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Corporate reporting and investor concerns are misaligned. Should IROs rethink their priorities?

Over the past year, the three hot topics for discussion between corporations and investors have been customer relations (62%), government and regulatory engagement (59%) and public health issues (53%), revealed the Stakeholder Management Report, based on a survey conducted by IR Magazine and Nasdaq.

Surprisingly, however, when companies were asked which topics they were reporting on, they did not match the ones they were most discussing with their investors, with only 38% of the companies surveyed including customer relations in their annual report, while 53% did not report on the issue at all.

Customer relations refers to the process used by businesses to engage with customers and build long-term relationships. This includes assisting customers with questions and developing policies that enable customer success. Unlike customer service, customer relations is proactive, rather than reactive, and aims to boost customer retention, customer lifetime value (CLV) and build stronger bonds with customers. Amazon, for example, invests in customer relations to understand their customer base and keep them engaged.

The most commonly reported issues, according to the study, are resource management and socioeconomic development, despite the fact that these are the topics investors appear to be least concerned about. Supply-chain relations also features prominently on investors’ priority list but is another topic scarcely reported on.

In this article we examine the possible reasons for this mismatch and ask whether IROs should rethink their priorities in order to be more attuned to shifts in investors’ concerns in recent years.

New times, new priorities

The report analyzes company focus and investor interest in nine key stakeholder issues: 1) carbon-neutrality goals, 2) customer relations, 3) employee relations, 4) government and regulatory engagement, 5) public health measures, 6) PR and corporate reputation, 7) resource management and waste, 8) socio-economic development, and 9) supply-chain relations.

Researchers found that changing times have shaped discussions between companies and their investors, with public health measures becoming a more salient topic in response to the Covid-19 pandemic.

The report highlighted a great increase in both company focus and investor interest in this issue over the past five years, with 90% of global companies reporting an increase in focus on this issue. Company focus on public health has been strongest in Asia (90%), even though, regionally, Asian companies are the less likely to discuss the topic with investors (42%).

The current debate on how to mitigate climate change also appears to have influenced investor concerns, with more than seven in ten IROs reporting carbon-neutrality goals as the stakeholder issue that has seen the greatest increase in interest in the past five years.

Carbon neutrality appears to be of particular concern for larger companies, with more than nine in 10 larger companies increasing their focus and eight in 10 IROs reporting greater investor interest in this issue.

Overall, the report found that the nine stakeholder issues examined had seen an increase in interest from investors.

Geography influences priorities

Researchers found that geographical and cultural factors, rather than company size, appear to influence discussions with investors, with European IROs more likely to place customer relations at the top of the agenda than North American or Asian companies.

The report found that North American companies are far less interested in customer relations than those in other regions. Over the past five years, North American companies have seen a waning interest in company focus and a lower increase in investor interest than companies in other regions.

Environmental concerns also appear to vary from one region to another, with carbon-neutrality recorded as slightly less of an issue for North American firms than for European or Asian firms. Whereas 76% of European and Asian firms reported on carbon-neutrality goals, only 29% of the North American companies surveyed did so.

Are investors not interested in employee relations?

Employee relations is another stakeholder issue for which researchers found a mismatch between topics prominently featured in companies’ end-of-year reports and agenda for actual discussions with investors.

Although employee relations was one of the most frequently reported-on issues and an area of high company focus, it is perceived to be of lesser interest to investors.

Overall, the research suggests that the larger the company, the more likely it is to be concerned, in terms of both investor interest and company focus, on this issue.

How Can Miranda Help?

Miranda IR is happy to help you understand what your investors care most about. As a third party we can carry out perception studies of your investors and analysts that cover your industries, to give you an unfiltered view.

Sources
●   https://www.irmagazine.com/content/stakeholder-management-report
https://www.forbes.com/sites/blakemorgan/2019/08/26/101-companies-committed-to-reducing-their-carbon-footprint/?sh=47c02cb7260b

 

Contacts at Miranda Partners

Damian Fraser
Miranda Partners
damian.fraser@miranda-partners.com

Ana María Ybarra Corcuera
Miranda-IR
ana.ybarra@miranda-ir.com

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