The evolution of Investor Relations (IR): The trends shaping IR

September 26, 2022

At the start of the year, the London Stock Exchange conducted an online survey amongst its issuers to determine developments in IR. The survey affirmed well-known trends. Nevertheless, it is always useful to recap on what’s shaping the profession to ensure that IR efforts are focused and yielding requisite results.

The importance of IR – IR’s importance has been elevated and responsibilities have increased. 37% of participants indicated that communication with investors increased over the past two years while direct engagement has become a prominent feature. Although this was prompted by the pandemic and in some instances, the severe impact on business activities and outcomes, the current macro backdrop of inflation, the global supply chain squeeze and the changing dynamic between employers and employees means that increased communication and engagement is here to stay.

Digitisation of IR – Despite the emergence of various communication platforms and engagement tools, the company’s website remains the primary tool for engagement, followed by virtual meetings and events and then, in-person events. While most companies increased their use of social media to engage investors, comfort with this channel is low with LinkedIn identified as the most appropriate social media platform to amplify messages and reach as broad an audience as possible.

Tracking tools – Investor analysis/sentiment tracking emerges as a valuable tool with 46% of participants noting that they will continue using this.

ESG – There is evidence of boardroom buy-in and support for ESG strategies; however, standardisation of ESG reporting is regarded as one of the main challenges in communicating ESG credentials and achievements.

The survey underscores the importance of communication. Even in the face of advanced technologies and investors’ priorities evolving in line with broader societal developments and other opportunities, what remains consistent is that communication matters.

At the heart of IR is the ability to gain trust, give confidence and receive support. Improving communication and enhancing dialogue between companies and investors can lead to mutual understanding between providers and users of capital, resulting in reasonable and informed expectations from investors. Moreover, it brings the long-lasting benefit of building trust between management and investors, allowing both to focus on the long term.

View the full report here