Over the past several years, environmental, social and governance (ESG) has moved to the forefront of investment strategies, making it critically important for corporate investor relations (IR) teams to communicate their sustainability story through roadshows, investor meetings and annual sustainability reports.
Michael Stiller, Head of ESG Advisory and Engagement at Nasdaq, spoke with Nasdaq Investor Relations Officer Ed Ditmire during a recent webinar, discussing the evolution of how ESG is impacting the role of IROs. The following is an abbreviated version of their discussion, which has been edited for clarity. Click here for the full conversation.
Insights from Nasdaq’s Investor Relations Officer Ed Ditmire
Michael Stiller: Why do you think IR professionals should care about ESG?
Ed Ditmire: Let me give my experience, and I will say everyone’s journey and situation in IR is different. I was not someone that was just born with an ESG passion, if you said to me at any point in my time at Nasdaq, “What’s your number one goal?” I would say I want investors to understand how special and high-quality Nasdaq is as a company, and for it to be seen as one of the high-quality growth stories in the market and justify the premium valuation that comes with that.
Beginning the ESG Journey
Ditmire: At one early point on my journey as an IRO, I happened to be on a debt roadshow. At the end of one pretty well-attended meeting in Paris, a prospective investor said, “I like your story. I think these are probably excellent bonds, but I think your ESG ratings are an issue, you should probably check in on them.” And I said, “OK, sure.” This was five years ago, and while I’m a little ashamed to admit this today, I did not at the time know that ESG rating agencies were publishing research reports on Nasdaq. I didn’t know that they had been for years and that they were giving us bottom quartile scores. I asked for the reports and noticed right away that they were full of inaccuracies. The most prominent one was that [it said] one issue with Nasdaq was that it didn’t give adequate benefits to employees. And I said, why are they saying this about us? And, after figuring out how to get in contact with them, they said, well, you don’t engage with us, and you don’t put clear information on your website. So, I set a first goal of saying, let’s make sure that they aren’t incorrectly putting us in this below-average category. My original objective was, let’s try to not have the kind of problematic, below-average ESG profile, especially one built on misunderstandings, that keeps investors away from what should be a good stock story.
Telling Your ESG Story
Ditmire: Nasdaq also embraced a many more, and frankly more important motivations and opportunities on ESG. We embraced the opportunity that Nasdaq can be absolutely superb at sustainability, not only in how we run ourselves the right way but, more uniquely, in how we can make an impact on the outside world. The idea is that Nasdaq can be an ESG multiplier to hundreds or thousands of companies that have opportunities to make a difference by helping them learn things more quickly, be more effective, and be more actionable. So now, in addition to being certain that Nasdaq’s ESG story is not going to get in the way of any of our other investment appeals, I’m increasingly convinced that Nasdaq is appropriate for the investors that care the most about ESG and are looking for special ESG stories. If I can find an investor like that, I can say, “Listen, I have a story to tell you that you’re not going to hear from any other company. The way we think we can make a difference is going to dovetail with what you all are trying to do as investors precisely.” It’s been a real evolution of what ESG is to this investor relations effort.
Stiller: That was great. I remember you telling me that story from five years ago when you came out of that meeting, and you said, I’ve got to figure this out. And that program has evolved quite a bit since then. The program was largely housed out of the IR team. Then we formalized with ESG sitting in the corporate controller/CFO office. We’ve always had a great evangelist and thought leading head of sustainability in Evan Harvey but formalizing it a bit more was the great evolution that we’ve seen. There is always more work to be done. It is a journey, as you highlighted.
Click here to read more from Michael Stiller and Ed Ditmire’s discussion on Becoming an ESG Expert and Connecting with the Investor Community.