New Guidelines will Help Listed Companies Engage on Environmental, Social and Governance Issues


A sharpened focus on the environmental, social and governance (ESG) practices of large listed companies makes it paramount that directors and senior management effectively engage on hot button issues. The Australasian Investor Relations Association (AIRA) today released a detailed and first of its kind guide on recommended practices for listed entities to improve their engagement practices on ESG issues.

AIRA’s chief executive Mr Ian Matheson said that constructive engagement with the investment community was critically important for companies to retain the ongoing support of shareholders for the provision of growth capital. The backing for resolutions requiring shareholder approval at annual and other general meetings was another prime factor.

Asset owners or managers in Australia, which currently hold $622 billion of assets or 47% of the total pool held by professional fund managers, apply some form of ESG integration and management. That trend has been growing for some time.

“The investment community has become more complex in terms of the number of parties involved in ESG issues, including asset owners, asset managers, proxy advisors, activist groups and ESG research providers,” Mr Matheson said.

“It is vital, therefore, that companies have an understanding of who’s who in this chain and their various requirements, the time-frames and who should be representing a company to these various parties.

“AIRA believes that there is a critical role to play for the investor relations officer (IRO) in companies to coordinate these interactions with the investment community on ESG issues.

“At different times, there will be different people from the company involved in these interactions, including the board chair, board committee chairs, CEO, CFO, company secretary and sustainability officer. IROs already act as a prime link between companies and the investment community. As ESG issues become more material, from a continuous disclosure perspective, so they should be managed appropriately from a disclosure process point of view.”

The guide sets out a number of practical recommendations and checklists for listed entities to consider. They include:

  • Avoid wasting valuable time by knowing exactly whether an asset manager is also the beneficial or not and whether they have the right to vote the shares.

  • Give priority to engagement with asset owners on ESG issues.

  • Thoroughly prepare chairmen and directors before attending meetings.

  • Ask whether ESG analysts and investment analysts will attend the meetings from the asset owner’s behalf.

  • Consider the appropriate timing for the meetings.

Ends

For more information contact:
Ian Matheson, Chief Executive Officer T: +61 2 9872 9100  M: 0419 444 731
E:
[email protected]

About AIRA

The Australasian Investor Relations Association (AIRA) was established in 2001 to advance the awareness of and best practice in investor relations in Australia and New Zealand and thereby improve the relationship between listed entities and the investment community. The Association's 160 corporate members now represent over A$1.2 trillion of market capitalisation, over 80% of the total market capitalisation of companies listed on ASX.