IR & Sustainability to become mainstream, wanted it or not

Sustainability has been on everyone’s lips for many years now. Everyone says that sustainability – taking environmental, health, safety and social aspects into account – is important, of course it is! Correct me if I’m wrong, but companies extensively reporting on sustainability to investors have been, to some extent, marginal or mainly restricted to specific industries or companies. It is only natural that companies operating in traditional industries and, for example, having real emissions or otherwise affecting the environment e.g. forestry, metals or mining, have reported high-quality and detailed information on sustainability to investors, some already for many years or even for decades.

For sustainability issues, it is difficult to set standardized best practices as two companies or industries are not the same. While for some companies environmental issues are essential, it might not be the case for others. Say, for example, a classic example of comparing a company operating in the metal industry and an IT company. It is obvious that there is a gap. In the IT sector there may probably be only some or even no relevant emissions to be reported, as often the largest source of ’emission’ is electricity used by laptops or servers – or office lights. Compared to a metal industry company, in which only the melting capacity of one plant may use electricity as much as some percentage points of the total electricity used in Finland.

Nevertheless, sustainability is gaining more and more importance. It will be an even stronger trend than it is today. According to the recent study by PwC, 97% of institutional investors participating the study said that they believe responsible investment will increase in importance. 18% of respondents said that they have withdrawn from an investment or capital on ESG grounds. (PwC, Bridging the Cap. Aligning the responsible investment, May 2015)

Today, large investors require more and more information on sustainability. For example, a large Swedish fund just recently said that it will only invest in companies which rank high in sustainability. Plus, there are numerous surveys or initiatives signed by hundreds or more institutional investors, saying, please give us more information on how sustainability has been taken account in your business. It might be tempting for the investors to sign the initiatives – why not sign, of course sustainability issues are important! Not signing is even an option. And it only takes a minute.

On the other hand, a much larger leap is to be taken by companies in order to fulfill investors’ information requests. There is always a cost for a company for producing information on sustainability. The fact is that hardly any pieces of information on sustainability come only by a clap of your hands or pressing enter on your laptop. It might actually be quite difficult to set up relevant metrics or obtain the right kind of information in the right form. What to measure in our company and how to measure it? You have to set relevant metrics in place, hire employees to follow those metrics and set up specific company-wide guidelines and policies. This may be a big exercise even if there are guidelines such as Carbon footprints, GRI’s or else to help one in the process. In addition to this, only the producing of a thorough sustainability report easily costs the company tens of thousands of euros, or even hundreds of thousands of euros, if you also take into account the time employees devote to the project. All this comes with a price tag on.

Reporting is good, but action is better. Setting up sustainability metrics is never wasted time. This  often would have to be done anyway in the company. Much more important than mere reporting is, of course, action taken based on metrics inside the company; actually reducing waste, emissions or energy usage in operations.

Yes, sustainability is important. Of course it is. Reporting and giving information to investors increase transparency and reduce the risk the investor sees. But is it also changing the work scene of IR pros for good? Do we need to have specialized IR & sustainability pros in the future?

Blue Berry Communications & IR Oy provides investor and financial communications services for stock exchange listed companies. We help our customers to communicate effectively, transparently and according to regulation. Through consultancy we always aim for tangible results for our customer companies. Blue Berry also develops a totally new kind of service portfolio for investor communications.