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.
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
“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.
For more information contact:
Ian Matheson, Chief Executive Officer T: +61 2 9872 9100 M: 0419 444 731
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.