IR Monitor – 05 July 2023

This week’s news

FTI to host panel event on 12th July regarding upcoming nature-related disclosures for listed companies

FTI Consulting London is delighted to host an in-person event on Wednesday 12 July (08:00-10:00) focused on how the growing momentum around biodiversity will affect financial services. A carefully selected expert panel, featuring Christina Hastings (head of sustainability at Nuveen Natural Capital), Dr Vian Sharif (Head of Sustainability at FNZ and founder of NatureAlpha) and Carlos Martin Tornero (Senior ESG specialist at the Financial Conduct Authority), will discuss why biodiversity is considered the new hot topic for financial services, from regulatory impacts to data measurement. The discussion, moderated by Graham McMillan, Senior Advisor at FTI Consulting, will cover the importance of natural capital and biodiversity to business, the role of disclosure in driving action and whether financial services can contribute to a nature positive future. If you wish to register your interest, please use this link – first come first served!

Why so many newly floated companies are taken private

Former global head of equity capital markets at BofA Craig Coben writes in FT Alphaville that there has been a noticeable wave of “P2P2Ps” (private-to-public-to-private), where many private equity companies look to purchase companies that have recently gone public and have performed well post-IPO. Normally a sign of public market failure, Coben observes that the most recent phenomenon proves contrary; most of the organisations that went public have met or exceeded expectations, with management delivering on promises and investors having little cause for complaint. Instead, Coben attributes P2P2P to three main reasons; public investors failing to value recently floated companies properly, recently IPOed companies not managing to attract the right shareholder base, and IPOs being priced too high and not leaving enough on the table. Regardless, Coben believes that this may yet prove a troubling sign of market decay that otherwise healthy public companies go private soon after their public offerings.

Forget the SEC, International Climate Reporting Standards (ICRS) could become the global baseline

Although the recently launched International Sustainability Standards Board (ISSB) reporting guidelines may be more demanding for businesses than the SEC’s upcoming reporting rules, companies and jurisdictions that align with the ISSB standards may see significant benefits due to the increasing demand from investors for standardised reporting globally, according to the WSJ. Early last week, the ISSB launched the first of its reporting standards which will require companies to disclose significantly more detail related to sustainability risks and opportunities. Although some jurisdictions, including the US and the EU, are separately developing their own reporting frameworks, the ISSB has worked with regulators to ensure that their standards can operate as a global baseline, even if some differences may remain. While some think the SEC rules will not go as far as the ISSB standards, nevertheless, US corporate and investor communities may still look to the ISSB rules as working to a global standard can be beneficial, particularly with so many investors operating internationally.

Webinar: Deepening investor engagement and managing Q&A

Investor days and earnings calls present great opportunities for high level engagement between the executive team and investors and analysts. An IR Magazine webinar last week highlighted ways in which companies can improve this. One of the key recommendations was the importance of continuous stakeholder engagement and ongoing preparation for Q&As, preparing question lists throughout the year following engagement with investors and analysts to better understand investor sentiment, conducting perception studies, and peer benchmarking. If you are interested in conducting either a perception study or a peer benchmarking exercise do contact the IR team here at FTI Consulting.

Pension funds say no to FCA reform

Ten of the UK’s biggest pension schemes say that proposals outlined by the Financial Conduct Authority would damage the City’s reputation as a “quality business centre”, placing investment returns in peril, according to The Times. The pension schemes say that proposals to dilute investor safeguards would significantly decrease fundamental protection for investors, while diluting the ability of pension schemes to act as stewards for their members. The group currently accounts for 22 million UK savers and manages £300bn of assets altogether. In response to the objections, the FCA has said that its proposed changes “aim to provide a simpler and more accessible UK listing regime”, and that it welcomes a range of views and discussion on the proposal.

And finally… KitKats are no longer carbon neutral. And that’s good

An increasing number of companies are now abandoning “carbon neutral” pledges and withdrawing from the offset market, instead redirecting the funds to cutting emissions in their supply chains and operations, according to Bloomberg. Companies that focus on offsets have been met with new criticism that the practice results in greenwashing, and this has led to many organisations reconsidering their reliance on offsets as a sustainability promise. The latest to do this is consumer food behemoth Nestle, pulling green pledges for many of the brands under management, including KitKat and Perrier. The company revealed that in 2022, despite cutting down 6.4m tonnes from its self-declared “usual path”, Nestle was still responsible for 93.3m tonnes of carboncarbon. Nestle’s decision to emphasize true emissions reductions rather than offsets offers a lesson for other companies.

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