By Amy Statham, content marketing manager, Q4
Growth in ESG-driven investing has caused a massive wave of new data, with 88 percent of investment managers saying they have been asked how ESG is incorporated into decision-making for their portfolio, but are unclear what to share and how to communicate the information effectively. Here, we dive into some of the best practices for communicating ESG effectively, whether you’re just starting out or looking to enhance your existing initiatives.
Focus on identifying material issues The push toward greater ESG transparency has resulted in many IROs grappling with how best to communicate their ESG policies in a credible and meaningful way. While ESG data and the way it is presented and monitored is still being defined, companies must identify the issues they believe to be most material to their size and specific industry. Material issues should be rooted in the context of a company’s unique strategy, stakeholders and industry.
From there, rank the order in which you will address each issue and how you plan to do so, and slowly start chipping away at the most pertinent issues. As you begin, know that it’s okay to communicate to the investment community that you’re just getting started on building out your capabilities. This is a process, so be sure to explain how you plan to implement and achieve your goals and provide updates as progress is made.
When assessing which material issues to address and how to report on them, look to the most commonly used reporting and disclosure structures. First, the SASB developed industry-specific standards (SASB Standards), across a range of environmental, social and governance topics. Forty percent of global S&P 1200 companies use SASB Standards in core communications with investors.
Additionally, the TCFD has created disclosure standards as a means of co-ordinating disclosures among companies impacted by climate change. In a recent EY survey, more than two thirds (67 percent) of investors surveyed say they make ‘significant use’ of ESG disclosures that are shaped by the TCFD.
Telling your ESG story Once you’ve identified your material issues, you need to find the best way to present the information. John Nunziati, IR partner at Q4, shares that ‘we [at Q4] think it’s best practice to ensure all ESG information is accessible on the IR portion of the website. As the audience for ESG information is primarily investors, it should be easy for them to find ESG information when visiting your IR website.’
And while having ESG information on your company or IR website is an excellent start, how you present that information matters as well. In fact, 72 percent of investors surveyed by EY say they conduct a structured, methodical evaluation of a company’s ESG criteria. This means if your website is not laid out properly or your reports and disclosures are not in the correct format, it could negatively impact your ESG rating.
According to a survey by Brunswick Group, investor relations websites are cited as the most-trusted resource for information for investors, making it a prime location to showcase your company’s ESG story.
As such, the Q4 team has collaborated closely with clients to incorporate their ESG activities into their website, but it was soon clear to Jeyson Lopez, Q4’s manager of digital design, that ‘clients were struggling with how to tell that story. They didn’t know what to include, what content should be promoted and how to leverage design to elevate that story.’
To address this issue, Simone Pereira, senior product manager at Q4, began researching ESG and the ways in which public companies, on the whole, had been approaching sustainability on digital platforms and turning deeply researched initiatives and significant quantitative assessments of non-financial strategies into visual narratives.
She comments that throughout her research, ‘clients across North America were continually asking me what [Q4] has learned speaking to others and the best practices we are seeing.’ There was an appetite for understanding how to bring ESG to a website more effectively.
Pereira, working alongside Samantha Howes, Q4 senior product designer, began reviewing various websites assessing how information was presented, what content was emphasized and what content types were being used.
‘Through our reviews, we began to assess the information architecture to see how content could be presented from text to PDF to imagery carousel to multimedia,’ says Howes.
Segmenting the universe of public companies, certain industries emphasized different things. One sector might place focus on one aspect of ESG like social, while other industries might have their focus on environmental initiatives.
Creating structured, consistent and impactful ESG websites While there are no industry standards yet for effectively communicating ESG, our team leveraged its expertise in IR website best practices to lead the development of two separate templates for ESG at Q4.
Clients have the option of using a one-page template that can be easily incorporated into an existing investor or corporate website or, alternatively, a four-page stand-alone template designed to accommodate a breadth of ESG information.
The templates, as well as mock designs created using the templates, were reviewed by experienced investor relations officers and professionals for their input and guidance, and they confirmed the designs were aligned with industry expectations. The outcome is a significant improvement in how our clients can communicate their compelling investment opportunity and an evolved sustainability approach in a structured, easy-to-assess format.
Conclusion Empowering public companies to effectively tell their ESG story enables better communication with institutional investors, which can be transformational to their strategy. It is a huge strategic shift for public companies to have an effective way to explain how they are making investments, to drive not only sustainability, but also sustainable long-term growth.
A broad audience of stakeholders (and shareholders) can easily access information critical to building and reinforcing their key cultural drivers. The public disclosure of ESG messages on Q4 websites is truly helping our clients to scale the impact of their message. To learn more, please visit our website.
Q4 is a leading capital markets communications platform provider that is transforming the way publicly traded companies, investors and investment banks make decisions to efficiently discover, communicate and engage with each other. The Q4 end-to-end technology platform facilitates interactions across the capital markets through its IR website products, virtual events solutions, capital markets customer relationship management solutions and shareholder and market analytics tools. The firm is a trusted partner to more than 2,400 public companies including 50 percent of the S&P 500. Q4 is based in Toronto, with offices in New York and London.
