Mid-year marks the time when investor relations (IR) professionals around the globe attend conferences to network, compare notes on proxy season, and discuss how evolving markets and emerging technologies are impacting the IR universe. Members of Nasdaq’s IR Intelligence team are gauging the sentiment of IR practitioners at conferences from Sydney to Chicago and many points in between.
As the global IR community turns attention from annual meetings to strategy and engagement, they appear focused on three primary drivers of change: artificial intelligence (AI), dynamic markets, and environmental, social and governance (ESG) disclosure. Below, we share our take on each of these drivers and how we expect them to shape the IR practice in the near term.
1. Anticipating the Impact of AI on IR
Despite the furor over AI chatbots and generative AI writing tools, IR professionals are in no immediate danger of being replaced. Generalist consumer tools like ChatGPT cannot (yet) replicate the narrow domain or workflows of IR professionals who have deep expertise, manage sensitive non-public information, and understand the nuance of word choice and narrative structure. As generative AI technologies and tools mature, we expect them to evolve over time to support—rather than replace—the IR domain.
On a more near-term horizon, domain-specific AI tools will power market insights and competitive analysis through summarization and comparison of corporate disclosures on a mass scale. These tools will enable IR professionals to harness and manipulate vast amounts of data in ways that will forever change—and potentially elevate—the IR role. There’s a lot to be excited about in terms of how an IR team will be able to scale itself. Many manually intensive tasks of managing an IR program will be automated, leaving IR teams more time to focus on strategic aspects of the role, including investor targeting, aligning with the executive team, and relationship building with investors and other stakeholders. Investors will be just as empowered, as there will be exponential growth in alternative data and AI to drive alpha generation and differentiation.
For years, Nasdaq developers have been embedding AI in our IR Intelligence suite; and advances in generative AI have led to expanded possibilities. With current offerings in beta and more in the lab, we anticipate new launches and enhancements to our IR Intelligence suite in 2023 and beyond.
2. Navigating Dynamic Markets
One constant in the markets right now is unrelenting uncertainty. The dynamic nature of the markets is driving a need for IR teams to filter out the noise, drive relevance, and secure the attention of investors and executive leadership.
In the wake of constant volatility, the trickiest part of the IRO role is recognizing when the market has shifted enough to warrant a change in message or direction. IROs must skillfully gauge when to raise the alarm, carefully curating what is relevant to the CEO. To do so effectively, IROs need a toolbox stocked with:
- Consistent core message and corporate strategy that can weather some volatility.
- Carefully considered engagement strategy for existing and prospective investors.
- Technology tools to manage stakeholder engagement and track stakeholder sentiment.
- The ability to harness vast amounts of data for deep insights into capital market and company stock drivers (including macroeconomic and geopolitical events).
Monitoring and tracking investor engagement and market sentiment are key to filtering out the noise and identifying when the time is right to approach the CEO. When investor sentiment pivots rapidly, the nature of questions is markedly different, or when capital flows alter the risk/reward of your engagement strategy, then it’s likely time to discuss adjusting your message with the C-suite. The Nasdaq IR team details the latest investor sentiment and capital flows analysis in our June 2023 Macro Trends Report.
3. Shifting Perspectives on ESG Disclosure and Engagement
Two shifts in thinking around ESG stand out during the 2023 IR conference season thus far. First, despite uncertainty, IROs are preparing to transition climate-related disclosures from a discretionary model to a regulatory one. In the U.S., the SEC is still considering comments on their proposed climate disclosure rule in a very polarized political environment, so a final decision is months away. However, businesses are getting approached every day by investors and advocacy groups to disclose more. Europe has already begun mandating climate disclosure, coalescing around the climate reporting frameworks of TCFD and TNFD.
Second, IROs are now augmenting defensive measures against activism with offensive strategies targeting ESG investment, as they recognize tremendous opportunities for attracting new capital. Companies are rapidly maturing their ESG reporting as they define and solidify their ESG profiles, making it possible to surgically target specific pools of capital and craft compelling engagement strategies. Amid political, regulatory and economic forces, investor strategies continue to emerge with an increasing focus on particular themes, such as human capital management, clean technologies or one of many Sustainable Development Goals (SDGs). This focus enables issuers not only to better understand investor expectations generally but also to engage with investors aligned with their corporate strategy and disclosure priorities.
IROs seek a deeper understanding of the expanding multiverse of ESG investors and pools of capital, the thematic areas of focus that drive ESG investment decisions, and how existing funds incorporate ESG factors in their investment mandates. Not only is this a topic of great interest on conference agendas this year, but we are also experiencing interest in our IR Insights ESG Ownership Dashboard, which provides a granular assessment of the type and nature of ESG funds investing in a particular company, peer group, and the market at large.
Nasdaq IR Intelligence combines deep capital markets knowledge and data with the tools and services you need to manage stakeholder engagement. Learn how to harness the power of data to drive market insights, target capital, and build compelling engagement strategies by contacting our team here.
