How to get investors on board with your ESG journey
So, you know you want to make an impact with your business.
You know you want to attract the best and most loyal employees and customers and that it is time to start your environmental, social and governance (ESG) reporting journey. You have decided where you want to focus and what your business’s priority is, and you know why you want to report.
The next question that comes up for so many fintechs is: how will I get investors on board with this?
This question comes up repeatedly with businesses that I speak with, so when I was lucky enough to sit down with Leeya Hendricks, chief marketing officer for Delta Capita, and get her perspective on all things ESG investing, I knew this would be a focus of my questions.
We know that ESG data has become more prevalent, with 9,000 organisations publishing ESG data in 2016 compared with only 20 in the 1990s. It is likely a feedback loop of investors being more interested in ESG data when more is available, which fuels the need for even more and better data. To know where to focus to get investors on board, it is crucial to understand what investors are looking for in the organisations they invest in. Leeya told me the most important thing they need to see is evidence, with third-party certification being the most compelling type.
However, third-party certification can be expensive for smaller organisations. Leeya says that investors also look for “ambitious ESG goals and KPIs to track performance” and reminds organisations that “actions speak louder than words… demonstrated activities that drive environmental and societal benefits are key”.
With 21% of investors surveyed in a recent financial analysis paper saying they don’t consider ESG factors because of a lack of data, what seems to be essential is being totally open, honest and committed to your ESG targets. Leeya suggests incorporating “visibility into the company policies and business practices that support ESG” and bringing it into all branding and collateral material.
ESG data can be complex, so having targets and actions broken down and explained across all your organisation’s communication channels will make your investors more likely to be positively engaged with and excited by your targets. Leeya sums it up as demonstrating your genuine commitment to people and planet.
I also asked Leeya about any common pitfalls that organisations sometimes face when communicating their ESG data. She said that she sometimes sees organisations that have become completely overwhelmed because they feel like they have to do everything – perfectly. She attests that the key here is not to try to do everything but rather to choose to do a few things that fit your organisation’s ethos well. She also reminds us that the focus should be on positive changes, allowing investors to feel they are a part of your goals and thus more likely to get enthusiastically on board with them.
Ultimately, eco-anxiety can cause anyone to freeze up, bury their head in the sand and try and ignore the problem. This might be why many investors don’t see negative screening as part of their future investment strategy. You want investors that feel positive, active and like agents of change – and you can make them feel that way with inspiring, easy to understand ESG communications.
With the barriers to utilising ESG information for investment choices tending to be a lack of standards and comparable data, the critical take-aways to getting investors on board with the ESG strategy of your fintech are:
- Don’t try to do everything – focus on something relevant, important to your business and inspiring.
- Incorporate your ESG communications into your organisation’s literature, and make sure your investors know about your strategy (and understand it!).
- Show genuine commitment. As much as you don’t have to do everything, you have to show how critical getting this work right is to you.
- Get third-party certification if this is an option for you; if not, focus on collecting robust evidence.
- Focus on the positives – the active change, the solutions rather than the problems.
Thank you so much to Leeya for taking the time to speak with me and answer my questions. Your insight into how investors look at ESG data is fascinating and invaluable!
About the author
Gihan Hyde is the award-winning communication specialist and founder of CommUnique, an ESG communication start-up.
She has been implementing ESG campaigns in eight sectors, across six countries over the past 20 years.
Her campaigns have positively impacted over 150,000 employees and 200,000 customers and have closed over £300m in investment deals. Some of the clients she has advised include The World Health Organisation (WHO), HSBC, Barclays, M&S, SUEZ, Grundfos, Philip Morris, USAID, and the Saudi Government.
Get in touch with Gihan through LinkedIn or Twitter @gehanam.