ALC - Q4

Understanding the intricacies of sustainability reporting has never been more crucial. Recently, a webinar titled “How the European Sustainability Reporting Standards Adopted by the EU Will Impact Global Public Companies” provided valuable insights on how new and existing legislation, the ESRS, from the European Union (EU) will impact how companies report their earnings results. 

With the announcement of a new Proposed Rule by the Securities and Exchange Commission (SEC), the US regulatory environment has taken a giant leap forward. Ignoring ESG-related and climate-related disclosures will soon no longer be an option for many domestic (US) or foreign SEC registrants.  

Key Takeaways

After 2021 showcased exponential growth in ESG-focused initiatives, investors, executive leadership teams, and heads of state have elevated standards towards broad market and company-specific policy referendums. Long-standing actionable items such as climate change, diverse boardroom composition, and social justice and equity programs draw initial attention from top investment houses, proxy firms, and educational institutions as the discussion heats up in 2022. In this note, Q4 outlines fundamental ESG-focused trends driving policy change and how buy-side investors think about an ESG outlook in 2022.

The importance of social and sustainability criteria for public companies has been steadily increasing as investors become focused on non-financial performance in their investment decision-making. For investors like Blackrock, environmental, social, and governance (ESG) initiatives are seen as critical contributors to a company’s future financial performance and their incorporation into portfolios. And with 72% of investors surveyed by EY sharing that they conduct a structured, methodical evaluation of a company’s ESG criteria, IROs have been looking to better elevate and communicate their investments into sustainability. 

Investors are taking a growing interest in the environmental, social, and governance ESG policy of the companies they invest in, and rightly so. A recent Barron’s article indicated that one-third of U.S. assets are now managed according to sustainable principles. Investors expect that number to grow further under the Biden administration. Whilst over in Europe, more than half the money that flowed into European funds last year went into sustainable products, according to the Association of the Luxembourg Fund Industry. As a result, a record €1.12trn ($1.4trn) in investor cash has now been steered toward strategies that address environmental, social, and governance considerations, according to the study.

Award-winning investor relations isn’t just a popularity contest or a trophy to sit on your shelf, in fact, it can help your bottom line. It was recently reported that companies that boast award-winning investor relations have a higher valuation and lower volatility than other companies. Every year, IR Magazine hosts an awards ceremony that recognizes best-in-class IR. They review multiple categories and follow a diligent process that includes multiple factors and research that are considered when choosing the candidates and winners. In this blog, we will detail some of the winners and nominees who earned their spot as best in the category, and what makes award-winning IR. 

Environmental, social, and governance (ESG) was already rising as a critical objective for IROs before COVID-19 took hold of the world. While only 27% of investors were making “frequent” use of nonfinancial performance in 2016, 91% of investors recently surveyed by EY say that non-financial performance has played a pivotal role in their investment decision-making over the past 12 months. In the new landscape of a post-COVID-19 world with restricted travel and office access, virtual events for ESG has become the best option for communicating and affirming ESG initiatives and updates.