Corbin Advisors is proud to partner with IR Magazine and Corporate Secretary for the ESG Integration Forum. Our Vice President of ESG and Nonprofit Advisory, Sudi Setlur, joined an engaging panel discussion on building and communicating an impactful ESG narrative moderated by Steve Wade, head of event content of IR Magazine & Corporate Secretary.
Setlur spoke alongside Renee Campbell, senior vice president of investor relations and treasurer at Valmont Industries; U-Jin Lee, vice president of business development at AlphaSense; and Tanya Rakpraja, managing director of corporate responsibility and government relations at Annaly Capital Management.
Setlur emphasized the importance of building a robust ESG story to effectively target ESG-linked capital. This includes identifying topics material to key stakeholders, mapping how they impact corporate strategy, and integrate the management of risks and opportunities arising from them into investor communications
Setlur described Corbin’s ESG research findings on the evolution of corporate responses to stakeholder expectations. A recent Corbin study found that 56% companies have at least one slide about ESG in their investor deck, but the quality varies. Only a handful are clearly showing what ESG means to their business and how they impact the financial health of the company and this will continue to grow. The panelists noted the importance of this forward thinking, while staying true to your company’s culture and individual story.
Though some companies have started their ESG journey years ago, Setlur advises that it’s never too late to begin. He notes that anyone wishing to build a successful ESG story today should conduct a robust materiality assessment to best understand what ESG means to you and your stakeholders. Involving key stakeholders will help establish what is material now and provide clues on what could be material in the future. Integrating their expectations helps maximize the ROI of ESG efforts, including talent and customer acquisition/retention.
Setlur highlighted three consideration points for creating an ESG narrative:
1.) Inward Reflection – Relying on ESG rating agencies to determine what’s important will result in missed topics because the raters are using topics common to the industry but not necessarily each company. Internal stakeholders understand their company better than any ESG rating agency. Setlur reports that materiality assessments that include the views of internal stakeholders reveal 30% of topics are either not considered by the raters or very differently weighted.
2.) Purposeful Storytelling – Targeting stories purposefully can help your stakeholders identify what’s important to your firm, and how it will create value. Companies must not only look at how to mitigate ESG risks, but also how to take advantage of opportunities, Setlur encourages.
3.) Value Creation – Breaking down the report for individual stakeholders helps them realize its value. Setlur gives the example of walking through the report with an HR department to determine what helps them recruit and retain, then creating a smaller, more digestible “tear sheet” for that group’s easy reference.
Overall, the panelists conclude that ESG communication needs to be intentional and circular; external conversations with investors can drive internal conversations on what’s important. By making your strategy defensible, your company can stand by what your goals are.
Other topics included:
- Engaging, Monitoring, and Planning
Rakpraja offered three points of consideration for standing out among peers in the ESG space: active engagement, active monitoring, and active deliberation/planning.
Active engagement involves conversations with investors about ESG to better understand how they feel about certain issues before they become policy. You can also educate them further about what’s important to you and your organization.
Active monitoring involves staying updated on happenings among regulators and policymakers, examining letters and guidelines, and benchmarking against disclosures and industry initiatives.
Active deliberation and planning is an internal process that involves prioritizing what’s important to the company. Through internal deliberation followed by external education, your company’s message about why and how ESG works can be spread.
- Driving Engagement Through ESG Reporting
Campbell recalled Valmont’s ESG investor call with a wide audience of 60 live participants. The event, which leveraged Corbin’s ESG advisory services, described how value creation, sustainable outcomes, and innovation come together at the company. In the future, she advises to send the ESG report before the meeting out to allow investors time to digest the information and distill which pieces were most important to the company. She advised that more company leaders’ voices on the call adds to your credibility.
The material from the call is being used for several internal stakeholder use cases, including talent attraction and retention. Campbell said that the call has also changed their social media presence for the better after they began highlighting the sustainability impact of their products around the world. The combination of value creation, innovation, and sustainability in the social media posts has seen a manifold increase in engagement.
- Trending ESG Topics Among Different Investors
Campbell also mentioned the difference between investor focus when examining ESG stories. Passive investors are data-driven, looking at ratings and frameworks to make decisions, and rarely reaching out directly to the company. When they do, they tend to ask about accountability, goals, and metrics. On the other hand, active investors have recently been engaging more frequently, especially EU investors; even funds are requesting further information that relates to our unique sustainability story.
Rakpraja explained large shareholders are asking broad ESG questions, while hedge funds rarely ask ESG questions. Standards are industry-specific, while many risks and opportunities are company-specific. Rating agencies are not focused on a particular company’s specifics. Therefore, Campbell encourages to stay offensive, not defensive, and focus on what makes your company unique and boldly communicate that.
Learn more about ESGand working with Corbin Advisors on ESG communications gap analysis, market research into ESG ecosystems and trends, and ESG-dedicated investor presentations.
Click here to access to replay of the panel discussion.