Why ESG Deserves Space in Your IR Presentation
Nowadays, ESG plays a key role in investors’ decision making. In an EY survey of over 320 institutional investors, 78% said they conduct a structured, methodical evaluation of the environmental and social aspects of a company’s performance, compared to 32% in 2018. Investors have been increasingly demanding more ESG-related information from companies. So much so, that the SEC added human capital management disclosure requirements in 2020 and proposed requirements for climate and cybersecurity disclosures in 2022. Further, ESG has become a common part of the due diligence and screening process for investors as they consider positions in potential investments and manage current holdings.
Some investors, like and BlackRock and Vanguard, have stated they will address ESG issues through increased engagement with management teams. And they’ve already started by asking more ESG-emphasized questions alongside topics addressing financial performance.
Due to the rise in interest from investors, companies are now preemptively providing ESG information within their investor presentations. Management teams are speaking to the topic head-on at conferences and are prepared for investor questions that may arise in Q&A’s, non-deal roadshows (NDRs), and quarterly calls. Investors want to, and to an extent expect to, see ESG information when learning about a new company or gathering intel on strategy and competitive differentiators. Therefore, ESG has become a common component of companies’ investor presentations.
Two ways to cover ESG within investor presentations are to include ESG or integrate ESG within investor presentations.
Companies that take the inclusion route tend to allocate a specific section of the presentation to ESG topics. This is a great way to dip your toes in the water and show your company is moving along its ESG roadmap. You may also be ready to go a step further and share progress updates or recent accolades and commitments from your ESG strategy.
- Hewlett Packard Enterprises’ presentation covers ESG in two slides. The first slide highlights its net zero commitment by 2050, reusing refurbished products, and sustainability-related customer engagements. The second slide shares human capital management metrics, including employee engagement, retention, and DEI, and touches on accolades for human rights initiatives. Lastly, at the bottom of the slide, it states that management’s goals and executive compensation are tied to the topics mentioned – talent retention and organizational diversity targets.
- Northrop Grumman’s company overview presentation mentions ESG accomplishments in the 2021 business highlights and then has a slide later discussing its ESG programs, featuring key environmental, social, and governance metrics. It also includes a slide with recognition for its inclusion in the DJSI World Index and North America Index, MSCI AA rating, CDP alignment, and more.
Companies that integrate ESG go deeper. They incorporate ESG throughout the presentation in different ways. Sustainability may be tied to the company’s strategy or part of the long-term opportunities that could impact the future performance of the company.
- Aptiv’s auto conference presentation is brief yet includes ESG on most slides by showing that it aligns with industry megatrends, which include safety and lower carbon emissions, that may prove advantageous to the company’s market opportunities. It also includes a slide dedicated to its sustainability commitments and displays logos signifying its achievements, strong ratings, and framework alignment.
- Williams Sonoma’s investor presentation starts by including sustainability in the company’s vision statement, “As the world’s largest digital-first, design-led and sustainable home retailer, our vision is to own the home.” It continues to discuss sustainability as part of the vertical integration process, a point of importance to customers, and how the company enacts its values-based culture, emphasizing environmental and social initiatives. Then, it ties in metrics around its achievements and goals, showing how it is improving the sustainability of its products, supporting diversity and equity within its workforce.
Leverage a Tool That Can Help
Adding ESG information within investor presentations is a great way to provide investors with an update, whether that be when presenting or while they are perusing your IR website. If you are wondering how to start or how to improve upon your current materials, rely on a tool like ESG Infinite that can guide you through effectively communicating your ESG strategy. By looking at best practices and starter examples, you can gather the insights you need to develop stronger ESG disclosures. To learn more, contact us and see how ESG Infinite can help you improve your ESG communications across all investor-facing materials.