ESG Strategy – Activating the CSR Report
Today, we’re covering highlights from our NIRI presentation – Phew! The CSR Report is Published…Now What?!
In 2021, 92% of S&P 500 companies – an increase from 80% 5 years ago and just 20% a decade ago – and 70% of Russell 1000 Index constituents published a sustainability report. And, it’s not just large companies that are publishing: 49% of the smallest half by market cap of the Russell 1000 published a sustainability report last year. Setting the stage, according to our proprietary buy-side research:
- 84% report ESG has meaningfully increased in importance as an investment factor in the past two years
- 56% believe companies that integrate ESG into business strategy will outperform over the long term
47% report reading the CSR Report only “sometimes” while 88% say the Investor Presentation is a leading source of information
In a recent poll of institutional investors, the top 3 critical factors across ESG are:
Environmental
- Emissions Reduction (inclusive of net zero)
- Energy Reduction
- Water Reduction
Social
- Diversity & Inclusion
- Employee Relations / Company Culture
- Community Impact
Governance
- Board Composition (inclusive of board diversity)
- Executive Compensation
- Capital Deployment
We also analyzed a randomized sample of 50 companies within the S&P 500, across sectors, that published a CSR Report in 2021.
According to our research, we identified that companies:
96%
Outlined goals and KPIs in the CSR Report
56%
Incorporated an ESG section into the Annual Report
56%
Incorporated ESG slides in the Investor Presentation
44%
Issued a communicative press release relating to the publication of the CSR Report, outlining key data and progress updates
44%
Highlighted ESG during the earnings call
42%
Published an ESG fact sheet and/or executive summary of the CSR Report
42%
Have a dedicated ESG / Sustainability Board committee
14%
Provided additional reports (DEI, Climate, etc.) in conjunction with the CSR Report
The CSR Report is a heavy lift; from coordinating across the organization to data collection and aligning on messaging, it’s a real feat to get the CSR Report out the door. To maximize the return on your effort, we recommend leveraging all your communication channels in addition to the CSR Report itself – incorporating your sustainability messaging within your annual report, investor presentation, and earnings call. And for those companies that want to differentiate their ESG approach, to go the extra mile and develop a focused investor communication strategy.
To that end, our research finds that only 12% and 6% have a dedicated ESG presentation and conduct an ESG webinar linked to the CSR Report publication, respectively – a communication strategy pioneered by Corbin several years ago.
For clients where we have supported the development of a topical ESG presentation and conference call, the results have been impressive and returns tangible: in every instance, the webinar has served to activate investor interest and investment, with clients receiving emails requesting a meeting to learn more while the webinar was inflight and 13F data showing position increases and initiations by firms / funds with a proclivity toward ESG.
Three ways to differentiate your ESG program / strategy to drive value creation:
Craft a compelling, authentic and achievable narrative; tailor the messaging for each stakeholder group
Ensure consistency of messaging across all communication channels, from your CSR report to your proxy, annual report, and earnings calls and leverage all channels to convey your message to the widest audience possible
Develop investor-centric ESG materials that distill the content of your CSR report and enable you to target and convert investors into new / bigger shareholders – host an ESG-dedicated webinar linked with its publication
Questions to discuss with senior leadership team, board, and anyone working on sustainability issues at your company:
- How is your company addressing the most important issues facing the world today?
- How are you innovating to solve global problems?
- How does the continued success of your company (strong bottom line) contribute to a better world and healthier planet?
- How are you helping customers advance their own sustainability goals?
- Why would someone want to build their career at your company, invest in your company, purchase products/services from your company?
In Closing
As always, we’re happy to answer any questions regarding ESG, share additional best practices, and/or provide an overview of our ESG solution to activate CSR Reports, including actual case studies on the impact of our bold and impactful investor communication strategies. We appreciate and value our client relationships and are driven to create long-term value for you.