It’s More Than the Color of Money: Investor Relations Goes Green


Although it’s widely known that CSR is much more than a passing trend as far as public interest is concerned, executives are still challenged to engage all corporate audiences in the context of CSR. Among these key audiences to address are investors. After all, an effective CSR program can help build credibility with investors, as well as communicate a company’s interest in the changing environment.

This issue of integrating IR and CSR communications deserves to be top of mind for all corporate communicators and investor relations professionals, and it was one of the hot topics at the recent National Investor Relations Institute (NIRI) Annual Conference, held last week in San Diego. Investors are increasingly reaching out to companies with questions, concerns and surveys about their CSR efforts, and it’s vital that IR and corporate communications professionals be prepared to respond in a strategic, coordinated manner.

The following points and related strategies and solutions were central topics of discussion at the conference.

â–¶ A competitive advantage can be gained from proactive CSR. According to Matt Coleman of Clean Asset Energy Asset Management, one of the country’s most prominent environmentally conscious funds, investors care not only about the actions that a company is taking to address CSR issues, but also about the efforts to proactively communicate these actions.
In explaining the SRI (socially responsible investing) investment approach, Coleman says that although his firm is “definitely focused on solutions, the majority of investors are going to be looking for you to be consciously addressing these environmental changes.”
According to Coleman, progress on CSR initiatives is important because investors believe that companies that are proactively addressing these issues will be able to enjoy a real competitive advantage.

â–¶ Investors see CSR as risk management. Coleman cites that $2.3 trillion U.S. investment dollars, or more than 10% of U.S. investors, are now considered to be socially responsible. He says, “The majority of
funds out there are investing in companies that are proactively addressing the environment around them and are trying to lessen their water or electricity usage, consider green building, have less packaging or make the supply chain greener.”
Coleman continues: “There are a lot of activities where it’s not just about what products you sell and how you normally operate your business, but we are now concerned about a lot of the risks of your business. It’s not just about the carbon footprint.”
â–¶ CSR offers opportunities for communication with investors. CSR issues should be looked at not as a threat to companies but as an opportunity to proactively address these business risks, give your company a competitive advantage and communicate with and attract new investors.
“The good news is that there are a lot of things you can be doing that are opportunities, and there are many ways to improve your business that we, as investors, are going to be looking for,” Coleman says. 
Although CSR is sure to demand more disclosures and better reporting in the near future, there are many things that companies can be doing now to communicate their key initiatives. A panel of experts at the National Investor Relations Institute Annual Conference discussed best practices and ideas for integrating CSR into your company’s business strategy and communications with investors (see page two for specific tips and best practices).

â–¶ Getting started with CSR. According to Hulus Alpay of Makovsky & Company, many small- and micro-cap companies, as well as companies that are new to CSR, should focus on “taking baby steps and consider starting with just one page in the annual report [devoted to CSR initiatives], but realize that this is something that all investors are interested in.”
Alpay explains that it’s important to be consistent and focused and to apply CSR to all parts of your communication. He also encourages companies to “use friendly stakeholders as a resource by organizing mini focus groups to get thoughts on your CSR initiatives.”

Lawrence Parnell of Bench Strength Communications encourages corporate communications and investor relations executives to use the resources around them when developing a CSR communications program.
“Forming an internal committee to look at CSR not only allows you to understand the issues and opportunities from all different angles, but also gets more people engaged internally,” he says.
Parnell also stresses the importance of benchmarking your competitors and understanding what level of metrics and disclosure are standard for CSR communications in your industry. “The first questions management will ask when you are getting started will be, ‘How much does it cost?’ and, ‘Who else is doing it?’” he says.

Regarding McDonald’s CSR initiatives, Lisa Ciota, the company’s director of investor relations, cites the importance of integrating your CSR strategy with your overall business strategy. She explains that McDonald’s has structured its CSR initiative to fit in with its overall “Plan to Win” business strategy, and communicates this on its Web site and in its annual report.
“It’s important to make this more of a part of the fabric of your business and to understand that it’s not about enhancing your image, it’s about changing the way you do business,” Ciota says.

â–¶ CSR must be multi-dimensional. At McDonald’s, Ciota explains, CSR is considered in all its manifestations, from how it relates to the customer experience to its effects on the physical plant and suppliers.
CSR is definitely not a quarterly issue—it’s something that investors are looking at over the long haul. By strategically integrating CSR initiatives into communications with investors, your company can showcase its mindfulness of the surrounding environment and community, and also its ability to achieve cost savings and effectively manage the risks of doing business in this new world. PRN

This article was written by Jennifer Farrelly, a researcher at the Tuck School of Business at Dartmouth College. She can be reached at jennifer.farrelly@dartmouth.edu.




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