Market Monitoring - 05/15/2020

The New Normal in Investor Relations

A  lot has been said about the “new normal” post-pandemic, new forms of interaction, remote work and so on. But what is going to change in our daily investor relations routine?

Although it is too soon to predict all impacts, we can already anticipate some changes that will continue even after the crisis, such as: 

Virtual Conference Calls and Roadshows:

It will be some time before companies can hold traditional conference calls and one-on-one meetings with investors, whether due to travel restrictions or extended social distancing measures. Even though technologies for virtual roadshows have already been available for a long time, most investors still prefer to discuss strategies with management during in-person meetings. In face of the crisis, these barriers have been removed and virtual communication has increased and should continue to grow. As they will save money on hotels, banks will be able to organize these events much more often. In addition, smaller companies will also be able to participate, since there will be no travel expenses. Not to mention saving travel time, which will allow C-Level executives to participate in the calls. Finally, we see a long-term trend towards a hybrid model that combines virtual and in-person meetings. However, when it comes to communication, the more options we have the better.

Virtual Investor Days:

Every IR department knows how difficult it is to organize a good Investor Day. It involves taking investors to a remote plant, demonstrating the operation and engaging all senior management to give an in-depth presentation of the company  in order to guarantee that investors will be committed to the long-term strategy. Now, imagine taking the logistics hassle out of the equation and providing a good video experience, with short videos that you can send to your entire shareholder base, including pre-submitted questions, interviews with management and everything technology has to offer. Virtual Investor Days are an excellent opportunity for the IR department to present the company and engage stakeholders.

Educational Webinars and IR Events:

The main events for our segment, such as the annual events of the Brazilian Investor Relations Institute (IBRI), National Investor Relations Institute (NIRI) and Brazilian Institute of Corporate Governance (IBGC), were postponed or had their original format changed. Even though face-to-face networking is beyond comparison, we have to deal with our reality and maintain an active conversation by using the available tools. Discussion forums, WhatsApp groups, webinars and lives with experts maintain investor relations professionals close to each other and allow them to share valuable experiences. 

Constant and Transparent Communication:

The world has changed overnight, and, even with an uncertain future, IR departments felt compelled to describe the impact of the pandemic in the short, medium and long term in  releases and material facts. In light of this, the best option is to maintain constant communication, being transparent about the immediate results, but focusing on the long-term growth, team quality, investments in technology and everything that makes a company a good investment. There are many ways to improve communication. What we have seen so far is short videos featuring C-Level executives using simple language, intended for individual investors, who are, understandably, fearing for their investments; weekly releases with updates on the effects of the crisis on the company’s operations and its impact on sales and the supply chain; and a “COVID hub” on the company’s IR homepage to concentrate all COVID-related information. In this hub, we see materials including messages from the CEO to clients, employees and suppliers; philanthropic partnerships with former competitors; and amendments to  previous guidance for investors, among others. No matter what you do, it is time to be more transparent and reach out to investors, maintaining the same routine even after the crisis.

Digital Shareholders’ Meetings: 

As shareholders’ meetings are such a relevant rite for publicly held companies, they were a challenge to be reckoned with. The regulatory bodies had to act rapidly and efficiently to test and validate technologies that would meet the main requirements, such as security when identifying shareholders, receiving documents and streaming events, as well as controlling vote casting and counting. The system must also allow shareholders to communicate with each other and the chairperson and the secretary to draw up the minutes with the signatures of the shareholders who participated remotely. The good news is that, once this new model is tested and validated, companies will be able to offer a call notice option that is fully or partially digital, thus increasing shareholder attendance.

Focusing on Risk and ESG Management:

Good corporate governance is critical at all times, but even more so in times like this. We see that companies that had not yet formed a crisis committee have already caught on, and this pervades not only the board, but the entire company. There are many concerns, but actions always need to be coordinated. For example, companies that focus solely on economic issues, risking the lives of their employees will probably have their reputation among consumers damaged in the long term. On the other hand, companies that focus more on social initiatives and manage to communicate this well can attract new investments. ESG is gaining momentum, as the companies that had already successfully mapped their risks tend to recover faster than its peers. The IR department must be very close to  C-Level executives at this moment in order to clearly communicate the company’s strategy, increasing the organization’s value creation and preservation.

– Amanda Munhoz, partner at MZ