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Wide-angle lens on investor relations

Updated: Mar 20


More than ever, investor relations managers must be good communicators, have a deep understanding of finance and company strategy and be in tune with the ‘hot button’ issues investors care about.

While the core investor relations (IR) role is to communicate the value of a company to the outside world, high expectations for sustainable outcomes and a heavy reliance on virtual engagement have forced IR managers to take on additional responsibilities and be more proactive.

Now, not only do IR managers need to have a good understanding of company operations, financial performance, governance processes and future prospects, he or she also must be able to integrate environmental, social and governance (ESG) stories with traditional financial metrics such as capital allocation and cash flow. For example, new law is being introduced in New Zealand requiring financial sector entities to disclose the impacts of climate change on their business and explain how they will manage climate-related risks and opportunities.

Another challenge facing the IR manager, who in small and mid-sized companies can also be the chief financial officer, is the heavy reliance on virtual communication during the covid lockdowns.

Appetite for information


The ‘new normal’ has raised the expectations of shareholders, financial analysts, retail investors, portfolio managers and the broader community for company updates to be available online in real time.

In this environment, investors and other stakeholders are developing a bigger appetite for information that goes beyond what is available in annual reports and financial results putting the spotlight on non-financial and operational information.

In particular, the covid pandemic is drawing attention to the consequences of humans exploiting nature and ESG priorities have come to the fore. IR practitioners must be able to respond to this scrutiny and meet the expectations of investors who are increasingly willing to weigh in on company performance in areas such as carbon emissions and employee welfare.


Questions


Questions investors are asking, depending on the industry a company is in, relate to climate change, pollution and waste management, board composition and structure, executive compensation, employee diversity, energy efficiency and data protection. They also want to understand the financial impact covid is having on the company and what measures are being taken in response.


Understanding the investment opportunity


The timely delivery of answers to these questions is essential for investors to understand the type of investment opportunity a company represents. Furthermore, achieving buy-in from investors for the company’s ‘growth story’ will be a crucial factor in determining whether its shares are priced on the market at fair value. It will also have an impact on the company’s ability to raise capital.

With world markets gripped by uncertainty, IR managers are being asked to do more than ever: tell their company’s sustainability story, ensure regulatory compliance, participate in strategic planning and respond to the demands of stakeholders who want – and expect – company information to be delivered to them across a broad range of online channels.

Increased investor engagement and the broader role being played by IR managers reflects the changing relationship between companies and their investors.

While investor relations still requires public relations skills, it also demands a deep knowledge of a company’s strategy and operations, a sound grasp of financial analysis and a good understanding of ‘conscience’ investing norms.


Contact us today on julian.nixon@axispr.co.nz or +64 21 02393303


#investorrelations #esgcommunication #irmanager #financialcommunication #humansexploitingnature #covidpandemic #sustainablebusiness #investorgoals

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