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We’ve packaged up everything you need to know about best IR practice, how our previous winners won, exclusive interviews with past judges and much more. Read on to gain tips and ideas
Awards-by-nomination: What the judges are looking for
Garnet Roach caught up with some of last year’s judges from our awards in Greater China and South East Asia to find out what they’re looking for across a range of categories.
Best annual report
William Tsang, head of research, Chartwell Capital and judge for the IR Magazine Awards Greater China – 2021
I always pay attention to the chairman’s or CEO’s letter to shareholders as it provides me with a sense of the firm’s culture and its overall direction, as well as its ambitions for the future. Most companies mainly talk about what they are doing, but if the firm can provide insights and figures at the industry level, it makes it a lot more appealing to me. I also like consistency, so that there’s a base for investors to keep track of the company.
When it comes to information disclosure, I would say there’s no upper limit here. After all, these are listed companies and they are responsible for disclosing information to their public shareholders, though I do understand that some businesses are rather sensitive and feel they can’t reveal too much as part of their corporate secrecy.
I have noticed a trend where listed corporates are expanding their efforts in IR and how IR communicates with shareholders, as well as their efforts connecting the capital markets – I think this is important and I find it quite useful. The footnotes in the balance sheet, income statements and cash flow statements are also very important. More and clearer explanations on each item can definitely create more trust between investors and the firm, and these figures are very helpful for analysts when researching the company.
When it comes to the design of the annual report, this isn’t something I usually pay much attention to but, for example, [among the 2021 nominees], one company especially stood out: [best annual report winner in the mid-cap category] Xtep. It changed the design of the annual report to align with its branding efforts and also changed the shape of the report itself. It was something different and refreshing, which I appreciated. All these bits and pieces actually tell you the team has invested quite a lot of effort.
Best crisis management
What I want to see is how the company is addressing issues directly and at the same time compare that with peers in the market. Also, who is its target audience when managing the crisis? The company can further elaborate on its own crisis management process and protocols. I want to know how the crisis has impacted the share price, too, as well as the benefits for shareholders and the outcome after the company has managed the crisis.
From the submission point of view, I would expect this to be more like storytelling, with a timeline involved. I want to get a sense how efficient the company is in terms of identifying a crisis and its ability to address it.
Best ESG materiality reporting
Professor Roy Ling, CEO & founder, FollowTrade and judge for the IR Magazine Awards South East Asia – 2021
Overall, I assess the strength of a nominee’s sustainability practices on how detailed and granular the factors are that nominees disclose, which are financially material to that company. The clearer and more crystallized the material factors are, the more confident I am that nominees with strong sustainability roadmaps offer prospects of better risk-adjusted returns over the long term.
Most nominees have used one or more of the major ESG frameworks as a reference guide, but what really stands out for me will be the nominee’s ability to demonstrate deep understanding of each sector and the company’s own ESG challenges and opportunities. Some examples of ESG best practices nominees have undertaken include:
• Validating each set of metrics with internal research and stakeholder perspectives
• Sector-focused workshops with external industry specialists to expose stakeholders to issues on the ground and to enhance appreciation of the materiality of the factors considered and how they should be integrated
• Data acquired on material ESG metrics used in integrated reporting and analytics
• Organization of regular meetings by IR with company management to better understand how ESG issues are being managed and transmitting key ESG insights to stakeholders.
It is important to customize the material indicators to each nominee’s sector and specific circumstances, as a one-size-fits-all approach will dilute impact. This makes implementation challenging, particularly with regards to scale and comparison across sectors.
Best investor event
Garnet Roach, senior reporter at IR Magazine and judge for both the IR Magazine Awards Greater China – 2021 and the IR Magazine Awards South East Asia – 2021
This can be a tricky category to judge because reading about an event is never the same as actually attending. For this reason, what I’m looking for is a story that pulls me into the action and gives a real feeling of what it was like and why it was memorable for investors, analysts and other stakeholders.
It is always interesting to hear about the challenges companies faced and how they overcame these as well as perhaps anything they would do differently with the benefit of hindsight. I don’t just want the glossy story of success – I want to know the issues IR teams had to grapple with to create that success.
Unlike some categories, where the outcome is perhaps less interesting than the process, I think there’s a lot companies can share when it comes to the outcome of their investor event: did sentiment change? Did the company gain more analysts? What sort of feedback did it receive both internally and externally?
As judges, we sometimes read entries where you can tell the event was probably more interesting than the entry actually sounds. I’d recommend taking some time away from your entry and then rereading it: does it really paint the full picture of what you achieved?
Best IR during a corporate transaction
Joshua Lee, senior portfolio manager, Bank of Singapore and judge for the IR Magazine Awards South East Asia – 2021
Sometimes, in the middle of a transaction, people are just focused on getting past the voting hurdle and doing the usual things, such as listing on the exchange or whatever. But what I liked about one of the companies was that it was more structured in what it did. It had an initial strategy, for example, to expand investor outreach – just those three words explain a lot. There’s a focus, there’s a KPI there. The company wants to expand the investor base and it wants to excite investors with the company story.
Even though what it was doing might be similar to what other companies did, the way the entry was structured and the way the plan was laid out made it unique and showed the firm’s level of thinking and organization.
Looking at what companies have to enter in the self-nomination form: challenge and objective – that is clear. Strategy and implementation – here, a lot of the nominees wrote very generic things, which didn’t really convey the sense of what they were doing or whether they were doing it well. A generic answer doesn’t show the judges that a firm has thought very deeply about this question. But that’s where companies can get the vote over the line.
I don’t really focus on the results too much because, usually, whatever the company was trying to achieve, it has done. It is the strategy and implementation section that is more important to me.
Simon Weston, senior fund manager, AXA Investment Managers and judge for the IR Magazine Awards Greater China – 2021
You’re less likely to have an entry where the transaction hasn’t happened because clearly, IR would not have been successful in what it was seeking to achieve. But it doesn’t have to have been a successful transaction.
And actually, because in Asia so many of the transactions are connected transactions that typically do go through, it is always interesting when a transaction doesn’t get approval. Regardless of whether the transaction went through or not, though, what I’m looking for in an entry is some idea of the experience the IR team went through. For example, it’s a different dynamic when the controlling shareholder is involved than if you need to get minority shareholders onside – how did that influence the IR strategy?
Best IR website
I look for a few things when judging this category:
• The contents of the website: does it contain enough information for anyone to learn what the company is and what it does?
• Ease of navigation: this one is quite subjective but different stakeholders should be able to access and locate what they need easily
• IR contact details: here I expect to find IR contact information, newsletter subscription options, the corporate presentation – which is different from annual reports and/or official earnings announcements
• A short corporate video would be great
• Desktop, tablet and mobile-friendly versions that all work seamlessly
• Past investor events, upcoming investor events and the option for investors to register for these via the website
• Design: it is always a bonus when the design complements the business or the sector the company is in.
Best use of multimedia for IR
Vijay Natarajan, real estate and real estate investment trusts analyst and judge for the IR Magazine Awards South East Asia – 2021
First, I look at it from point of view of an analyst, or from an investment community point of view: does this [multimedia] help make things simple and easy for the investment community to understand? Multimedia should be a tool to help you get to the point within the next two to three steps. The same goes for company websites.
I would also look at some of the statistics the company has mentioned and the journey it has taken. I want to understand what the problem was and how the firm is trying to solve it.
Many companies say, for example, that previous investment feedback pointed to a difficulty in finding certain information and that, off the back of that feedback, the company revamped the website, increasing traffic and making for a smoother experience. If I read this, the first thing I will do is try to find that information myself. I will look at the scale of the multimedia the company is using, too, as well as which platforms, because that is quite interesting and important.
I also try to look at multimedia from a retail investor point of view: multimedia needs to be scalable, it needs to be about reaching a wide audience and also offer an opportunity to be more creative in the way companies present data. Institutional investors know a lot of ways to reach companies but retail investors are the ones who may not be as savvy, who may not have the same amount of access. Those are the innovations that I think really matter: the ones that help retail investors want to get engaged.
And effort counts. It’s not just about putting a dollar amount on something or getting the big brands or big consultants in to get things done. Multimedia that looks good is important, but that also has to be adjusted and looked at through a lens of what a corporate is trying to do in terms of getting its message across.
Click here to view a full list of winners and short-listed companies for the 2021 Greater China Awards, and here for the 2021 South East Asia Awards.
Asia-Pacific investors taking ‘passive route to ESG,’ says Cerulli Associates
Research highlights growth in ETFs across region, with Australia, China and Taiwan the big players
Although ESG-focused ETFs make up just 4 percent of overall ESG assets in the Asia-Pacific region, research from Cerulli Associates highlights the rapid growth in the vehicles as investors seek ‘cost-efficient access to responsible investing products’.
Twenty-five ESG ETFs were launched in the region in 2020, with 31 more listed in the first half of 2021, according to the firm’s research. And fund flows have increased notably: in 2016, ESG ETFs listed in Asia-Pacific saw inflows of $159.8 mn, a figure that has jumped to more than $2 bn each year in 2020 and 2019. Net inflows in the first half of 2021 alone exceeded $1.7 bn, says Cerulli.
That has resulted in huge growth in assets under management in ESG ETFs across the region, with 167 percent growth in 2019 and 108 percent growth in 2020. A further 33 percent growth in the first half of last year brought ESG ETF assets under management to a total of $12.8 bn across the 10 markets covered by the research: Australia, China, Taiwan, Japan, Korea, Hong Kong, Indonesia, Malaysia, India and Singapore.
Cerulli notes, however, that Australia, China and Taiwan are the dominant players, accounting for 86.8 percent of total ESG ETF assets in the region in 2020.
The big three
Australia has seen ‘exponential’ growth, say researchers, with assets in ESG ETFs listed in the country growing from $156.2 mn in 2016 to $4.9 bn by June 2021. During that period, 29 ETFs with an ESG focus were listed in Australia but Cerulli predicts a ‘significant rise’ in the future. It notes that in March 2021 alone, three new ESG ETFs were launched: the BetaShares Climate Change Innovation ETF, the VanEck Global Clean Energy ETF and the VanEck MSCI International Value ETF.
In Taiwan, Cerulli notes that although just one ESG ETF was launched in 2020, six were listed in the first half of 2021, and predicts that the ‘upward trend for ESG ETFs listed in the market is likely to persist into 2022.’ Taiwan has seen assets in ESG ETFs climb from just $101 mn in 2018 to $1.2 bn in 2019 and $1.7 bn in 2020, according to Cerulli’s data.
‘Cerulli believes the sudden increase in launches is due to increased demand from institutional investors, as well as young retail investors who are attracted to the low costs of buying large stocks,’ note researchers.
‘[But] the ESG ETF market boom in the first half of  could be attributed not just to demand factors, but also to fund houses scurrying to push out their ESG strategies before new regulations were introduced in July 2021. That month, [China’s] Financial Supervisory Commission issued guidelines mandating that fund managers disclose their ESG investing processes, investing methods and the international standards they have applied, in a bid to put an end to greenwashing.’
In China, Cerulli notes that although the adoption of ESG investing is relatively new, assets in ESG-themed ETFs in the country jumped from $15 mn in 2016 to $2.9 bn in 2020, with researchers adding that ‘many sustainability-themed ETFs were established in 2021, driven mainly by Beijing’s ambitious pledge in September 2020 to transform China from the world’s largest carbon emitter into a carbon-neutral nation by 2060.’
Eleven new ESG ETFs were launched in China in the first half of last year – up from just four in 2020 – with a strong focus on low-carbon or new energy.
‘Cerulli believes the government’s focus on renewable energy and the increasing number of ETF listings is setting the tone for passive investing in China’s ESG space,’ say researchers. ‘These, in turn, are expected to accelerate the use of ETFs by institutional investors and lead to gradual adoption by retail investors.’
In a separate release from Cerulli, the Boston-headquartered firm notes that, interestingly, ESG is not a priority for Chinese retail investors, despite the fact that individual investors invest heavily in ESG-themed funds.
‘An in-depth look at the top 10 ESG funds by assets under management between 2019 and June 2021 shows that the proportion of retail investors outweighed that of institutions in all 10 funds,’ says Cerulli. ‘For example, individuals held more than 90 percent each of the biggest sustainability-related thematic fund – ChinaAMC Energy Innovation Equity Fund – and the biggest ESG integration fund, Zhong Ou Responsible Investment Allocation, as of June 2021, according to Eastmoney statistics.’
How Singapore is taking sustainability and diversity on board
We look at recent efforts to introduce new governance rules for Singapore’s listed companies
Several new corporate governance measures are slated to be introduced in the Singaporean capital markets in coming years, with investors increasingly concerned about their assets’ climate change disclosures and board diversity policies.
Singapore Exchange (SGX) launched a consultation paper on climate change and diversity disclosures last August. In it, Singapore Exchange Regulation (SGX RegCo) set out a roadmap for climate-related disclosures to be mandatory in issuers’ sustainability reports, as a result of heightened investor demand for this information. The disclosures will be based on the TCFD reporting requirements. The consultation process is also exploring assurance of sustainability reports and one-time sustainability training for all directors.
At the same time, SGX RegCo is proposing to introduce enhanced board diversity rules that would require issuers to have a board diversity policy and provide disclosures on related targets, plans and timelines in annual reports.
These changes are being introduced ahead of expected mandatory climate change disclosure rules being developed by the new International Sustainability Standards Board (ISSB), which was created in November last year by the IFRS Foundation in association with the International Accounting Standards Board.
ISSB’s objective is to deliver a comprehensive, global baseline of sustainability-related disclosure standards, providing investors and other capital-market participants with information about companies’ sustainability-related risks and opportunities to help them make informed decisions.
Harold Woo, president of IRPAS, notes the consultation process has involved SGX putting forth a list of 27 proposed ESG metrics. ‘While not mandatory, these metrics may be used by issuers in conjunction with their sustainability reporting,’ he says. ‘The exchange has also proposed a data portal where investors can access ESG data in a structured format as reported by issuers in accordance with aligned metrics and disclosure requirements.’
Commenting on proposals around the assurance of sustainability reports, Woo says the consultation process is exploring how listed Singaporean businesses can demonstrate whether reported data is accurate and complete. ‘Issuers may also choose to have their sustainability reports assured through external auditors or an independent assurance services provider,’ he adds.
Woo points out that financial markets need high-quality and transparent sustainability disclosures, in particular on climate change, so that market participants can price and manage climate risks more effectively.
Fung-Leng Chen, vice president of investor relations at Singaporean real estate investment trust Frasers Centrepoint Asset Management, says corporates know there is no turning back when it comes to enhanced sustainability reporting: ‘You either need to comply to stay in business, or you may have to face the harsh reality of being marginalized as the competition moves forward.’
All issuers must report climate information on a comply-or-explain basis in their sustainability reports from the financial year starting in 2022. Climate reporting will be mandatory for issuers in the financial, agriculture, food and forest products and energy industries from the 2023 financial year, and for the materials and buildings and transportation industries from the 2024 financial year.
Sustainability in practice
Jaclyn Yeo is head of sustainability reporting at DBS, which already has a well-developed sustainability reporting practice. ‘The primary objective of our sustainability report is to convey our sustainability efforts, whether it’s a job well done or in tracking against our targets,’ she explains. ‘It shows where we stand and how much more work needs to be done to get to where we want to be.’
Yeo says the report’s target audiences include investors, regulators and the public. The climate-related information reported is guided by the TCFD framework, against which DBS has been reporting since 2018. She uses the climate change risks to which the business is exposed as an example of how the firm approaches reporting.
This is an extract of a feature from the Spring 2022 issue of IR Magazine. Click here to read the full article.