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Reports 5 Dec 2016

Closing the Sustainability-Investor Relations Gap

Engaging Stakeholders Research

By Rebecca O'Neill

Too few companies get clear sustainability performance messages out to their investors and one of the main barriers is the internal dynamic between Sustainability and IR departments.

This is a key finding from SustainAbility’s latest research, Closing the Sustainability-Investor Relations Gap. The research makes the case for stronger internal engagement between Sustainability and Investor Relations (IR) teams to enable proactive, integrated communications to investors.

Integrating sustainability into investor communications is genuinely difficult and requires internal collaboration.

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While investors are increasingly integrating consideration of sustainability or Environmental Social and Governance (ESG), issues and metrics into their decision-making, more progress is required.. By closing the gaps between IR and Sustainability, companies can accelerate information flow and drive capital to more sustainable businesses.

In Closing the Sustainability-Investor Relations Gap, we outline five key gaps where Investor Relations and Sustainability teams feel misalignment:

  1. Language – Differing terminology to describe, and different indicators to measure, company performance
  2. Timeframe – Companies and their IR teams are pressured by investors to report on short term results while Sustainability teams often focus on issues that play out over the medium to long term
  3. Expertise – Inadequate levels of mutual comprehension and technical capacity in the respective disciplines of IR or Sustainability
  4. Relationships – Lack of strong internal relationships between IR and Sustainability departments and team members
  5. Resources – Not enough staff time or other resources dedicated by Sustainability and/or IR departments to integrate sustainability issues and sustainability performance data into investor communications

The report examines each gap in detail, exploring the reasons, the pain points and solutions that have been proven to help close the gaps. We include case studies in which companies have successfully applied the solutions to build stronger internal collaboration on investor communications.

Some solutions highlighted in the report include:

  • Foster IR/Sustainability alliances
  • Build on existing tools and channels
  • Prioritize a few surveys or decide not to respond
  • Identify intersections between sustainability issues and the business model
  • Ask investors what language and metrics they use
  • Discuss the value of cultivating long term investors

We encourage practitioners to explore our findings, implement the solutions, and continue their work integrating sustainability into investor communications to enable the shift to a more sustainable financial system.

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