If you work in communications or investor relations for a quoted company, you must be feeling like you deserve both a pay rise and more support in your role. The demands keep rising as the definition of the purpose of a company keeps being expanded.
In the US, last year the Business Roundtable group set out the list of stakeholders which a corporation should be considering. In the UK, arguably the 2006 Companies Act had already widened a company’s focus away just from its shareholders, and this was given additional weighting in the 2018 Corporate Governance code which is now fully in place.
So it is not just about the owners of equity. Companies also need to consider customers, employees, suppliers and the wider community, and sustainability plays a large part in many of these relationships.
Now, I have seen some criticism of companies recently for not including more ESG information in their reported results and trading statements. But I would ask whether this is the best forum for including this type of information?
In Europe there has been a reduction in the reporting demands for companies in recent years. A Q1 and Q3 trading statement is no longer required. This was intended to allow companies to focus more time on communicating their longer-term, “big picture” story. So trading statements have got shorter and in many cases disappeared. Even interim and full year results presentations have become punchier.
The sell-side analysts and financial media will always be attracted by the “news event” of corporate reporting, but many investors and other stakeholders are likely to see this as short-term “noise”. In addition, the back-to-back reporting seasons, particularly in the US but also to a less extent in Europe, only allow a small window to analyse what a company is saying before you have to move on to the next one.
Certainly, it is important to reaffirm your sustainability credentials in your results materials; however, it is unlikely to be the best platform for a detailed in-depth review.
Overall I think there is increased interest in a steadier drumbeat of news from companies throughout the year, often including smaller capital market events, rather than the traditional big capital market days. These allow for a deep-dive down into a division, or a function, or potentially how the company approaches its dealings with each of the wider stakeholder groups.
In London in the last year, we have seen several companies dedicate a capital markets event to their sustainability agenda, including the likes of Coca-Cola, Tesco and Unilever, and I suspect we will see more in 2020.
Yes, it is vital that companies address ESG issues on a regular basis, but choosing a results reporting day is unlikely to give you the full attention of your audience. As ever in life, you need to choose your moments well.