Beyond the Numbers: Providing Meaningful IR Communications via Social Media
Many investor relations officers (IROs) are comfortable tweeting the dates and times of their quarterly earnings calls, but it’s hard to stand out from the pack when using social media for the same announcements as everyone else.
Savvy IROs are looking to expand their social-media conversations to offer a glimpse into the personality and inner workings of their companies. This makes sense, given that a recent Ernst & Young (EY) survey “Tomorrow’s Investment Rules: Global Survey of Institutional Investors on Non-Financial Information” found that 90% of investors view non-financial information as “pivotal” when it comes to making investment decisions.
Among the 163 institutional investors surveyed, the prevailing view was that non-financial information could be used as a benchmark for risk. Among telling red flags for risk were a history of poor governance and no real strategy to create value over the long term.
“One significant trend we uncovered was that non-financial information is increasingly being used to inform decision-making on investments,” say the authors of the EY report. They continue: “Investors said they had a lack of information to understand what issues could materially impact returns for shareholders; that they often failed to be able to compare performance, even among peer organizations; and that they were often unable to draw the connections between non-financial and financial performance.”
When asked about decision-making within the past twelve months, non-financial performance was said to play a “pivotal role” “frequently” for 23.3% of respondents and “occasionally” for 34.4%.
Highlighting the Right Topics
Although non-financial IR communications can obviously take many guises, the one EY highlighted was information on ESG, or environmental, social and governance topics.
Tellingly, institutional investors seem to want this information to come straight from the horse’s mouth — or from companies themselves. This is a terrific opportunity for companies that can figure out how to use social media and other channels to get investors the information they desire.
A few non-financial issues that investors deem important are the business impact of regulation (50.4% describe as “essential” and 35.5% as “important”), good corporate citizenship — company policy on business ethics (23.9% describe as “essential” and 45.8% as “important”), and personal values (17.3% describe as “essential” and 43.9% as “important”).
Right now, social media is clearly only a small part of how non-financial information is being disseminated. In fact, when asked about the usefulness of social media (Facebook, Twitter, and YouTube were the channels specifically mentioned), only 2.8% said that social media was “essential” and 13.4% said it was “important.” On the other hand, 43.7% said that social media was “seldom relevant.”
The takeaway? Most companies are not yet using social media to convey information on non-financial topics — and yet this information is something that institutional investors feel has vital importance.
For a copy of the report, visit http://www.ey.com/Publication/vwLUAssets/EY-Institutional-Investor-Survey/$FILE/EY-Institutional-Investor-Survey.pdf.