2019 volume 29 issue 3

Towards More Inclusive IR?


Karen Keyes, Aimia Inc.

At the CIRI Conference in Halifax, I was interested to hear Marnie Smith of Korn Ferry speak to an emerging trend of companies adding a “stakeholder relations” person at the executive level. It wasn’t the first time I had head the term. When British bank Lloyds was purchased by the UK government in 2009, it genuinely made sense for leadership of IR and government relations to be a combined role – stakeholder relations – as government was the largest shareholder. It was thought-provoking to hear this type of management structure discussed at the Conference.  

‘Corporate affairs’ or ‘corporate reputation’ has been a feature on the landscape for many companies for years. In smaller companies, this has sometimes been a necessity as cost structures have forced them to combine roles. Since communications, media relations, government relations – and at times investor relations – have been recognized as sharing common ground, the management of these functions has sometimes been combined.

Early in my career, in the late 1990s, I worked in government relations. Our interactions on behalf of the company (and our employees) involved multiple stakeholders – politicians, policymakers, unions, NGOs and, importantly, trade officers and our contacts at the export credit agencies. It was an early exposure to how to communicate about the company as a good ‘citizen’ and, while somewhat at odds with the 1990s focus on shareholder value, much of our activity and communications ultimately focused on what was good for the company and mustering financial support for our exports. 

There may be a nuance to the emerging language. Debates around “inclusive capitalism”[i] and “moral money”[ii] are easily found these days and the Financial Times has recently launched a weekly Moral Money newsletter. Perhaps the mentality at the executive level is shifting from the inside out – from protecting the company and focusing on what is good for it to a more inclusive concept that signals the company is open to a dialogue with its stakeholders as it shapes strategy. These sorts of changes in the landscape are making chief executives think twice about what outcomes they are looking to achieve and are shifting, to a degree, how they think about shareholders. 

As Board and senior management turn in this new direction, IR could also become more ‘inclusive’ and more interesting. This may require IR practitioners to think carefully about what kind of IR they want to practice and how to position themselves internally, in the following areas:

  • Choices around resources: IR is already pretty busy. When I started in investor relations, I held a fairly simple view of my job’s focus and who my stakeholders were. In my internal presentations to the finance team, I frequently referred to investors as the IR ‘audience’ and the media and analysts as ways to help the company communicate with investors. Sure, I realized that the investor community was more sophisticated and that large pension funds were different from the Invescos of the world, but at that stage, I had limited knowledge of hedge funds and activist investors and no contact with debt investors. Just addressing the needs of these audiences keeps me pretty busy on a day-to-day basis. The fact is, few IROs have the bandwidth to step above the parapet into these broader, ‘higher level’ conversations. As investors put more focus on a company’s social impact, more data, more effort and more resources will likely be required to take a meaningful corporate view. However, if IROs don’t assume the challenge and decide how to resource to answer the demand, the ‘stakeholder relations’ vacuum is likely to be filled by colleagues responsible for strategy or communications, or the corporate secretary.
  • Building knowledge and internal networks: My roadshow conversations today rarely stray into discussions regarding ESG – let alone detailed conversations about stakeholders, apart from employees and perhaps unions. Building knowledge beyond the financial statements and the spreadsheets always requires an internal network – and this may involve increasing the conversations IROs have internally to include more functions or topics. In my experience, quarterly business reviews touch lightly, if at all, on the kind of long-term strategy and economic issues that lead to conversations about a wide range of stakeholders.
  • Creative thinking about external networks: Building strong stakeholder relationships requires creative thinking about your industry, your company’s place in it and how you influence the broader economy. My government relations experience taught me a lot about how to do this with respect to regulation, as well as investment and jobs, but certain IR situations (proxy contests, difficult strategic decisions regarding changes to dividend and leverage policies, as well as large corporate restructurings) educated me a great deal about building arguments and allies to influence outcomes with media and investors.
  • Internal positioning of IR: My boss in government relations was firm that we were not to be lumped with ‘corporate communications’ and that the government stakeholders we worked with were key to the company’s financial success. In recent years, it has become the norm in many companies for IR to be part of the finance team. A potential shift in IR as part of a more extensive stakeholder relations role may make it less obvious where the IRO should report, potentially leading to multiple (and confusing) reporting lines. This would require IROs to either embrace the direction or be clear what the role will cover and how their knowledge and skills fit the scenario.

As many investors embrace a more expansive dialogue with the companies in which they invest, IROs would do well to think about how they can best position themselves to contribute. Building strong internal and external networks and the right creative thinking skills can only be a positive for anyone looking for a broader ‘stakeholder relations’ role in his or her career. 

Karen Keyes is Senior Vice President, Investor Relations at Aimia Inc.

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