Navigating the evolving investor relations landscape: Expert tips for IR professionals
The art of investor relations has changed beyond recognition in the 21st century. “Fast-paced” is an understatement when we consider the demands of an always-on digital market where stakeholders have multiplied, and a diversity of investor audiences need tailored approaches. Expert panellists at Diligent’s recent webinar explored the challenges facing IR professionals; the London Stock Exchange Group’s Katie Rubery summarised the situation by saying, “Communicating your equity story has never been more important, but the investor relations role is increasingly diverse and demanding.”
It’s not just the pace of the environment that is a challenge; it’s also the breadth and depth. Today’s investor relations programmes extend far beyond the annual report and AGM. They must be agile, informed and capable of responding immediately to external factors ranging from macroeconomic conditions and geopolitical events to ESG and the accelerating digitisation (and disruption) of almost every industry.
This calls for a whole new strategic skillset among IR professionals, as Head of IR at GSK Nick Stone explains: “Increasingly IR teams are being asked to do more. It’s a multifaceted role incorporating strategy, insight generation and engagement. We’re also seeing convergence with corporate affairs and broader leadership roles.”
Tactical skillsets have also evolved: “We still need traditional skills such as financial and capital market knowledge, as well as sector-specific pharma knowledge, but we also need digital, social media, communications and storytelling expertise. And as we go forward, we will need next-generation skills — such as prompt engineers and data scientists — as the advent of AI makes its impact.”
Harnessing and balancing digital investor relations channels
Digital communications channels are a double-edged sword in investor relations. They enable greater engagement with investors and are an important benchmark of transparency, but at the same time, they can lower the level of control IR professionals can exert over public dialogue around the company.
Sam Bell, MD and co-founder of investor communications consultancy Copia Digital highlights one particular challenge around consistency: “A dynamic CEO of a multinational company may have a strong personal social media following that has a lot of traction, but you need to advise them on how to tell the story, so they are on message and aligned with the rest of the business.”
Managing digital communications is resource-intensive and meeting stakeholder expectations on responsiveness can be a challenge, so teams need to be sure they have the capacity to service different channels before they embark on new initiatives.
Bell also cautions against going “all in on digital”. While Covid prompted strong demand for virtual AGMs, and these have persisted post-Covid, he warns, “You can’t just do absolutely everything online. [A major UK retailer] recently got it in the neck because they only do digital AGMs, but investors want the opportunity to read the reaction in the room and look the CEO or investor relations team in the eye.”
On the other hand, notes Bell, holding virtual events delivers a valuable opportunity to capture detailed audience data, which, if correctly handled from a GDPR perspective and intelligently segmented, can be an opening for targeted ongoing communications with a broader range of investors.
The role of intelligence gathering in investor relations programmes
Indeed, data is a critical success factor in the prevailing IR landscape. The more intelligence a team has on public perception, investor interests and concerns, and the wider commercial landscape, the better positioned it is to shape the corporate narrative effectively.
Amani Korayeim, Europe and Emerging EMEA Director at Institutional Investor Research underlines the importance of maintaining intimate knowledge of the landscape and its inhabitants: “Focus on identifying your core shareholders and repeat the exercise often as there are shifts in dynamics of the shareholder structure. Perception intelligence is critical. This is the data and information you need to remain abreast of risk on the street, and you need to collect it regularly, not just every two or three years when you have a strategy update.”
Stone agrees and reiterates the wealth of audience data obtainable through digital engagement channels: “By managing different channels for shareholder engagement, you end up with a wealth of data and need to capitalise on it. We use a CRM system, and we are starting to have AI built into it, which is super helpful.”
It’s also essential to collect broader data on shareholder perception, voting trends and market movements to deliver vital context around IR decision-making. Tools such as Diligent’s Market Intelligence solutions offer oversight of topics from governance and compensation benchmarking to voting records, shareholder activist risk, and ESG impacts. However, as I mentioned during the webinar, it's important that IR professionals keep an open mind when reviewing large amounts of data, especially when it doesn’t show what they expect.
What’s the key to investor relations success?
Investor relations is a people business, and our panellists felt that long-term success depends heavily on the character and resilience of IR teams.
Stone advises that “proactive candour” is key. “That means engaging even when times are difficult to build trust with individuals over the long term.”
Korayeim agrees that modesty is an important character trait, commenting, “People who are modest will always ask what they can do better or differently to improve the team, resource it efficiently and use individual strengths to optimise team performance.” She also advises agility and a robust approach to performance measurement and gathering market metrics to inform strategy.
Finally, Bell reiterates the importance of consistency in storytelling. It’s essential that senior leaders have both the story and the evidence to back it up so that when it is their turn to tell it, they can do so with confidence.
Learn more about how Diligent supports investor relations teams with data and insight through our market intelligence solutions.
Resources
Watch the replay of the webinar and download our additional resources for free:
