Sample: Covid-19 Update 2021
Sample: Covid-19 Update 2021
Covid-19 Update
How investor relations has been affected by the Covid-19 pandemic and what this means for the post-pandemic IR landscape
Sample contents
Introduction 2
Key Findings 3
Future Impact 6
Travel 9
Targeting 13
Macroeconomics 21
In June 2020 IR Magazine produced a report on the initial effects of the Covid-19 pandemic on investor relations. In it we identified a number of changes to working practices, strategic approaches and economic outlook as a result of the pandemic’s early stages.
In this report we revisit the subject one year on to examine what has changed in the intervening period. We investigate how IR has adapted to the changes and how both corporate and wider economic performance has fared during this time. We also look forward to IR’s post-pandemic future and what the ongoing and lasting effects will be.
The findings in this report are taken from 255 online interviews conducted with IR heads, IROs, fund managers and analysts. Fieldwork for this survey was conducted between April and May 2021.
During the course of the report we refer to ‘investors’ and ‘IROs’ for shorthand purposes. In this, ‘investors’ refers to findings from the investment community (fund managers, buy-side analysts, sell-side analysts) and ‘IROs’ refers to both heads of IR and investor relations officers.
Findings in this report are broken down using the key regions of North America, Europe and Asia, while IR community findings are segmented by market cap size. For the purposes of this report, cap size is defined as follows:
SMALL CAP – UNDER $1 BN
MID-CAP – $1 BN TO UNDER $5 BN
LARGE CAP – $5 BN TO UNDER $30 BN
MEGA-CAP – $30 BN AND OVER
Key Findings
- Increased virtual meetings/events is the change to working practices that has had the greatest impact during the Covid-19 pandemic.
- Remote working is the change viewed most positively by IROs and investors.
- Reduced travel has created greater challenges for IROs and investors in Asia than in North America or Europe.
- The overwhelming majority of both IROs and investors believe the experience of the Covid-19 pandemic will lead to a permanent change in working practices, with 84 percent either agreeing or strongly agreeing.
- More companies have underperformed against their pre-pandemic forecast than have outperformed against it. But seven in 10 have done better over the past year than they expected to at the onset of the pandemic.
- More than four in 10 IROs have changed their targeting strategy as a result of the Covid-19 pandemic.
- More IROs expect to see an increase rather than a decrease in resources as we come out of the pandemic, although most expect resources to remain the same.
- A third of investors in Europe and Asia have changed their investment approach as a consequence of Covid-19, with a quarter of North American investors also doing so. This is down from last year when a majority had changed their investment approach.
- Most investors and IROs agree that Covid-19 has increased the importance of ESG, while just 14 percent disagree.
- More than two thirds of respondents recognize that economic performance over the course of the Covid-19 pandemic has been better than they initially anticipated when the pandemic first began.
- The majority of respondents are concerned about a rise in interest rates in the near future, with just 15 percent unconcerned.
- An overwhelming 86 percent of respondents agree that the economic measures taken to combat Covid-19 will have a lasting economic effect, with more than four in 10 strongly agreeing.
*See full report for figures, IR Essentials subscription required
After more than a year of experiencing these changes to working practices, both investors and IROs are in a position to assess what impact these changes will continue to have after the Covid-19 pandemic. Nearly eight in 10 respondents believe the increase in virtual meetings and events will continue to have at least a moderate effect post-pandemic, with 42 percent saying it will have a large or extreme impact.
The impact of less travel is also expected to continue after the pandemic, with more than a third of IROs and investors believing this will have a large or extreme impact and just over one in 10 anticipating it will have no impact. The issue of remote working is expected to have less of an impact in the future than travel reductions or the increase in virtual engagement. As many investors and IROs think that increased workload will have no impact as think it will have a large or extreme impact. More than four in 10 think changes to reporting and guidance will have no impact, while just 8 percent believe this will have a large impact.
The impact of travel restrictions during the pandemic has been more significant in Asia, where half of the respondents rank it in the top two most-impactful changes to working practices. These restrictions have also been more significant for IROs at smaller companies than those at larger companies.
Respondents in Asia also have the most negative reaction to these restrictions, with just 39 percent viewing the experience of less travel positively, compared with six in 10 North American respondents and 54 percent of respondents in Europe. Less travel is viewed more positively by IROs than investors, with more than a third of IRO respondents giving a high positivity rating of 8+/10, compared with 28 percent of investors
The impact of less travel in the future is felt more in Asia, with 43 percent anticipating a continued significant impact compared with 35 percent in North America and 29 percent in Europe. Large and mega-cap IROs also have a greater expectation of the continued impact of less travel in their working lives.
More than four in 10 IROs say their targeting strategy has changed as a result of the Covid-19 pandemic. This is slightly up from last year when a third of IROs at the onset of the pandemic had changed their targeting strategy.
European companies have seen less of a shift, with two thirds of IROs there saying they haven’t changed their strategy. More IROs at larger companies have changed their targeting strategy than have IROs at smaller companies.
The key way in which targeting strategy has changed is that it is less geographically focused due to increased virtual meetings and less travel. This means companies can more easily target investors in areas that otherwise may have been less accessible to them.
Economic performance
A clear majority of both IROs and investors recognize that economic performance over the course of the Covid-19 pandemic has been better than they initially anticipated. In fact, the seven in 10 respondents who agree with this statement exactly matches the number of IROs who say their company has performed better than they expected at the onset of the pandemic.
This positive view of economic performance is most strongly felt in North America, with respondents in Asia the least likely to agree: just over half of respondents in Asia agree the economy has exceeded expectations, while a third disagree.
IROs are only slightly more likely to agree with this statement than investors. Among IROs, those at larger companies are more likely to have a positive view of recent economic performance than those at smaller companies, with 83 percent of large/mega-cap IROs agreeing with this statement, compared with 64 percent of small/mid-cap IROs.
