Drawing from our interviews with Ceres investor partners, Change the Conversation highlights key trends in investors’ evolving expectations for corporate sustainability. It presents nine recommendations to guide companies toward more meaningful and effective investor engagement on ESG issues, helping them to not only meet investor expectations, but also capture competitive advantage.
When Ceres released The Ceres Roadmap for Sustainability — our vision for corporate sustainability leadership in the 21st century — in 2010, sustainable business leaders were easily identified and few in number. Now it is commonplace to find a “sustainability” or “corporate responsibility” section included on company websites. Increased public awareness, regulation and investor interest has made acknowledging environmental and social impacts, and claiming a commitment to be “sustainable,” a mainstream practice for doing business today.
Nearly half of the 600 largest public U.S. companies are formally communicating with investors in some way on sustainability, via annual meetings, quarterly earnings calls, investors days and more. But how those companies are engaging, and the depth and value of those engagements, varies widely. For example, most companies still share information in ways that reinforce the misconception that these issues are extra-financial and not material. They also fail to provide investors with the information they need to understand and value the positive impacts of sustainable business strategies on corporate health and financial performance.
For 30 years, Ceres has partnered with leading global corporations and investors to better integrate environmental and social considerations into business strategies—effectively working together to redefine business as usual. As active advocates leading these corporate and investor dialogues, we understand that for many companies, engagement with investors on environmental, social and governance (ESG) issues is fraught with trepidation and resistance. This leads to reactive, less effective interactions with interested investors. Without deeper insight on what ESG information investors value, how investors want to see this information and who they want to hear from, companies will continue to fall short in providing the decision-useful information investors need to fully understand and value the financial implications of critical sustainability risks and opportunities.
In collaboration with more than 25 Ceres investor partners—including some of the world’s largest asset managers and asset owners, ESG-oriented asset managers, ESG and governance analysts, and proxy advisors—we conducted a series of interviews to further explore the themes and observations gleaned from our decades of experience in corporate and investor dialogues. In these conversations, we sought to get answers to the most common questions we hear from companies every day:
What does meaningful ESG disclosure look like to the investor community, and where and how do they want to see it?
What timeframes are investors interested in: short- or long-term?
How do investors define sustainable business leadership?
How, in an increasingly crowded space of companies claiming to be sustainable, can companies stand out and be rewarded by investors for their leadership?
What emerged is a set of nine recommendations, outlined under three strategies, to guide companies toward more meaningful and effective investor engagement on ESG issues.