Blog

Long-term Value for Investor Relations and Corporate Responsibility

Richard Hardyment

This week marks a small but significant landmark in the sustainable business world. Data from the hugely popular Dow Jones Sustainability Index (DJSI) is now lighting up Bloomberg terminals. Over 300,000 investors now have access to this rich dataset of sustainability performance (something I’ve previously described as Sustainability’s Big Bang).

This is part of a relatively silent, somewhat slow but hugely significant trend.  More and more investors are showing an interest in responsible and sustainable business. Specialist sustainable investing assets are estimated to have grown by over 60% in two years, standing at over $21 trillion. The UN’s Principles for Responsible Investment has an even bigger $59 trillion under management by signatories. Meanwhile, 60% of investment board members say they’d divest from companies with a poor sustainability performance (according to a major MIT Sloane and BCG study).

Why the interest from investors? Because more are realising that well-managed companies with strong corporate governance, sensitive environmental management, effective ethical practices and a positive social impact are not just ‘nice to have’. They generate great, long-term returns, and they often have a lower risk profile.

So how are companies responding to this trend? By burying their heads in the sand, according to our new research. Truth be told, there is still a massive gulf between Investor Relations (IR) and Corporate Responsibility (CR) with the result being a general failure to engage investors on corporate sustainability.

Sometimes the two teams appear to have totally different mindsets. One does data; the other does case studies. IR talks of capital and compliance. CR speaks of giving and green. IR wants to save money. CR wants to give it away! Of course, this is a gross simplification. Many CR practitioners are acutely aware of the need to measure a business case. But our research suggests that CR and IR are not doing enough to work together. But it doesn’t have to be this way.

This week, we’re launching the Long Term Value Project – a new initiative from Corporate Citizenship to explore how CR and IR can better work together. IR and CR have a shared ambition: to create sustained, long-term shareholder returns that benefits different stakeholders. We need a new common language, and a mindset shift towards the long-term. To unpack the challenge and potential solutions, we’ve been interviewing companies and other experts. Working with S&P, we’re publishing a report next week. Meanwhile, my colleague, Peter Truesdale, is presenting the findings at the RobecoSAM Forum 2016 in Zurich today.

We’re keen to hear from more companies that have tackled these challenges. How can we bridge the divide between IR and CR? What common language, processes and priorities are most effective? Please get in touch if you are interested in taking part.

Leave a Reply

Your email address will not be published. Required fields are marked *