ESG and its impact on FTSE Boards as seen from an Investor Relations standpoint

With ESG promising to be on everyone’s agenda post Covid 19, we will need to see boards adding the necessary expertise around Environmental, Social and Governance topics in order to be equipped to make smart and informed decisions.

Sainty Hird & Partners, in association with Boardex, surveyed the Heads of Investor Relations across the FTSE100 & 350 to get a better understanding of how ESG was impacting the strategy of their businesses.  The findings showed some interesting conclusions.

  • Organisations take ESG seriously – 57% of these programmes are overseen by the CEO or Chairman and 68% have a board committee member that deals with ESG.
  • Investors are much more interested in ESG – 96% of companies reported an increase in investor engagement in ESG in the past 12 months.  Consequently, 96% of firms plan a greater role for ESG engagement with investors in the next 12 months.  The survey also found that 82% of investors are looking for more board involvement in ESG initiatives.
  • Howewer, only 64% of firms feel they have a clear process to manage ESG engagement with investors or have engaged with a wider group of external stakeholders to help devise their ESG strategies.

From our survey we established that where organisations had a board member responsible for ESG,  it tended to be the CEO (40% ) who was responsible for driving the ESG agenda and its impact on the strategy of the business.

An overwhelming majority agreed that ESG has played a greater role in the firm’s engagement with investors over the past twelve months.

Almost 100% agreed that ESG has played a greater role in the firm’s engagement with investors over the past twelve months. Moreover as we look forward companies are fully aware of investors increasing interest in a company's activities around ESG, and will, therefore,  need to be ready for this. This may well involve a shift in strategy and certainly will require more board time being dedicated to the conversation. Firms have seen the need to demonstrate to investors how they are approaching ESG during the last year.  

Importantly, as they approach next year, companies are fully aware that the engagement will need to increase as they will need to show investors the initiatives they are pursuing in the space.

As we look to the future, what is important to note is that only 68% boards  feel reasonably comfortable with the processes they have in place to manage their ESG engagement with investors, leaving a large number of firms unclear on how to navigate this new world. Put simply there is still a lot of work to be done.

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ESG and its impact on FTSE Boards as seen from an Investor Relations standpoint
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