With a new decade comes new ideas, topics and trends that change the way business is done. Like all businesses, publicly traded companies must stay ahead of the curve in order to maintain a competitive edge and drive continued success.
Below are three investor relations trends that you should consider for 2020:
1. Shareholder Value May No Longer Be Top Priority
Shareholder profits may no longer be the primary focus of publicly traded companies. More than 180 of the top companies in the U.S.—including giants like Amazon, Walmart, Chase and Apple—announced this shifting corporate direction in August 2019. Their CEOs signed a pledge stating that more emphasis should be on stakeholder value, rather than that of shareholders. In 2020, corporations are putting more focus on the needs of their customers, the environment, their employees and the communities in which they operate. This fundamental change in corporate purpose is being driven by the Business Roundtable—and it shows no sign of slowing down. According to Forbes, this is the first time since 1997 the Business Roundtable has conveyed the main goal of corporations isn’t to please its shareholders.
2. Environmental, Social and Governance (ESG) Reporting
Another trend to dominate the attention of public companies will be environmental, social and governance (ESG) reporting. As investors look to mitigate risk and increase returns, ESG initiatives are becoming increasingly important to investor relations. Investors are turning to company ESG reports and other public ratings/rankings for data to support their investment decisions.
In 2020, companies that effectively manage and report on ESG issues will see far greater interest from investors. Corporate boards can play a key role in the data-gathering process by steering management toward a system where the data can be captured and reported. As with any data-focused project, it could take some time for the information to gathered, synthesized and communicated. Be assured that this trend will continue to grow in coming years.
3. Increased Corporate Board Diversity
Gender inequality is real, especially at the top levels of publicly traded companies. Corporations are setting their sights high this year with efforts placed on diversity in the board room and other high-level management positions. Women, specifically, will be the primary focus in high-level roles this year. According to the Corporate Women Directors International, three major American financial services companies are already jumping on this opportunity—Progressive Insurance, TIAA and Wells Fargo—with an average of 43.7% women directors.
Keeping up with these investor relations trends will be critical for any public company in 2020. It’s equally important to communicate where your company stands on these matters through investor presentations, your company website, ESG reports, annual reports to shareholders and other IR communications.