2022 Investor Relations Highlights
As we reach the end of 2022, MZ created a small summary of the year’s most discussed topics in Investor Relations. The list below reflects the most relevant IR events attended by the MZ team globally, such as NIRI, IBRI, IR Society, and IR Summit, as well as general studies prepared by experts to help you be up to date with the most current trends.
Here were the highlights of the year:
Use of Technology:
Artificial intelligence, machine learning, and the metaverse are the technology buzzwords of the moment. Articles discussing technology trends usually address the current hot topics with revolutionary zeal: the next big thing that will change the world as we know it. But the reality is more prosaic: often the technology that really makes a difference is much less exciting, but carefully designed to delivery incremental improvements in our daily workflow, such as well designed CRM and an automated IR Website with interactive tools.
In the NIRI event, the focus of the discussion about technology in this conference was very focused on the use of artificial intelligence (AI) and data. The buy-side has been using AI-driven software that is able to analyze both the script and the Q&A session of an earnings conference call and identify issues such as tone of voice, language and even specific words to identify positives and negatives.
Focus on ESG:
Every year that passes, ESG becomes more relevant – for example, 85% of millennials understand the importance of ESG investing. On that note, we perceived that 2022 ESG’s highlights were to combine ESG information with companies’ narratives, recognizing the importance of communicating its strategies and starting a dialogue with your shareholders. Besides companies leveraging ESG to reach new investors, improve the business and lower its cost of capital, it has been also increasing their sales and showcasing how it fits in with their customers’ ESG strategies. There has been genuine evidence coming out from communities that when the company focuses on ESG matters, the quality of the investor experience and, therefore, investor relationship shows significant improvement. On the other hand, analyzing the market today, using ESG as a risk management tool is critical, since companies need to be able to explain to the shareholders how it is handling some of the key ESG risk factors and how it’s not likely to deter the sustainable growth of the company.
Clear KPIs are definitely a trend, as companies are trying to hone in on the KPIs that are not only related to sustainable goals to show how their ESG efforts are improving, which helps them identify what are the aspects of the business that can be managed. The investing community and regulation are ultimately forcing companies to target those KPIs and have a great opportunity to identify which one of those it’s important for them to highlight. Non-financial metrics are a great way to tell their story to investors and integrate into IR materials for more credibility.
As we know, ESG is a big part of a company’s IR program and it’s always important to keep enhancing your strategy and to understand your stakeholders. It’s time to create more value and a sustainable future, you can always start small and go step by step, it’ll definitely make a difference.
Communication with retail investors:
In 2022, three important aspects were highlighted when it comes to communication with retail investors: marketing initiatives, investor education and governance communication.
According to the 2022 BNY Mellon Retail Investor Survey, marketing initiatives are crucial to attract new investors. Opportunities suggested by the research include leveraging favorable analyst research/ratings and engaging with financial professionals. It is also beneficial to improve brand awareness, thus issuers should leverage implicit third-party endorsements and amplify news flow on social media, if appropriate. Another important aspect is investor education. Stock purchases and shareholder loyalty can be driven by education about where to find information on factors relevant to retail investors’ goals, such as a stock’s growth or income drivers. To better educate investors, issuers should improve their online brand presence and host an attractive IR website with a modern look and feel. Additionally, governance communication is surely relevant to retail investors. For example, the majority of retail investors consider governance important enough to learn more about and said they both read and vote their proxies. However, these investors dislike legalese and want proposals explained in plain, direct language. Therefore, for improved governance participation, issuers should leverage user-friendly proxy voting technology and consider designing clear and concise governance documents, including proxy statements and annual reports.
Data Privacy and Security:
For a company to be easily found by its investors, it is essential to own a good Investor Relations website that provides general information about the company, its history, financials, calendar and policies. Thus, investing in the security of maintaining this data reliable is an extremely important topic within IR. Some examples of “must haves” on an investor relations website are: a trusted URL, SEO apps, cookie alert, privacy policy alert, General Data Protection Regulation (GDPR) and HTTPS for encrypting communications. The topic “Data Privacy and Security” was among the “2022 trends” for the investor tools market. Proving its relevance, this year, several countries authenticated or updated the data protection law, such as Brazil, the United States and Chile.
Communication in a Bear Market:
Difficult times in the Capital Markets need an effective IR program, so the company can keep a dialogue open with its investors, especially after quarterly earnings or any major announcements, contributing positively to the reduction of its cost of capital and increasing shareholder value. Therefore, investing in the technologies available in the market has become increasingly necessary to promote a better communication.
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MZ has been a global leader in investor relations services for over 22 years. Our solutions are trusted by more than 800 clients worldwide, and we have published over 2,000 IR websites. Our portfolio of intelligence and communication solutions empower our clients to remain ahead of the market by providing them with all the tools and insights they need to make effective decisions and better engage with the capital markets community.
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