 

Both the European Union and United States are enacting increasingly complicated requirements for ESG reporting. In Europe, a new Corporate Sustainability Reporting Directive (CSRD), is set to create detailed sustainability reporting requirements for EU and non-EU companies starting in 2024. IROs need to prepare for this change now. 

In the United States, the SEC in 2022 proposed a rule that would require a domestic or foreign registrant to include certain climate-related information in its registration statements and periodic reports, such as on Form 10-K. 

The proposal, known as “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” would require a registrant to disclose information about its direct greenhouse gas (GHG) emissions (Scope 1) and indirect emissions from purchased electricity or other forms of energy (Scope 2). In addition, a registrant would be required to disclose GHG emissions from upstream and downstream activities in its value chain (Scope 3), if material, or if the registrant has set a GHG emissions target or goal that includes Scope 3 emissions.   

That proposal is likely to be passed in 2023, 

The need to coordinate with more stakeholders 

The rise of stakeholder capitalism means that businesses seek long-term value creation by taking into account the needs of all their stakeholders, and society at large.  

Stakeholder capitalism requires a company to undertake an important shift in thinking: from putting investors first to putting all stakeholders first, including people, clients, and the community (or communities) in which a business operates. This shift towards stakeholder capitalism means that IROs must place all stakeholders, not just investors, at the core of a company’s future investment strategy. 

The life of the IRO has become more complex. They must closely coordinate communications with various internal stakeholders who are responsible for building trust with consumers, employees, potential job candidates, business partners, and public influencers. For example, the messaging that the CFO shares with investors should match the messaging that the chief people officer shares with employees. 

Adapting to AI 

AI is transforming the investment industry, providing new opportunities and minimizing potential threats for IROs if done correctly. But meanwhile, IROs are enduring a stressful (albeit exciting) time of transition as they respond to how AI is changing investing.  

To keep up, IROs must be more accurate and transparent about the data they share, as investors now possess more comprehensive information about the companies they assess. Additionally, IROs must act with haste since institutional investors are trained to quickly assess data about a company, its competitors, and investment risks.

Ongoing challenges 

These join a host of other challenges that continue to make life more complicated for the IRO. One of the biggest headaches is the complexity of financial information, which can lead to misunderstandings and reputational harm. Additionally, communicating a wide range of financial metrics and other strategic content can be daunting, especially for companies with complex models. Accuracy and timeliness are also essential. 

There is also the sheer volume of financial information to communicate. Investor relations professionals must keep stakeholders up to date on a wide range of financial metrics, including revenue, earnings, cash flow, and balance sheet items – along with the strategic type of content, such as details on the company’s growth strategy. This can be daunting, especially for companies with complex business models or those operating in multiple regions.

Finally, there is the challenge of ensuring that financial information is accurate and up to date. Investor relations professionals must work closely with finance and accounting teams to ensure that all financial data is accurate and that any changes or updates are communicated to stakeholders in a timely manner. 

Strategies for thriving 

To thrive, IROs can use certain strategies to combat this complex, ever-changing landscape. 

• Share a Connected Content narrative. Go beyond sharing data. Share a narrative about the company’s long-term strategy through the lens of the CEO and their team. Discuss financial decisions in context of that narrative. Ensure that the narrative is consistent with the story your business shares with every stakeholder.  
• Use powerful storytelling. Don’t get lost in the morass of ESG reporting. Discuss your compliance with ESG regulations with plain language supported by strong visual content that tells a story in a compelling way. Avoid technical jargon and complex terminology. Instead, use simple, easy-to-understand language that is accessible to all stakeholders. Moreover, visual aids such as charts and videos can be used to present financial information in a more accessible and understandable way. 
• Be transparent. Transparency is key to building trust with stakeholders, especially when investors armed with AI can learn far more about your business than ever before (and faster than ever). Investor relations professionals should be open and transparent about the company's financial performance, highlighting both successes and challenges. 
• Embrace technology – including AI. Finally, technology can be a powerful tool for improving communication with stakeholders. Investor relations professionals can use online tools such as webcasts (audio/video that is reliable and run by experts), blogs, and social media to share financial information and engage with stakeholders in real time. I am a firm believer in AI. AI presents endless opportunities for IROs going forward.    

How Investis Digital Can Help 

At Investis Digital, we help IROs to navigate through challenges on a daily basis. Our combination of strategic counsel and bespoke IR data analytics help us stand out from the rest while providing you with the actionable insights you need to create value. Sound interesting? Visit our website here. Read more of our IR-related blog posts here. And contact us today.