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‘The pandemic has changed IR’: Thomas Kudsk Larsen on his move from AstraZeneca to small cap Sobi
Multi-award-winning IR professional on shifting priorities and a ‘fundamental’ change to IR
‘For people doing IR, I think this pandemic has been so fundamental in terms of changing their daily lives,’ says Thomas Kudsk Larsen, talking to IR Magazine about why he made the move from pharma giant AstraZeneca – made a topic of household debate across the globe by the pandemic – to Swedish small-cap biopharma firm Sobi (short for Swedish Orphan Biovitrum) where he now serves as head of communication and investor relations.
Part of the issue is the nature of investor relations itself. As such an outward-looking profession – where the job is really about talking to people, whether investors, management, other departments or external stakeholders – much of what Larsen says was important to him about the job has changed.
Outside of the busy quarterly results periods, IR people are usually out and about having meetings, holding site visits or traveling to conferences and busy roadshows. Of course, all that stopped with Covid-19 and, although virtual stepped in, for people like Larsen who thrive from that personal contact, something vital had been lost. Many believe things won’t go back to the way they were either: four in five IROs believe the experience of Covid-19 will lead to a permanent change in roadshow activity, according to IR Magazine’s Global Roadshow Report 2021, with more than a third strongly believing we will not see a return to the pre-pandemic norm.
‘If you’re used to doing IR the ‘old way’ – and I had been doing this for 19 years before the pandemic hit – then the impact was huge,’ Larsen says. ‘I really missed going out and seeing people. People don’t often do small talk on Teams or Zoom, they just get straight into it. That whole recharging of the batteries and getting ideas and perspectives and kind of connecting the dots you can’t always see was lost. For me, it meant what I really love about this job disappeared.’
Smaller, broader
Seven years into his job at AstraZeneca, Larsen was at the top of his game. The company had won multiple awards – from IR Magazine and elsewhere – and consistently ranked at the top for IR across Europe and its sector. But Larsen says he started to question what the pandemic-induced changes meant for him and what he was looking for from his profession.
‘I asked myself: what does this mean for me? Because what I loved most about IR, I couldn’t do. And I don’t think we’ll be back to anything close to what we were doing in 2019 anytime soon. We have this new variant, but there’ll be more variants.
‘I realized that if what I loved most about the job was being taken away, and I couldn’t do much about it, then maybe I had to do a broader job so that I get to do an element of the IR I love. But I can also do other things. [As an IR professional] you can do internal and external communications, you can do IR, you can do a bit of sustainability. Maybe you can help your company go on a journey with sustainability and therefore also do more to help society. That is what I chose to do.’
What this often requires, says Larsen, is a move to a smaller firm, noting that the IR role is often very siloed at big companies. Big firms come with other restrictions too, he notes, talking about a sort of ‘glass ceiling’ around personal development.
‘A glass ceiling is not necessarily a matter of promotion or a bigger salary,’ he explains. ‘For me, it was more about, How do I continue learning?’ At a huge firm like AstraZeneca – and even more so during the pandemic with the constant news flow the team had to stay on top of – he says that time and that development just wasn’t available.
Larsen adds that this is an issue in big companies everywhere, and in part an issue related to the very nature of IR as a profession. ‘IR often becomes your first and your last job in a company, because it is a struggle for companies to further develop ‘career IR’ people,’ he says. While he acknowledges that some firms do rotational IR very successfully, he suggests that, instead, companies allow career IR experts to do what they do so well – but also to have a 10 percent to 15 percent buffer on their time, allowing them to develop interests and skills in other fields.
New priorities
But Larsen’s move in August 2021 wasn’t just about having more time for personal development. Sobi is a company that focuses on treating rare diseases, often hereditary and detected in babies or at early childhood, and often without alternative treatments available. According to the company, around 95 percent of rare diseases currently have no approved treatment and 75 percent of rare diseases affect children. ‘You can start trying to make a difference with different medicines,’ says Larsen. ‘That is another symptom of the pandemic: you think a little bit more carefully about things.’
Sustainability is something else Larsen thinks carefully about and he says this is a further factor in the way IR teams are likely to adapt to a ‘new normal’ as far as travel goes. Now that we know a large proportion of meetings can effectively take place virtually, how can companies justify a return to pre-pandemic travel?
He notes that large organizations often look at ESG issues from a big-picture view. What he and the team at Sobi are doing is trying to think about the company’s individual role and the role of each employee when it comes to sustainability. ‘We try to be very aware of what each individual person’s impact on the environment is and how we can reduce that instead of thinking only as one big corporate,’ he explains. One example is offsetting the carbon any time Larsen has to fly from Cambridge, where he’s based, to Sobi’s headquarters in Stockholm.
The old guard
Anecdotally, Larsen says a number of IR professionals he knows personally have either changed jobs or are on the hunt for something new because the jobs they had have changed so much, and he notes some factors that might affect how you feel about the profession at the moment. One of those factors is location. Larsen says he’s been lucky in Cambridge, within easy reach of London. This means that even if there’s a hold on international travel, he can still see people. ‘If you’re in New York you can still do some meetings,’ he adds. ‘Also if you’re in Boston or San Francisco, for example. But if you’re in a country with no financial center? That’s hard.’
The other factor is whether you’re an old pro or not. ‘I think the guys who are new to IR, they will still be happy because they’re doing something new that they didn’t do in the past, so for them it’s an upgrade,’ Larsen says. ‘But for the people who have known IR for the past 10 or 15 years? I don’t think this new world is necessarily very appealing.’
How ESG integration drives cultural change
Highlights from a session on ESG reporting at the IR Magazine Forum – Europe 2021
Companies need to make significant cultural changes to integrate ESG issues into the way they think and act, but the result can be more engaged employees as progress is made against sustainable goals, according to panelists at the IR Magazine Forum – Europe 2021.
Speakers also discussed the challenges of setting long-term ESG targets, especially around climate change. Increasingly companies are announcing the goal of net-zero emissions by 2050, but they also need a credible roadmap to get there.
‘When I talked to my team, two and a half years ago now, I told them that, like it or not, ESG is going to be very high on our agenda,’ said Martin Ziegenbalg, executive vice president and head of IR at Deutsche Post DHL, who spoke on a panel about ESG reporting frameworks and standards.
‘It took them a couple of weeks to realize I was serious about it. [I remind them] this has to be a core part of the equity story and I expect each and every IR team member to be fully on top of these issues. I don’t want just one single ESG expert in my team, just like I don’t want [just one] Ebit expert in my team.’
Ziegenbalg says some aspects of ESG communications are similar to more traditional IR work – for example, you have to be able to explain what’s behind the numbers and how corporate initiatives are having an impact. But other aspects of the work present new challenges, such as dealing with the wide variety of frameworks, ratings agencies and NGOs.
‘With ESG being an integral part of our strategy, and therefore the equity story, the whole team has to have a strong command of what’s going on there, which has been a bit of a learning curve,’ he explained.
Speaking on the same panel, Yulia Chekunaeva, director of capital markets and strategic initiatives at En+ Group, says enthusiasm has grown within the company about tracking and reporting on sustainability topics.
‘The first time we collected the data to release it in 2018, I think as part of the sustainability report, everybody was a bit reluctant and [asked], Why do we get all those data points? or Why do we release those data points?’ she said. ‘But then a very important thing happened. When you put two bars of any metric [compared year by year] and people see that, they would like to improve on them.’
Chekunaeva said over time people start to own the process of collecting the data and sustainable indicators become embedded in how the business views performance. ‘Over the years, what we are seeing is that, culturally, when people know the performance indicators we produce, not only on finance and operations, but also on waste removal, water treatment [and] air pollution, that causes the change,’ she said.
The discussion also covered net-zero emissions targets and how they are evaluated by the investment community. Ramón Álvarez-Pedrosa, head of IR at Respol, spoke about his company’s net-zero goal – the first set by a major oil and gas provider – and the challenges of reporting on climate risk.
‘As our CEO always said, putting in an objective or ambition for 2050 is the easy part. What is much more difficult is what you are going to do in 2025, 2030 and 2040,’ he said.
‘All of the European companies followed us in the following two months. And there are now companies outside Europe that are [taking] the same path. But there is no common framework, every [firm] has its own standard, its own way to communicate. We understand very clearly that that can create confusion within the investor community.’
Adding to the complications, Álvarez-Pedrosa noted that the Science Based Targets initiative (SBTi), which approves emissions-reduction goals set by companies, has not yet produced guidelines for the oil and gas industry. SBTi is aiming to come up with a methodology for the sector this year.
Randeep Somel, portfolio manager at M&G Investments, who manages the firm’s climate solutions equity portfolio, said having a 2050 target is ‘fantastic’ but companies must provide more short-term goals.
‘Let’s be quite frank: the entire board, the entire executive aren’t going to be in charge of these companies in 30 years’ time in most cases,’ he pointed out. ‘Having achievable targets for the shorter term, from 2025 to 2030 now, is the thing to look for, and report every year on how much closer you are getting to these targets.
‘And incentivize your management teams accordingly. Put in those KPIs and tell us exactly what they are, tell us how they’re being reported. Make it a reasonable amount of your compensation package… carve out 10 percent-20 percent for some of these ESG factors. It shows willing, and it shows that the companies are interested in doing this.’
In addition, Somel mentioned that science-based targets are becoming increasingly important for investors. ‘You’re going to have SBTi companies and non-SBTi companies,’ he said. ‘SBTi doesn’t cover everything today. It doesn’t cover oil and gas, it doesn’t cover chemicals, but it is working with companies to get those frameworks in place. And they’re going to be incredibly important.’
To find out more about the IR Magazine Forum – Europe 2021 or to access recordings of the sessions, please click here.
Problem solver: Which ESG data requests should you respond to?
From Sustainalytics to S&P Global, we ask how IR teams prioritize requests for ESG information
In this regular article, we ask IR professionals how they would respond to a specific operational issue. In this article, we asked how IR and sustainability teams determine which requests for ESG data to respond to, and how to ensure investors are receiving the ESG information they need.
Abbigael Foster, senior analyst in sustainability at Equinix, says:
Investors today want readily available, decision-useful ESG information on companies in which they invest. Like all public firms, Equinix receives a high volume of ESG data requests from investors, customers and partners. These requests include aligning disclosures to standardized frameworks, responding to ratings and rankings and providing supplementary information via custom surveys or engagements.
Having a comprehensive and robust strategy around ESG disclosures is critical to being able to respond to these various requests. Annual disclosure for Equinix begins with our integrated shareholder wrap, which includes ESG highlights and is disseminated to more than 10,000 investors. Shortly after this, we issue our annual sustainability report and our sustainability website, which is a deeper dive into our ESG strategies, progress and metrics.
We also decide which ESG reporting frameworks most frequently requested by our stakeholders we should align with, and where to disclose. We use the GRI standards in our CSR report, SASB in our 10K and the TCFD framework on our website.
To ensure raters and rankers have access to accurate information, Equinix responds to widely followed groups such as CDP, S&P Global, ISS, MSCI and Sustainalytics. We prioritize these by evaluating who uses the data or results, whether scores tie into benchmarks or ESG indexes, how data is made public and which stakeholders are requesting our participation.
Requests for supplementary data are inevitable with the constantly changing ESG landscape, and we engage directly with our stakeholders to provide additional details on our strategy and progress as appropriate. ESG measurement and transparency are critical to Equinix’s ESG program success and are increasingly valued across the industry.
Hunter Wells, vice president of IR at Century Communities, says:
I don’t believe there is a single right or wrong answer for this: one framework may not be fully comprehensive. But there are certainly a few key considerations you should ponder to help you narrow things down.
Every issuer will be at a different stage in its ESG journey, will be benchmarked against a unique set of peers and will have a distinctive shareholder base with its own set of expectations. I would begin by polling your top shareholders to see whether they have any preference and researching whether any of your largest institutional investors have stated their support publicly for any particular methodology or framework.
Additionally, outside of your investors, you should think about other stakeholders whose input should be considered, such as your board of directors or even your top customers.
From there, you should have a better idea of your audience and what frameworks they are familiar with or have a preference for. Next, you will need to determine what resources and personnel you will have dedicated and available for ESG reporting.
I appreciate the simplicity of SASB as it has a concise a set of standards for more than 70 different industries and it can be used in conjunction with other frameworks so, looking ahead, we can efficiently build upon our ESG reporting disclosures and add additional frameworks. For most issuers, one or a couple of the most commonly used frameworks – GRI, SASB, TCFD and CDP – should provide a suitable start.
