Building on Strong Foundations - Investor Relations Dialogue

The business of ‘investor relations' is well established - companies seek to build a compelling equity thesis that resonates with investors. This revolves around a well-defined strategy and business model that outlines the company’s objectives, competitive advantage, and growth prospects. Increasingly activity extends across asset classes and covers a much wider dialogue than the historic financial conversation. By effectively communicating the strategic elements, companies seek to build investor trust and encourage long-term commitment.

The question that we set out to address in this dialogue:

How can we create a seamless information ecosystem that caters to the needs of both investors and corporates, promoting transparency, trust, and informed decision-making?

What we discovered:

Expertise plays a pivotal role in this dialogue. Effective Investor Relations requires:

• A high level of expertise in identifying and communicating key strategic elements to build investor trust and encourage long term commitment.
• Detailed knowledge of a heterogeneous investor universe, and effective strategies to engage with and build long-term relations with a wide range of investors.

Reimagining Strategic Engagement: It is essential for companies and investors to differentiate between two very important needs:

• Engagements for information; and
• Engagements focused on value creation.

There is much to be done to establish the right people to speak to and the purpose of each engagement -whether addressing concerns or meeting reporting needs - to ensure efficient interaction.

Navigating Regulatory Complexities: Both corporates and investors are grappling with the immense challenge of keeping up with a myriad of regulatory and reporting requirements. There is a danger that compliance and reporting requirements frame conversations and crowd out dialogue centred on strategic issues.

Integrating Sustainability Strategically: The evolving sustainability landscape demands a more synchronised approach from both corporates and investors. Joint effort is needed to navigate the upcoming reporting frameworks and initiatives and to ensure a focus on decision-useful information and value creation.

This is an extract from the Investor Forum 2023 Annual Review and captures findings from our Investor Relations Dialogue, which the Investor Forum collaborated with the Investor Relations Society on. The Best Practice Dialogues project focuses on the critical exchanges between investment managers and companies and the key dialogues that characterise the relationship: Investor Relations, Sustainability, Audit and Assurance and Voting and Governance.

For further details on the Investor Relations Dialogue or any of the other Dialogues or on the project as a whole please get in touch.