Citigate Dewe Rogerson’s 13th Annual Investor Relations Survey
8 out of 10 companies have less than 10% of their management remuneration linked to ESG performance
Latest research highlights lack of executive management and board accountability for non-financial performance, despite increased focus on ESG strategy
New research from Citigate Dewe Rogerson (“CDR”) shows a significant lack of executive management and board accountability for non-financial performance, despite an exponential rise in focus on ESG strategy in corporate communications.
While the number of boards with a dedicated Sustainability Committee has risen substantially from 37% in 2020 to 46% in 2021, 81% of the 250 UK and international companies surveyed said their management teams have less than 10% of their remuneration package linked to ESG metrics, while just 3% link ESG performance to more than 25% of remuneration.
Despite increased investor focus on social issues driven by Covid-19 and greater scrutiny of net zero targets in the run up to the COP26 summit, CDR’s findings show that 72% of boards still do not have social or environmental issues as a standing agenda item at their meetings.
This may be a consequence of many companies remaining light on relevant ESG experience at board level. Fewer than 50% of respondents say that their boards include at least one member with experience of managing ESG issues, and only 8% claim such experience in all board members.
Sandra Novakov, CDR’s Head of Investor Relations, said:
“Our research findings echo CDR’s own advisory experience over the past year of supporting our global client base as they developed their ESG narratives and navigated the communications challenges of the pandemic.
“Remarkable progress has been made in sustainability reporting, particularly in Europe, and we expect companies to continue to build on this. But with COP26 highlighting the urgent need to move away from an ‘all talk, no action’ approach, there is more pressure than ever on companies to demonstrate management authenticity and accountability when it comes to ESG strategies.
“The advantages of being a responsible, forward-looking company should more than offset the time and effort required to make the necessary internal changes to future-proof the business. As long-awaited regulatory changes to ESG disclosure start to emerge, companies must embrace this period as an opportunity to become leaders in the field.”
CDR’s 13th Annual IR Survey incorporates feedback from 250 Investor Relations Officers (IROs) at leading companies across the world and is now available to download here.
Other key findings:
The Survey also shows Covid-19 continuing to drive changes to financial reporting and investor engagement despite signs of recovery across the globe:
- Altered approach to guidance: 31% of respondents have changed their approach to guidance, and only 14% intend to restore guidance to pre-pandemic levels by mid-2022.
- Investor focus shifting to longer term: Investor demands have moved beyond additional clarity and context around performance and future expectations, with companies increasingly being called upon to demonstrate their approach to navigating post-pandemic challenges, and longer-term strategies for recovery. This has prompted a wave of investment case reviews, which 31% of companies plan to conduct by mid-2022, as well as new strategy announcements by 23% of companies.
- Growing activism: 21% of respondents report a rise in engagement with activist investors over the past year, with many citing ESG issues as the driver of this.
- More frequent investor engagement: Many report more frequent contact with investors, including with those outside key financial centres, with 64% of respondents holding more ad hoc virtual meetings throughout the year and 32% holding more virtual Capital Markets Days and other group events.
- Hybrid working patterns drive virtual engagement: 69% of IROs have adopted a hybrid working model post-Covid, implying that virtual engagement will remain popular longer term.
- Accelerated integration of ESG into overall narrative: while dedicated sustainability reports are rising in popularity, with 51% producing a separate sustainability report vs 42% in 2020, there is evidence of the increasing integration of ESG narrative into ongoing newsflow and results reporting. 45% of companies now include regular references to ESG in results materials vs 35% in 2020.
For further information, please contact:
Head of Investor Relations
Citigate Dewe Rogerson
Tel: +44 (0)7748 794 395
About the Survey
Citigate Dewe Rogerson first started investigating trends in investor relations in 2009 to gain insight into how companies were adapting to the uncertain times brought about by the 2008 financial crisis. Our first survey was based on responses from 80 IROs representing companies from a wide range of European markets, sectors and company size. Since then, our annual IR survey has gained a growing number of supporters, not least from IR societies across Europe including the UK IR Society, Germany’s Deutscher Investor Relations Verband (‘DIRK’) and the IR Club. This led to a decision to include companies outside of Europe in the research for the first time in 2016. In 2021, 250 IROs from leading companies across the world participated in the survey to provide comprehensive insight into how companies across 49 countries around the world are evolving their IR strategies for a post-Covid world and responding to the growing stakeholder demand for ESG data.