As 2021 is coming to an end, it is time to reflect on the main events of the year, and it has indeed, been yet another quite unusual one with many changes. Overall, this is described in the leader in the Christmas issue of The Economist which opens with the following paragraph: “In 2021 people have been yearning for something like stability. Even those who accepted that they would never get their old lives back hoped for a new normal. Yet as 2022 draws near, it is time to face the world’s predictable unpredictability. The pattern for the rest of the 2020s is not the familiar routine of the pre-covid years, but the turmoil and bewilderment of the pandemic era. The new normal is already here”.
Investor Relations is at the forefront of this development and is used to adapt quickly to rapid changes. Big shifts are nothing new, but the very speed at which all these changes are happening all over, is breathtaking as is its outreach and impact. A return to business – or life – as usual is unlikely. Instead, the new normal may very well equal disruption, unpredictability, and accelerating long-term trends. For business and IR this brings new risks and opportunities. In the following, DIRF is taking a close look at 2021 events from our international peers and partners by summing up their headlines.
The IR Society – UK
In the UK the IR Society is continuing business as usual with online events only throughout the year just as the entire team has been working remotely. Their flagship event, the annual conference, was for the second year in a row online only with the main themes centered around the need for companies to have a clear vision of their purpose and sometimes to revisit and potentially adjust it. Purpose revolves around ensuring sustainable future performance as well as corporate raison d’etre. At the same time, all regulation remains a big issue in the aftermath of Brexit with some EU law carried over into UK law. Still, for the most part EU directives are no longer applicable in the UK. Focus is on classification of sustainable investment products and new sustainability disclosure requirements for asset managers. And growing attention on the broad subject of ‘greenwashing’ with both issuers and investment managers by the FCA.
NIRI – USA
In the fall, many businesses started to get back from working remotely for more than year – yet with much difference in approach and companies depending on where your company is located and which industry etc. However, the ‘great re-entry’ to normality has begun in most states, and NIRI has highlighted some of the challenges to IR in that such as whether to have in-person meetings, is it safe and alright to travel? A recent survey carried out among NIRI members showed that 55% of all meetings are now virtual down from about 80% with expectations that in-person events will rise in numbers in the spring of ’22. However, the general opinion is that the world of business travel will change and likely for a very long foreseeable future. It may come back, but a bit differently with more remote working and more virtual meetings, but it will come back at a lower level/scale as it is crucial for relations to meet personally and relate/connect. There is a need to get back out and meet your customers, but it may not look the same as before covid. Other issues in focus are understaffed offices, shops and hotels with many new employees learning as they go. Also supply chain issues and high inflation are of concern, and with the COVID-19 “omicron variant,” more stops and starts, and changes in rules are expected just as re-instituting indoor masking requirements.
Overall, the same key IR-themes are seen everywhere,
- Global developments affecting macro economy with changing conditions resulting in limited visibility, with businesses affected to varying degrees by uncertainties surrounding their business and the markets in which they operate as trading conditions change.
- Climate changes/UN SDGs with the effect on business and society in general on a journey towards adoption of internationally accepted, broad sustainability standards. Companies are needing to change their narrative going forward. Need and benefit of providing some guidance on their websites, including consensus estimates when available, but were erring on limited detail given the prevailing uncertainties.
- Regulation especially from the EU – and consequent effects from follow-up globally
- IR classic themes brought up to date on guidance, disclosure, investor roadshows and marketing, results meetings and conferences, as well as the growing impact of ESG on corporate communications.
What about the IR role going forward?
Getting out and about – the role is broadening and extending, fuelled by the growing importance and relevance of ESG factors and disclosures. With future investor engagement likely to occur through a mixture of communication channels, including face-to-face contact and virtual media, the profile of the IRO is likely to rise. There is a need for IRO to ‘get out’ on their own to establish/reestablish face-to-face contact with investors while taking advantage of digital technologies to run smaller events showing off the business’s products and services. Additionally, the necessity to provide feedback from the market to senior management is considered to be an essential element of the IRO role going forward.
As we approach the end of an incredibly challenging year, DIRF would like to take this opportunity to thank all our members, sponsors, committees, and friends, as without your ongoing participation and support much of what we do would not be possible.
MERRY CHRISTMAS AND A HAPPY NEW YEAR