Beyond Investor Relations: The Evolving Role of IR Professionals in ESG and Sustainability
By Michael Stiller
Investor Relations (IR) professionals are quickly becoming the dynamic multitaskers of today's corporate world. They are viewed as an internal partner of choice across corporate functions and have expanded their remits year-over-year, including focus on technology advancements, sustainability, regulatory compliance, and macroeconomic disruptions. With a growing list of responsibilities, IR professionals have a reach that extends from internal initiatives to external activities. In recent years, IR professionals' versatility has been particularly evident through a growing involvement in or leadership of sustainability and ESG efforts.
Now more than ever, IR professionals are managing, reporting, and communicating their organization's ESG strategies and programs. Looking deeper into this topic, Nasdaq IR Intelligence uncovered how the role of IR has evolved over the years, as well as how leveraging people and AI-based technology can help IR professionals align their objectives with their organizations' broader ESG and sustainability goals.
IR Professionals: Then vs. Now
Today, the IR profession has entered its third wave of execution – cross-functional leadership and tackling new verticals, like ESG and sustainability. This most recent phase can create a narrative for stakeholders that's not solely focused on financial performance and investor engagement. With this shift in responsibilities, an exciting growth course becomes evident for individuals within the IR profession. They are given the opportunity to expand their skill set, gain access to new internal decision makers, and elevate their position within their organizations. The evolution of the role also means they can influence key strategic decisions within the organization and shape the corporate narrative to a greater extent than ever before.
“I see the IR career evolving as a glue across the organization,” says Katrina Rymill, SVP of Corporate Finance & Sustainability at Equinix. “IR professionals are held accountable for a lot more, and it's no longer just for the earnings calls.”
Catherine Buan, VP of Investor Relations at Asana, also shared her thoughts during Nasdaq’s 2024 IR Forum. “In IR, you have a very unique vantage point. You're not the CEO or CFO, but you have the altitude of one. You see things at a higher level, and you can be a great ally to the C-level from that standpoint. The cross-functional leadership skills you develop as an IR person are critical and have become even more profound as the years come.”
IR’s Focus on ESG, Sustainability, and Regulation
The increasing collaboration between IR and ESG teams is evident. According to findings from Nasdaq’s 5th Annual IR Issuer Pulse survey, ESG remains the most significant responsibility outside traditional IR activities, with 35% of IR professionals reporting a heavier focus on ESG in recent years. Four years prior, that amount was at 14%. Collaboration between IR and sustainability teams also lends to improved communications with stakeholders about an organization’s sustainability initiatives—and highlights the strategic nature of modern IR.
With the evolution of ESG and sustainability, IR professionals can play a crucial part in leading or participating in their company’s ESG working groups. Occupying a unique position within organizations, and core members of the finance team, IR’s role in the evolving regulatory landscape cannot be understated. Further insights from the 5th Annual IR Pulse, 20% of IR professionals indicate the greatest ESG-related challenge is navigating the increasing disclosure regulatory requirements.
As ESG and sustainability started to gain traction in stakeholder demands, engagements between IR professionals and investors had naturally shifted to include more ESG-focused issues and acted as a starting point for IR professionals to expand their responsibilities. For many IR teams, keeping up required a steady adoption of ESG and sustainability initiatives into their workloads. “It was an organic evolution,” says Susan Morrison, Chief Administrative Officer at Tandem Diabetes. Having dealt with a failed say on a pay vote six years ago, Morrison had the incentive to get feedback from shareholders and to understand why this was the case. Speaking to different investor stewardship teams from various funds on top of discussing compensation, the conversation naturally took a broad look at governance within the organization. “This really helped to clarify the picture. And as those conversations were happening, we were able to strengthen our shareholder relations, and came to the realization that sustainability was critical to have at the forefront of those governance discussions. We needed to make sure that we were establishing our own presence in the sustainability space,” Morrison explains.
Igniting an IR Career with New Responsibilities
The ever-expanding role of IR professionals brings the challenge of managing increased responsibilities with limited resources. As mentioned, IR professionals are now intertwining their roles with key strategic corporate functions, most notably ESG and sustainability. With such a significant paradigm shift, IR teams are no longer just communication bridges between their organization and the financial community – they are now strategic partners driving ESG initiatives that go beyond just sustainability reporting.
“Sustainability is so much more than reporting,” says Rymill. “There is a whole tie between strategy, communication, and reporting. The metrics drive the strategy, and the strategy drives the metrics.” With this concept in view, Rymill’s career took on a whole new direction and was led by the question of how an IR team can help map out long-term strategic sustainability value for the organization. “It changed my career”, revealed Katrina. “It gave me a chance to have visibility in a completely different way. It gave me people management experience, and I had people asking to join my team to work on this. It really changes the trajectory of what you’re capable of.”
Growing Efficiently with the Right Investments
It is important to note that attaining that career growth by taking on more can be nearly impossible without investing in the right areas. So, in leveraging valuable assets —people and technology—IR teams can optimize resources to drive success. First, investing in people is crucial. Resourcing existing team members where their expertise and skills will shine not only supports improved individual performance, but also enhances the IR team’s overall effectiveness. In addition to human capital, technology can play a pivotal role in scaling operations and driving efficiency. Adopting emerging technologies, such as AI, helps automate routine ESG tasks, freeing up IR professionals to take on more and focus on strategic areas.
However, it is important to note that one may not always work as efficiently without the other, as IR professionals can elevate their roles when they incorporate the use of AI and technology and use it as a strategic partner in their efforts. “Relying on technology is what allows us to accomplish so much. IR professionals have so much breadth to our roles, and to be efficient in it, you have to be able to rely on technology,” explains Morrison during the Nasdaq’s 2024 IR Forum. “Technology helps you keep pace in those, but it never replaces doing the work.”
Moreover, integrating AI into IR workflows can be transformative, especially in addressing ESG-related challenges. AI technologies, like Nasdaq Sustainable Lens™, provide a unique opportunity to help IR teams seeking to take on more ESG responsibilities leverage AI to boost productivity by automating repetitive tasks and tap into credible and trusted insights.
Building Upon a Strong Position on the Finance Team
As the corporate landscape evolves, IR teams are managing various responsibilities. Their expanded role can now include leadership in ESG and sustainability efforts, further solidifying their position as internal partners across various corporate functions. IR professionals looking for ways to grow their careers should take a hard look at sustainability and ESG. They are well positioned members of finance teams, adept at navigating regulatory topics and communicating complex topics to stakeholders. For those that want to leap, taking on this added responsibility in an efficient manner requires getting scale through two powerful assets – human creativity and technology, both working in tandem.
______
To discover how IR professionals can leverage technology to expedite better decisions, boost productivity, and enhance credibility, visit: https://www.nasdaq.com/solutions/corporate-esg-solutions/esg-ai.
