EVENTS PROGRAMME | CHAIRMAN’S LETTER | NEW MEMBERS | INDUSTRY NEWS INFORMED
THE VOICE OF INVESTOR RELATIONS IN THE UK ISSUE 76 AUTUMN 2012 NON-FINANCIAL REPORTING: AN UPDATE
Good practice, sustainability, carbon emissions and more...
IR WORLD: SPAIN & PORTUGAL A special feature looking at a troubled region and the challenges for IR
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PROMOTING EXCELLENCE IN INVESTOR RELATIONS INFORMED AUTUMN 2012
CONTENTS
20 NARRATIVE 4 CHAIRMAN’S LETTER An exciting schedule REPORTING: John Dawson, IR Society chairman AN UPDATE
5 NEWS FROM THE SOCIETY Narrative reporting; new regulation, sustainability New face at the Society reporting and carbon emission legislation Conference sessions online New IR Society members Certificate in Investor Relations – passes 21 The future of reporting Michael Portillo to host IR Best Practice awards Sallie Pilot, Black Sun The awards categories 24 Carbon emission reporting Stine Jensen, MerchantCantos 8 A PERSONAL VIEW After the storms, new opportunities for IR 26 Best practice in SRI communications Michael Mitchell, IR Society Mike Tyrrell, SRI CONNECT
28 Getting the SRI answers 10 INDUSTRY NEWS SRI and communication professionals, Selected recent IR industry developments: SRI CONNECT Society welcomes changes to codes...
IR WORLD: 32 EVENTS 12 IR Society dates for the rest of 2012 SPAIN & PORTUGAL 34 COURSES Professional development dates for the rest of 2012 and early 2013 IR in the Iberian peninsula at a time of great economic and market challenges 36 IR SERVICE PROVIDERS DIRECTORY 13 How the Iberian economies are coping Find help in this listing of IR service providers with the crisis Carlos Andrade, Banco Espirito Santo 38 IR SOCIETY BOARD 15 A Spanish giant in the UK Names, roles and email addresses Stephen Jones, Santander UK
17 IR in practice – Kingfisher Sarah Levy, Kingfisher
18 IR in practice – National Grid Andy Mead & Iwan Hughes, National Grid
IR SOCIETY 3 INFORMED
CHAIRMAN’S The Investor Relations Society Bedford House, 3 Bedford Street, London, WC2E 9HD LETTER Tel: 020 7379 1763 Fax: 020 7240 1320 www.irs.org.uk THE MANAGEMENT TEAM An exciting John Gollifer General manager [email protected] schedule Michael Mitchell [email protected] Starting off on a somewhat parochial UK note, what an exciting summer it’s been with a fantastic mix of depressing English weather and uplifting sporting Alina Ardeleanu Financial controller achievements. Back to earth with the day job and the issues remain broadly [email protected] unchanged – challenging European economics (Spain once again in the spotlight), uncertain growth in the US (with additional stimulus needed) and China providing a Robert Dann Head of marketing cautionary note. I don’t know if I am alone in receiving so many different broking [email protected] teams’ daily news snapshots – but they can certainly dampen one’s spirits on the journey to work if you read them all. What is interesting is how much they reflect the Laura Hayter Head of professional development style and aspirations of the publishing bank – it’s worth getting on the circulation list [email protected] for three or four of these if you can – but don’t overload unless you have a very long Richard Knight commute! Head of policy and membership Like many of you, September has been a very busy month for me – typical of [email protected] many IR calendars. As a team we have been meeting investors (both holders and Dipty Patel non-holders) at conferences, on specific roadshows or as they travel through London Head of conference and events on their own fact-finding missions. Keeping a tight focus on effective diary [email protected] management for IR and the executive team is very important as it is easy to lose control. THE OFFICE HOLDERS Looking back on this period – checking back to targeting, meeting notes and time John Dawson management – can be a very good discipline and can help start the process of Chairman refining the IR plans for the forthcoming year. It’s also a good opportunity to make [email protected] notes on how the team have performed, setting out some development thoughts to Karen Keyes help prepare for the year-end reviews. I have also updated my supplier and broker Deputy chairman scorecards (doesn’t that sound grand – it’s really just notes in a little black book). All [email protected] useful tools when it comes to addressing the issue of providing feedback, Ian Arnold undertaking pitches or just plain contract renewals. It’s always much better to capture Treasurer thoughts when the evidence is in front of you than to try and remember it later on. [email protected] This issue of Informed comes ahead of our annual dinner and awards in Hazel Jarvis November. We have an exciting schedule for these this year, with a focus on both Company secretary [email protected] reporting best practice but also the companies and individuals who are leading examples of best practice in all aspects of IR. It’s going to be a great celebration of a For a full list of the IR Society board and the challenging 2012 and you’ll want to be there. committee chairs, see last editorial page. We are also welcoming our new general manager this month – John Gollifer, formerly of the Singapore Exchange, who will be taking up the mantle progressively INFORMED over the next three months, with the help of Mike Mitchell who plans to retire at the Libby Wimble end of the year. There will be plenty of opportunities to meet John at our events in Publishing assistant the next few months. [email protected] As a personal reflection, Mike has done an exceptional job for the Society over the Alex Murray last six years as general manager and previously as a board member, committee Publisher [email protected] member and long standing supporter. We are hoping to keep him engaged on several fronts in the years ahead but if you see him at different events over the next few Informed is published on behalf of the weeks please show your appreciation for the work he has done guiding us through IR Society by: ■ Silverdart Publishing some challenging conditions. Tel: +44 (0)1285 831 789 www.silverdart.co.uk
Editorial enquiries can be addressed either to Michael Mitchell or to Alex Murray.
Views expressed in this publication are not JOHN DAWSON necessarily those of the Society. © 2012 IR Society.
4 IR SOCIETY AUTUMN 2012 SOCIETY NEWS
New face at the Society Conference sessions online John Gollifer, the new general manager of the Society, started work on 1 October. The key sessions of the 2012 IR John takes over from Mike Mitchell who Society annual conference (‘The retires at Christmas after six years at the Competition for Capital’, 22 May) helm in Bedford Street. are now available as videos online – John’s background is in investment and are free to all who attended. banking, capital markets and investor For anyone who did not attend the relations in the UK, Europe and Asia, so conference there is a charge of he brings a truly international flavour to £29.99 per session, or all 12 sessions the Society. Most recently, John was head can be viewed for £249.99. of investor relations at the Singapore The available sessions are: Exchange and was heavily involved in establishing the Investor Relations • morning keynote – Rich Ricci; Professionals Association in Singapore in • plenary session – The big picture; 2006. • plenary debate – What is the debt John started his career with Barclays market? Bank in the City of London before • breakout stream 1 – Dealing with embarking on a number of roles in Asia extremely valuable with our profession debt in a crisis; and Europe with Barclays, ABN Amro and and members becoming ever more • breakout stream 2 – Power of the BNP Paribas. He has a BA from international.” rating agencies; Loughborough University and an MBA Commenting on his new role, John • breakout stream 3 – Beyond debt - from Henley Business School. Gollifer said: “I’m very happy to be back IR and PE; Commenting on the appointment, John in London and joining such a well • midday keynote – Rt Hon Danny Dawson, chairman of the Society said: established community. It is exciting to Alexander MP; “We are delighted to have attracted a follow in Mike’s footsteps and to have the • plenary session – The acceptable candidate of John’s calibre as general opportunity to work with a great group of face of capitalism; manager of the Society. I know he will people. I really look forward to meeting • breakout stream 4 – Managing embrace the opportunity to rival the everyone at the earliest opportunity and equity in times of low growth; enormous commitment and energy Mike to taking the Investor Relations Society • breakout stream 5 – Equity has brought to the role over the last six forward together in 2013.” allocation; years. John’s strong financial markets John is married and has five children. • breakout stream 6 – Technology - expertise and insight into investor He is a keen sportsman and lives in East Is the medium changing the relations on a global level will be Anglia. ■ message (coming soon); and • panel discussion – Shareholder Spring. SAVE THE DATE - CONFERENCE 2013 The 27th IR Society Annual Conference will be held on 18 June 2013. Please note that Please contact Robert Dann at the Premium members of the Society who renew membership prior to the conference will Society ([email protected]) for be able to attend on a complimentary basis. password details. ■
DELIVERING INDEPENDENT INSIGHT
[email protected] +44 (0) 20 7427 1574 www.investorperceptions.com 85 Fleet Street London EC4Y 1AE SOCIETY NEWS INFORMED
NEW IR SOCIETY MEMBERS
The IR Society welcomes the Claire Joyner – Tesco Lorraine Wilder – Richard Davies following new members to mid- Tanya Landman – Sasol Limited Investor Relations September 2012: Jasmine Lindsay – DP World Henry Wilkinson – Babcock Katie Lyons – Lyons Bennett International Group Emanuela Anguria – ProxyCensus Rachael Malcolm – Maitland Katarzyna Wodyk – Imic Ian Baker – Legal & General Group Laura Newell – SThree Bryn Woodward – Tesco David Bishop – QinetiQ Megan Saia – Babcock International Jamie Young – DP World Ian Brown – Capital MSL Group Rollo Crichton-Stuart – Pelham Bell Zanele Salman – Sasol Limited Pottinger Guy Scarborough – Pelham Bell For information on Duncan Fox – Independent Pottinger membership benefits and to Chris Griffith – Tesco Lorna Spears – Pelham Bell Charlie Harrison – Pelham Bell Pottinger join the IR Society please Pottinger Sergey Ternikov – MRSK Center contact Richard Knight: Claire Hassell – Tesco Darren Walker – Richard Davies [email protected] or James Hopkinson – Standard Investor Relations visit www.irs.org.uk Chartered Charles Wedderburn – Tesco
CERTIFICATE IN INVESTOR RELATIONS – PASSES
The IR Society congratulates the Lauren Goble – Ryan Financial Yap Miow Sap – Independent following candidates who passed the Communications Emily Smart – Independent Certificate in Investor Relations (CIR) Joan Harper - JM Harper&Associates Serena Toh – Keppel Land International to September 2012: Peng Li Hoong – Independent Wai Yee Wong – Straits Developments Lim Kek Siang – Time Engineering Private Johan Alexander – Syngenta Berhad He Xuan – COSCO Corporation Joseph Mark Anand – Straits Teo Soo Kiam – Keppel Land Developments Private International Irina Averina – Russian Investor Lilian Low – China Aviation Oil About the Certificate in Relations Corporation Investor Relations The CIR is the UK’s foundation-level Andrey Bednyakov – Sberbank of Russia Melaine Ong Sook Mun – Hektar Asset professional qualification for IR Tiffany Cheung – Sa Sa International Management practitioners, and has been updated to Holdings Yaroslav Paramonov – Russian Investor include recent changes in law and Tan Chiew Kian – Sabana Real Estate Relations regulation. For further information, Investment Management Lim Su Phei – ST Asset Management please contact Laura Hayter – [email protected] Annabel Choo – SMRT Corporation Yeoh Su Qin – ST Asset Management
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6 IR SOCIETY AUTUMN 2012 SOCIETY NEWS
Michael Portillo to host IR awards
Michael Portillo, the broadcaster and former secretary of state for defence, will be guest speaker and compere at this year's IR Society The awards best practice awards annual dinner on 20 November 2012. categories This year’s awards dinner promises to be the best yet. The awards have been There are two sections this year – extended to include categories that Nominated and Voted (new). recognise excellence in investor relations by individuals and companies as voted by Nominated awards Society members, brokers and fund managers. 1. Best Communication of strategy, The venue will once again be the Tower performance and KPIs of London, following the success of last 2. Best communication of year’s event, but the theme will this year governance and risk be ‘The Great Gatsby’. The evening begins 3. Best communication of corporate with a champagne reception, followed by The Rt Hon Michael Portillo entered the responsibility a delicious meal, the presentation of the House of Commons in 1984. He was a 4. Best use of social media tools to 2012 best practice awards and finishes minister for 11 years and held three positions support investor relations with a disco and the opportunity for in the cabinet, including secretary of state for communications further networking in the reception bar. defence. He lost his seat in 1997, and began 5. Most effective use of innovative This is always a fantastic event and a to develop a career in the media. He online technology within a great way to unwind at the end of another returned to parliament between 2000 and corporate website challenging year – so don't delay – book 2005, and was shadow chancellor. Since 6. Best corporate website for your table today! leaving politics, he has become a regular on investors – International Visit the website or contact Dipty Patel both BBC 1’s ‘This Week’ programme and 7. Best corporate website for on [email protected] for more Radio 4’s ‘The Moral Maze’. He has made investors – Small Cap & AIM information. ■ many radio and television documentaries. 8. Best corporate website for investors – FTSE 250 9. Best corporate website for investors – FTSE 100 10. Award for the most effective overall Annual Report (printed and online) – International 11. Award for the most effective overall Annual Report (printed and online) – Small Cap and AIM 12. Award for the most effective overall Annual Report (printed and online) – FTSE 250 13. Award for the most effective overall Annual Report (printed and online) – FTSE 100
Voted awards
14. Best communication of investment proposition (company) 15. Most improved IR (company) 16. Best newcomer to IR (individual) 17. Best investor relations officer (individual) 18. Best overall company IR (company) Scenes from the successful 2011 IR Best Practice awards at the Tower of London
IR SOCIETY 7 SOCIETY NEWS / A PERSONAL VIEW INFORMED
After the storms, new opportunities for IR
In his final column, Michael Mitchell discusses the extraordinary challenges of the past six years and the good prospects for IR professionals in the years ahead.
When I took over as general manager in January 2007 the world was at the tail end of an economic boom that had lasted on and Michael Mitchell is the outgoing general off for 15 years. Tony Blair and Gordon Brown were arguing manager of The Investor Relations Society. about who should be prime minister and a senator from Illinois [email protected] called Obama had never been heard of – the next president of the US was expected to be a woman. The global financial crisis (GFC), when it hit, took everyone unawares (apart from Gillian Tett of the Financial Times), but in reaction, there is a danger of ‘throwing the baby out with the hindsight it should have surprised no one. Its ramifications have bath water’. We should remember that despite some lasted for longer than anyone expected. We have now moved shortcomings the UK is the leader in corporate governance, from the first stage of what was a private debt crisis to a company disclosure is the best in the world and UK investor sovereign debt crisis and who knows what the next stage might relations is looked up to as a global role model. be – a world trade crisis perhaps? Central bankers around the In this febrile environment of ‘something must be done’ we world are struggling as the conventional levers of monetary have an opportunity to strengthen the position of IR and imbed policy become increasingly ineffectual. the tenets of best practice in all quoted companies, not just the This has been a testing time for companies and investor top 100 or so. relations professionals. The immediate fallout from the GFC was It is encouraging to see the growth in the number of full time much finger pointing and many exercises in hindsight. IR officers and we now have a generation of senior IR directors Companies were blamed for either not being transparent enough whose experience and gravitas enables them to hold their own or conversely being too good at investor relations ‘spin’. Fund in the executive suite. As professionals we also need to make managers were accused of neglecting their duty of stewardship sure that our voice is heard in Whitehall and Brussels; and and regulators were too disjointed. through the activities of our policy committee we will continue We are now faced with a new regulatory regime with to lobby on your behalf. demands for more disclosure and increased transparency by After six years as general manager of the Society I am handing companies and more active involvement by investors. We over the baton to John Gollifer (see page 5). We will be working currently have had reviews by the Department for Business, together until Christmas to ensure a smooth hand-over. I am Innovation and Skills (BIS) into narrative reporting; by Sir John pleased that membership numbers are once again increasing Kay into short-termism in the UK economy; and by the EU into and activities such as the Club 22 dinners, the annual corporate governance, to name but a few. As in every post-crisis conference and our educational programmes are well supported. There will be new challenges ahead but I am confident that John will bring new ideas and energy to the Society. ■ Despite some shortcomings the ‘ RESPONSE TO TAKEOVER CODE CHANGES UK is the leader in corporate The IR Society has responded to the Takeover Panel’s consultation on profit forecasts and other amendments to The governance, company Takeover Code: ‘Overall, we are in agreement with the broad thrust of this paper and we consider that the proposed disclosure is the best in the amendments... will – in general – serve to strengthen the existing Code.’ However, the Society also adds that ‘we do have concerns world and UK investor relations with aspects of this consultation that, whilst few in number, we feel are of significance and if left uncorrected could have is looked up to as a global role an adverse impact on issuers.’ For full details, please see the response on the website – model ’ www.irs.org.uk ■
8 IR SOCIETY Celebrating10 years of delivery of the highest quality Investor Relations services to IR professionals across the world richard davies : investor relations
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To find out more about us please visit www.rdir.com a Bridewell Gate, 9 Bridewell Place, London EC4V 6AW t +44 20 7492 0500 e [email protected] INDUSTRY NEWS INFORMED
Society welcomes changes to codes...
On 28th September The Investor Relations stewardship are i) recognising which Society welcomed confirmation of changes parties have voting rights and ii) identifying to the Corporate Governance and the party that understands the company Stewardship Codes. In particular we and takes decisions regarding investment welcomed the amendments to the so clarification of relevant parties’ Stewardship Code requiring investors to stewardship remits is welcome. make clearer the use they make of proxy IR Society chairman, John Dawson said: voting agencies in decisions impacting on “We are pleased that the FRC has listened UK issuers, as our members have to our views regarding changes to the repeatedly made clear their concerns over Stewardship Code and has implemented Industry news briefing the extent of the relationship between some relevant actions to amend the code. institutional investors and proxy voting We are strong supporters of the Selected key issues for IROs agencies and the perceived lack of Stewardship Code, having endorsed its transparency of process. We are pleased to launch in June 2010 and we look forward see the Financial Reporting Council has to continuing to play our part in helping it recognised this issue and made a first step achieve its goal of best practice investor towards encouraging greater clarity in this engagement, in the interest of our “As such we welcome the Kay review’s area. members”. proposal for a forum for major investors to The Society also welcomes clarification engage with UK companies and each other of the respective responsibilities of asset and indeed we have recently established managers and asset owners regarding ... and applauds Kay review our own ‘IR Forum’ in which stewardship. In our response we asserted The IR Society sees investor relations as representatives from some of the UK’s our view of the importance of both fundamental to overcoming short- largest fund managers meet with a cross investors and issuers understanding which termism – from fund managers not taking section of investor relations directors to parties have stewardship responsibilities in the risk of moving too far from their discuss how the two groups encourage the investment context. The two benchmark index over short periods to the dialogue. As the review identifies, asset fundamental considerations for IROs in excessive scrutiny of company managers are the ‘stewards’ of the funds ascertaining and encouraging investor management over short-term share price their clients invest into. We support efforts fluctuations. It is the role of IR teams to to encourage this process although we explain and report company strategy to contend that issuers have been actively give a true and fair perspective of current engaging with the buy and sell sides NEW FSA PUBLICATION and future performance. through their investor relations departments The Society therefore notes with interest for a considerable time and that, in fact, Replacing List!, Primary Market the findings of Professor John Kay’s ‘Review this process is improving”. Bulletin is the Financial Services of UK Equity Markets and Long-Term The Society also notes that the Kay Authority’s new way to communicate Decision Making’. Society chairman John review proposes the scrapping of mandated and discuss a range of issues with Dawson comments: “There is much for us quarterly corporate reporting as well as market participants, from the factual to to support in the Kay review. We strongly encouraging high quality, succinct narrative the technical, such as consultation on believe there is a role for companies and reporting. We support both these amendments to technical and investors working together to strengthen recommendations although consider that procedural notes. openness and trust, with a prominent role many companies may wish to continue for the investor relations function. reporting on a regular basis. Dawson comments: “Many of our members tell us that they are likely to continue with four to six trading updates per year because it is Keep up to speed with latest developments in the IR helpful in enhancing openness and trust. All too often, companies that don’t provide industry and with IR Society by subscribing to the clarity with regular market updates are accused of selective briefing. However, weekly Bulletin email newsletter. there is much that can be simplified and See the IR Society website to register – www.irs.org.uk. reporting timetables can be more flexible so many companies will welcome the opportunity of a less prescriptive approach.
10 IR SOCIETY AUTUMN 2012 INDUSTRY NEWS
Ending this obligation should allow greater LORD TURNER SLAMS ‘CYNICAL GREED’ flexibility for companies with regards to their reporting needs”. Lord Turner, chairman of the Financial of England and the FSA, an absence of The practicality of some of the remaining Services Authority, has slammed systemic analysis and macro- recommendations is harder to determine elements of investment banking for prudential policy tools”. and timing on any of these proposals is still “cynical greed” while demanding the However, he states that “Beginning unclear. However, this review is a step in “purge” of its “culture of cynical in spring 2008, the FSA has therefore the right direction with respect to reducing entitlement” where this arises. implemented radical change in its equity market short-termism, and we His speech highlighted the “radical approach to prudential supervision – welcome the emphasis it places on the change” in the FSA following criticisms with more resources, better trained, importance of issuer-investor dialogue. of its role in the financial crisis, and better focused on key issues. That specifically its “woefully deficient rules reform has continued over the last on bank capital and liquidity”, its year.” EU to tighten abuse regulation “deficient and under-resourced He looks forward to the new Michel Barnier, the EU commissioner approach to prudential supervision” financial regulatory environment due responsible for internal market and and the “‘underlap’ between the Bank to formally take place in 2013. services, has stated his preference to see the manipulation of benchmarks such as Libor as criminal activity under proposed plans to harmonise the EU market abuse financial instrument traded on a regulated New remuneration vote plans framework. market, MTF or OTF”. They consider that A spokesman for Barnier commented: “for transparency purposes, competent Business secretary Vince Cable has “We intend to close the regulatory gap in authorities should notify the European announced revised plans over our proposed market-abuse legislation by Securities and Markets Authority (ESMA), shareholder votes on executive including the direct manipulation of market which should publish a list of the financial remuneration following recent indices such as Libor.” instruments which are admitted to trading consultations in which the IR Society The proposal outlines that “there is a or are traded on the trading venues they participated. Annual binding votes on need to establish a more uniform and supervise. This regulation should apply to executive remuneration will now not take stronger framework in order to preserve such financial instruments whether or not place. market integrity and to avoid potential they are included in the list published by However, there will be binding votes on regulatory arbitrage as well as to provide ESMA. This should improve investor executive pay every three years if a more legal certainty and less regulatory protection, preserve the integrity of markets company chooses to leave its complexity for market participants” in order and ensure that market manipulation of remuneration policy unchanged – but this to combat insider dealing and market abuse such instruments is clearly prohibited.” becomes a binding annual vote if the across the Union. The Society notes that ESMA is becoming policy changes. If the binding vote does The intention is that “all persons follow increasingly significant as an organisation - not pass, the company will retain the the same rules in all the Union” to include its recent consultation on the proxy existing remuneration policy until “any financial instrument traded on advisory agency being one such example. shareholders agree a revised one. multilateral trading facilities or organised Member states and the European Once a new policy is agreed, any trading facilities, or any other conduct or parliament must give approval before it can further changes require further action which can have an effect on such a take effect. shareholder approval. Companies will then have to stick to their pay plans for the next three years or have another shareholder vote. GENERAL REPORTING QUALITY IS ‘GOOD’ – FRRP In addition, the following will be published: The Financial Reporting Council has • the panel also welcomed early signs published a report of the findings of the that some boards were reconsidering • a single figure every year showing how Financial Reporting Review Panel the presentation of their financial much executives have been paid; and (FRRP) in relation to its review of reports information to focus on key messages; • exit payments – saying how much and accounts in the year to 31 March and directors will be paid if they are sacked 2012. • as in previous years, the panel or resign. Some highlights: continued to be concerned about the quality of the reports and accounts of The Department for Business, • 326 sets of accounts were reviewed; some smaller listed and AIM quoted Innovation and Skills has taken on board • 130 companies were approached for companies with whom it raised more representations through consultation, further information or explanation; potentially substantive issues and including those from the IR Society. The • the panel found the general quality of which took time to resolve binding vote will require a simple reporting to be good; satisfactorily. majority of more than 50% for a policy to pass, which the Society supports. ■
IR SOCIETY 11 INFORMED FEATURE
IR WORLD: SPAIN & PORTUGAL
A special feature looking at aspects of IR in the Iberian peninsula at a time of great economic and market challenges.
13 How the Iberian economies are coping with the crisis
15 A Spanish giant in the UK 17 IR in practice – Kingfisher 18 IR in practice – National grid
12 IR SOCIETY AUTUMN 2012 IR WORLD: SPAIN & PORTUGAL
How the Iberian economies are coping with the crisis
The Iberian countries, Spain and Portugal, are among the most troubled of those affected by the sovereign debt crisis in the eurozone. Here Carlos Andrade of Banco Espirito Santo explains the background to these problems.
The Iberian economies have been at the exports of goods showing a year-on-year forefront of the eurozone sovereign debt increase of 9% in the period of January to IBERIAN ECONOMIES crisis, with severe austerity measures and May. In this context, the external deficit of the need to rebalance their own public the Portuguese economy (ie, the combined • Portugese companies are exporting accounts and reduce debt levels plunging current and capital account deficit) shrank more to the African and Asian these economies further into recession. to 3.9% of GDP in the year to March 2012 markets while maintaining strong and is expected to drop to below 2% of sales growth to Germany and the US. Portugal GDP by end 2012. • Portugese economic activity is In Portugal, GDP has continued to contract In terms of the underlying numbers, the expected to fall by approximately and economic activity deteriorate, year on Bank of Portugal’s indicator of economic 2.8% for 2012. year. This has been driven by weak internal activity, which broadly seeks to capture the • The Spanish labour market has demand (with its continued negative effect changing GDP, fell by 2.7% year-on-year in continued to deteriorate on GDP), the required changes in fiscal the second quarter of 2012, which • Recapitalisation of banks points to a policy, the increasingly restrictive financial compares with year-on-year drops of 3.1% negative outlook for the Spanish conditions, and an overall deleveraging in the first quarter and 3.2% in the last economy in 2012-2013. process at both a domestic and business quarter of 2011. In July it declined by level. People simply aren’t spending. 2.4%, which, together with other Domestic consumption is down, despite indicators, suggests some element of the fact that data suggests stronger stabilisation (ie, year-on-year drops oriented activity sectors. These sectors now consumer confidence. In turn, imports of becoming less and less steep). This is have much less capacity to absorb jobs goods and services showed a sharp however against a backdrop of domestic while others that have benefitted from retraction while exports of goods and demand continuing to contract recent economic policy decision - chiefly services have slowed down. significantly. those dealing in tradable goods and Even though Portugal is already feeling In terms of outlook, economic activity is services that are more competitive and the brunt of the Spanish recession, the expected to fall by around 2.8% for 2012, open to the external markets – are typically positive news is that Portuguese companies starting to normalise in 2013, with a less labour intensive or do not yet have the are exporting more and more to the African forecast GDP fall. Unemployment reached demand to increase their workforces given and Asian markets (namely to China, 15% in the second quarter (14.9% in the the difficult financial conditions and the Angola, Mozambique and Morocco), while first quarter) and will continue to rise over wider Europe recession. still maintaining strong sales growth to a the next year, reaching close to 16%. This is The IMF-EC-ECB’s 4th assessment of the number of mature markets, such as indicative of the structural transformation economic and financial adjustment Germany and the United States. Although under way in the Portuguese economy, with programme, released in June was positive; now slowing, exports continued to grow at a reduction in support for certain less the programme’s leaders having reaffirmed a healthy pace in the second quarter, with competitive and more domestic market their commitment to continue to provide financial support to Portugal until conditions of access to the markets are Investor perception restored. In this context, and despite the ‘ considerable challenges of the fiscal consolidation process, there has been a of the Portuguese marked improvement in investor perception of the Portuguese economy. This economy has can be seen by a significant narrowing of Carlos Andrade is research director public debt securities’ yields in the at Banco Espirito Santo. improved secondary market. (The yield of 10-year [email protected] ’ Treasury bonds retreated from a peak of
IR SOCIETY 13 IR WORLD: SPAIN & PORTUGAL INFORMED
17.4% at the end of January to 8.7% in the latter part of August.)
Spain In Spain, after the deep recession of 2009 and the period of stagnation in 2010, the economy somewhat bounced back in 2011, growing by 0.7%. However, 2012 did not start well: recession persisted, and the focus has been more on how deep and long it might be. In the first and second quarters the Spanish economy contracted by 0.3% and 0.4% quarter-on-quarter and by 0.4% and 1% year-on-year – driven by status of preferred creditor. The advantage the fall in domestic demand and the Spain may be of this direct procedure is that it will allow reduction in private sector debt. Both ‘ continued access to the financial markets private consumption and investment forced to request a while not penalising the country’s public continued to contract. Exports registered a debt. small retreat in real terms, however imports full rescue package In the short term, however, major experienced a much sharper contraction, concerns now focus on the possibility that reflecting the weakness of domestic Spain may be forced to request a full rescue demand. As a result, the trade deficit should investor package should investor confidence not be diminished. The labour market has restored soon. continued to deteriorate, with confidence not be unemployment reaching 24.63% in the Update second quarter of 2012. Within an restored soon In early September, the ECB said it would environment of high aversion to risk, the ’ be prepared to intervene in the euro restrictive budgetary policies combined secondary sovereign bond markets via with the recapitalisation of banks and Fitch have downgraded their ratings of 'outright monetary transactions', and that a unfortunately point to a negative outlook for Spain to Baa3, BBB+ and BBB, respectively. necessary condition for intervention would the Spanish economy in 2012, continuing (At the same time, the yield of the 10-year be 'strict and effective conditionality into 2013. bonds in the secondary market rose from attached to an appropriate European Tax revenues have continued to decline, 5.09% at the end of 2011 to 6.2% on 21 Financial Stability Facility/European with the fiscal deficit reaching 8.5% of GDP August 2012 (with a peak of 7.621% in Stability Mechanism (EFSF/ESM) by the end of 2011. The Spanish government between)). This has left the Spanish programme'. has been concentrating efforts to reduce this government little option but to seek The markets reacted positively to this deficit to 6.3% of GDP in 2012. financial assistance and to recapitalise the announcement by Mario Draghi, the ECB's This environment of deepening recession banks, through a loan of up to EUR 100 president - which was interpreted as a new and the strong need for fiscal consolidation billion to be provided by the European willingness by the ECB to help troubled has been fuelled further by tensions in the Financial Stability Facility. eurozone countries such as Greece, Spain European financial markets and the limited This will be in place until the European and Portugal and to bolster the euro. access to financing, which has in turn Financial Stabilisation Mechanism However, at the time of writing, discussions penalised the public debt market and the becomes operational, after which the loan continue between key eurozone financial sector. Moody’s, Standard & Poor’s will be transferred to the EFSM, without the participants. ■
Portugal Spain
Real growth rates (%), except when indicated 2009 2010 2011F 2012F 2013F 2009 2010 2011F 2012F 2013F GDP -2.9 1.4 -1.7 -2.9 -1.6 -3.7 -0.3 0.4 -1.9 -0.8 Private consumption -2.3 2.1 -4.0 -5.5 -5.6 -4.3 1.3 -1.0 -2.0 -1.5 Public consumption 4.7 0.9 -3.8 -2.8 0.8 3.2 -0.1 -0.5 -11.5 -3.2 Investment -13.3 -3.6 -13.9 -13.3 -9.2 -16.0 -7.4 -5.5 -6.5 1.6 Exports -10.9 8.8 7.5 4.6 5.4 -11.6 9.2 7.6 3.8 4.0 Imports -10.0 5.4 -5.3 -5.3 -3.4 -17.8 3.5 -0.9 -6.0 -1.2 Inflation (CPI) -0.8 1.4 3.7 3.3 1.2 -0.2 2.0 3.1 1.9 1.1 Budget balance (% GDP) -10.1 -9.8 -4.2 -5.0 -4.5 -11.2 -9.3 -8.9 -6.3 -4.5 Public debt (% GDP) 83.0 93.4 107.8 114.4 118.6 53.8 61.0 68.5 79.8 81.0 Unemployment (% of labour force) 9.5 10.8 12.7 15.6 16.0 18.0 20.0 21.6 24.3 25.0 Current & capital account balance (% GDP) -10.1 -8.3 -5.1 -1.7 0.8 -4.5 -4.0 -3.4 -0.7 -1.0
14 IR SOCIETY AUTUMN 2012 IR WORLD: SPAIN & PORTUGAL
A Spanish giant in the UK
The perception that the troubled Spanish economy may directly affect the business and financial strength of Santander’s UK operation presents a specific IR challenge, as Stephen Jones of Santander UK reports.
antander UK is in many ways the most meant that Santander UK has at times SBritish of Britain’s big-five systemically been rerated as a result of downgrades to The message has to important banks. Some 99% of Santander the Spanish sovereign, but with the ‘ UK’s customer assets are UK-related, it rerating not reflecting any change to ranks as the second largest mortgage Santander UK’s own business performance be reinforced and lender and retail savings business in the or outlook. UK whilst its exposure to the eurozone’s repeated to fixed peripheral economies is the lowest of its The IR challenge UK peer group. Santander UK is 100% Santander UK’s IR function was set up income investors owned by Banco Santander, a Spanish- initially to support the needs of Santander ’ based global business which operates in UK’s standalone fixed income issuance 10 distinct markets across Europe, North undertaken by ‘Abbey National Treasury America and Latin America and which, as Services’ (ANTS) and its credit ratings. experience in the US is that the market a result, originates the great majority of its Given generic eurozone concerns, remains large and diverse and that profits from outside Spain. some US investors have taken the opportunities remain open for issuers With the eurozone financial crisis and approach of avoiding any new investment prepared to engage. the market’s view of the Spanish economy in any European bank. Santander UK’s IR Investors in general have become more and the state of its financial sector, response has nevertheless been one of interested in the nature of the relationship Santander UK has a very specific investor continued engagement. The points of re- between Santander UK and its parent, and relations challenge. This arises from the entry can be various: distinguishing the ultimately the Spanish state, and with the perception held by some investors that UK from the eurozone periphery; a internal governance and regulatory the issues in the eurozone and/or the specific class of security; or in providing constraints that are in place to limit and Spanish economy may directly impact the comfort on points of concern. In the monitor exposures that result. Whilst business and financial strength of longer term we believe continued considerable success is apparent in Santander UK. This perceived risk has engagement will enable us to accelerate communicating the very strict risk limits often been fanned by media comment. the time at which the investor can be and governance in place, this message Rating agencies pose a further persuaded to commit again to our remains one that has had to be reinforced dilemma. The often mechanistic nature of securities, whilst maintaining confidence and continuously repeated to fixed the methodologies of certain agencies has in our management. Our practical income investors and rating agencies (and also customers and the media).
Santander UK’s operating model The reality of Santander UK’s position is A SPANISH GIANT IN UK that its prospects are essentially determined by the UK economy and its • 99% of Santander UK’s customer banking sector. In addition Santander UK assets are UK-related. It ranks as the sits behind a strong firewall, one second largest mortgage lender and acknowledged by the UK’s Financial retail savings business in the UK. Services Authority (FSA) that, as • The reality of Santander UK’s mentioned before, ensures that Santander position is that its prospects are UK is the most British of Britain’s essentially determined by the UK systemically important banks. This also economy and banking sector. prevents financial problems spreading • Santander is one of the world’s anywhere through the Santander group. leading banks and there are many The firewall that protects Santander UK, advantages from being part of the Stephen Jones is chief financial and its investors and depositors, is the group. officer, Santander UK plc. long established ‘subsidiary model’ of [email protected] Banco Santander. The ‘subsidiary model’
IR SOCIETY 15 IR WORLD: SPAIN & PORTUGAL INFORMED
gives local autonomy and requires each Our current long term credit ratings of the main businesses to be self-sufficient The reality of relative to our major UK peers and to in capital, funding and liquidity, and to ‘ Banco Santander SA are summarised in operate without guarantees in either the table (below). direction between parent and subsidiary. Santander UK’s At the same time Santander UK is The right model regulated by FSA liquidity and capital position is that its Despite an autonomous business model, rules which are gauged on a stand-alone it is important for Santander UK that basis, whilst board governance processes prospects are investors and the rating agencies do not further reinforce the model. Finally, no lose sight of the fact that the Santander funds can leave Santander UK to the essentially group is one of the world’s leading banks group without FSA approval. All of these and that there are many commercial and combine to reinforce the robust ‘firewall’ strategic advantages to be gained from around Santander UK. This ‘subsidiary determined by the being part of that group. Operational model’ is well perceived and welcomed synergies and strengths exist in brand, by both the UK regulator and the UK economy systems, platforms, corporate governance, Santander group’s Spanish regulator. ’ risk management practices and With the support of its parent, management capability, and represent key Santander UK has disclosed the detailed underpinnings to the strategic development workings of the ‘subsidiary model’. This of Santander UK. has been reinforced by having the The inter-relationship of Santander UK ‘subsidiary model’ publicly accepted by and Banco Santander is defined by specific ratings agencies and the UK regulator. circumstances; the firewall being a key This disclosure has been further advantage. The wider investor relations supported by an extensive media with the limited exposure that Santander lessons of the present eurozone concerns engagement programme, engagement UK has to its parent. It has been important are necessarily built from basic principles. with the wider stakeholder group and by to work with the agencies to get them to For Santander UK, this starts with a belief providing asset liability management, acknowledge that regulators see that we have an appropriate business corporate banking and retail banking Santander UK as a systemically important model that mitigates the eurozone risk within Santander UK with the necessary bank. Secondly, engagement with the about which investors are concerned. briefings to be able to engage with agencies has looked closely at the Beyond that Santander UK’s IR customers and other stakeholders directly. consistency of their models towards programme emphasises transparency: Simultaneously Santander UK’s IR Santander UK and its UK peers. But, as articulates the response and aligns external engagement with the rating agencies has usual, much rating agency engagement is messages; provides the supporting focused upon a number of key areas. in ensuring that the door is always open, information; and is prepared to First, to have the agencies acknowledge that the engagement is also proactive and continuously engage with investors and the ring fencing of Santander UK, along responses are robust. other stakeholders. ■
Selected bank credit ratings summary (as at 01-10-12)
S&P Moody’s Fitch
LTR Outlook STR LTR Outlook STR LTR Outlook STR
Santander UK plc A Stable A-1 A2 RUR P-1 A Stable F1
HSBC Bank plc AA- Negative A-1+ Aa3 Negative P-1 AA Negative F1+
Barclays Bank plc A+ Negative A-1 A2 Negative P-1 A Stable F1
Lloyds TSB Bank plc A Stable A-1 A2 Negative P-1 A Stable F1
RBS plc A Stable A-1 A3 Negative P-2 A Stable F1
Nationwide B. S. A+ Stable A-1 A2 Stable P-1 A+ Negative F1
Banco Santander S.A. A- Negative A-2 Baa2 RUR P-2 BBB+ Negative F2
16 IR SOCIETY AUTUMN 2012 IR WORLD: SPAIN & PORTUGAL
IR in practice – Kingfisher
Kingfisher is Europe’s largest home improvement retailer and has 18 Brico Depot stores in Spain. In an interview with Informed, Kingfisher’s head of investor relations Sarah Levy discusses the company’s IR programme in Spain and Portugal.
What percentage of Kingfisher’s shares are Do you organise the meetings yourself or held in Spain? do you use a broker? About 1% of the company’s shares are We use a broker who covers us and has held in Spain. The holdings are spread good connections in the country. For my over about seven institutions including most recent visit I used Barcap. Santander, BBVA, Banesto and Trea Capital. These holdings have been broadly What forms do the meetings take? constant over the last few years. We have one-to-ones with Q&A with our larger shareholders and a lunch with a How did these holdings arise? presentation for three or four others plus They are mainly the results of what I call the local specialist sales people. our ‘IR fishing’ programme. Where I do not consider it is worthwhile for our FD The Spanish people seem to take much or CEO to spend time, I visit potential longer for lunch, close for a siesta in the Sarah Levy is Kingfisher’s head of markets on my own. This proved to be afternoon and eat much later in the investor relations. quite successful in Spain and three out of evening – how does this impact on IR [email protected] four institutions bought shares after my trips? initial visit. The financial community operates on a about an hour outside Madrid. It’s on the more northern European schedule so it way to the airport so probably best to fit How often do you visit Spain? doesn’t seem to impact too much on the in the appointment at the beginning or I now visit Madrid about once a year. If timetable for meetings. I don’t tend to stay end of the day. Security is very tight and possible I combine my visit with another around for evening dinners as I am you have to use a bus to travel round the European country such as Italy. I have usually on a flight home! site so allow extra time in your schedule combined visits to Spain with Portugal, for this. I usually visit in June which is but this was not so successful - so on my And what about language? pretty hot. Late July and August are even last trip the Portuguese fund managers I can get by in Spanish which is useful for hotter and are no good for meetings as attended a lunch in Madrid. If possible I taxi drivers, etc, but all business meetings everyone is on holiday. also try to visit some of our overseas are held in English, so it’s not a problem. stores so last time I took the shuttle plane And finally any recommendations on on to Barcelona. Are there any other useful hints and tips where to stay? that you can give for IROs visiting Spain? I usually stay in the Westin Palace which It’s worthwhile remembering that is very central and has lots of tapas bars Santander is based in its own community close by. ■ ‘About 1% of the company’s shares are held in Spain and the holdings are spread over about seven institutions ’
IR SOCIETY 17 IR WORLD: SPAIN & PORTUGAL INFORMED
IR in practice – N ational Grid
National Grid is an international electricity and gas company and one of the largest investor-owned energy businesses in the world. Andy Mead and Iwan Hughes of National Grid discuss its IR programme in Spain and Portugal with Informed.
Does National Grid have any operations Did you specifically target investors in in Iberia? Spain and Portugal and have these been No – we don’t have any operations long term holders? We target specific ourselves but the energy sector is quite We target specific countries where we ‘ well represented in Spain with companies think there is an opportunity to increase such as Iberdrola (owner of Scottish long term investment. One member of our countries where we Power), Endesa and a number of IR team looks after Spain, Portugal and renewable energy companies, so our Italy. think there is an business is reasonably well understood by investors. How do you arrange the visits and who opportunity to goes on them? What percentage of your shares is held in The most recent visit was arranged by increase long term Spain and Portugal? Barclays who is our brokers and seemed We currently have less than 0.1% of our to have good connections in both Madrid investment shares held in Spain but we think this and Milan. The IR team lead the visit – we ’ offers an opportunity. We have a number don’t think it is appropriate to take out of debt investors in Spain so our Treasury our CFO or CEO just yet, but if interest department also organises visits to builds we will certainly consider it along Are there any other useful hints and tips Madrid. with operational management. We had that you can give for IROs visiting Spain? one on one meetings but no group lunch We visit in January, which is a good time Which centres do you visit and how this time. for us and it was good business weather. often? All the investors are very proficient in We have only recently started regular How informed are the investors in Spain English so language is not a problem. visits to Spain as part of an enhanced IR and Portugal and what are the issues they There is not always agreement amongst outreach programme. We expect to visit talk to you about? UK brokers about who are the right Madrid once a year and this time we It’s a bit mixed – some of the investors are investors to see in Spain, so it’s worth combined it with a visit to Milan which very well up to speed but others are just doing some homework and talking to seemed to fit reasonably well together getting to know us. more than one house. with just one overnight stop. Finally, do you think it’s been worth the effort to visit Spanish and Portuguese investors? Yes, we think Spain is worth an annual IR visit and we also see some Spanish investors in the UK and at conferences. ■
Andy Mead is senior UK IR officer Iwan Hughes is head of Whitehall at National Grid. and industry affairs at National Grid. [email protected] [email protected]
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An overview of the narrative reporting landscape, with a look at new regulation, a focus on sustainability reporting and carbon emission legislation.
21 The future of reporting 24 Carbon emission reporting 26 Best practice in SRI communications
28 Getting the SRI answers AUTUMN 2012 NARRATIVE REPORTING
The future of reporting
Sallie Pilot of Black Sun describes the continuing evolution of narrative reporting in the UK, highlighting four key areas of change.
here is a broad consensus that FUTURE OF REPORTING Tcorporate reporting is not fit for purpose. The needs and requirements of Increasingly the market are moving rapidly, with both ‘ • Over 20 new consultations, legislation and technologies evolving, and discussion papers and guidance engaged reporting has long failed to keep pace. notes, impacting narrative reporting Stakeholders, regulators and companies have been published since the UK shareholders are alike recognise the need for change Governance Code in 2010. towards a model that better meets all of • Greater strategic focus, more their requirements. finding and using integrated content, sustained pressure for transparency and Impetus for change their voices innovations in digital delivery are the To date reporting has evolved in a ’ four broad themes for narrative piecemeal fashion with changes to reporting. regulation responding to specific issues. by the Department for Business, For example, much of the focus by the Innovation and Skills (BIS)’s consultation government over the past year has been on ‘The Future of Narrative Reporting’ on tackling executive pay in response to suggests a direction of travel under four widespread media coverage and broad themes. shareholder discontent. The ‘shareholder spring’ has changed the dynamic for 1. Greater strategic focus companies and, in particular, for their One of the proposals under consideration board members. Increasingly engaged by BIS is for a Strategic Report which shareholders are finding and using their would include the company’s strategy, voices. business model, key risks and meaningful In response to greater focus on forward-looking analysis. The aim is to cut corporate information there has been a through the complexity of reporting to plethora of new consultations, discussion enable companies to focus on material papers and guidance notes impacting issues. narrative reporting. Well over 20 have The desire for better future insights been published since the UK Corporate represents a shift away from the annual Governance Code in June 2010. report as a document that simply reviews The good news is that those with an the past. At Black Sun we have tracked interest in corporate reporting seem to be progress in this area for the FTSE 100 over heading in the same direction, with a the past seven years and have seen growing consensus on what represents strategy become an increasingly best practice. Leading companies are prominent component of reporting. The already adapting to expected changes fact that many companies are recognising from the regulators, which themselves are these changes shows that the annual responding to the needs of investors. report is becoming an important vehicle The questions as to where this mood for for articulating the business story. Sallie Pilot is director of research and change will lead and, more importantly, Strategy, to date, has been one of the strategy at Black Sun plc. where it should be heading are still under only key elements of reporting not [email protected] discussion. However momentum provided specifically required by legislation.
IR SOCIETY 21 NARRATIVE REPORTING INFORMED
Moving forward BIS’s proposals promote 3. Sustained pressure for transparency strategy as the driving force behind all The changes in content within the annual Challenges remain areas of reporting. Companies will need to report are closely linked to continued ‘ be more long-term in their focus, disclosing demands for greater transparency and with many future targets for the business and providing accountability. more meaningful insight into the progress With more pressure than ever on of the company. As a result, investors will company performance, and particularly in companies be able to make better, more informed recent times in linking remuneration to decisions. both strategy and performance, corporate choosing to reporting has recently taken centre stage in 2. More integrated content the debate on restoring trust in the UK disclose Over the last few years there has been a market. It has been encouraging to see that, proliferation of reporting standards and despite the uncertainty over the exact information using regulations forcing companies to increase outcome of all the reforms, more their focus on sustainability issues in companies seem to be focused on ‘telling ‘boilerplate’ corporate reports. Leading reporters are their story’ in their own words, integrating material non-financial and demonstrating their individuality and financial issues, helping to demonstrate culture. reporting, which is more clearly how their companies can As the demands of stakeholders and create value, both now and in the future. regulators continue to push reporting neither meaningful As this approach becomes increasingly requirements, there have already been recognised as best practice, more some notable advances in disclosure and nor transparent companies are integrating their reports. The communications. For example, in 2005 ’ BIS proposals reflect this, requiring key only 45% of FTSE 100 companies disclosed environmental and social information to be their risks, while all do so today. included as part of the Strategic Report. Some companies are going to great Adding to this momentum, the lengths to rebuild trust and meet the International Integrated Reporting Council demand for greater transparency and (IIRC) has led a global move towards more accountability. However, challenges rounded reporting of company remain with many companies choosing to performance. The focus here is on building disclose information using ‘boilerplate’ messages in the most effective way for the the foundations of financial, management reporting, which is neither meaningful nor selected channels. There is a greater focus commentary, governance and transparent. For example, while the on telling a clear and concise story, which remuneration and sustainability reporting business model may have been mentioned can be brought to life online, using tools in a way that reflects their critical by 84% of FTSE 100 companies, only 10% such as video and social media to engage interdependences. genuinely shed any light on how they audiences and give insight into the As the investor focus on financial and actually create value. personalities behind the brand. non-financial disclosure continues to To achieve progress towards better We expect to see continued innovation intensify, companies will need to ensure disclosure, companies need to stop hiding by companies in this area as reporting that sustainability is integrated into behind the complexity – which increasingly becomes an important strategic decision-making to demonstrate undoubtedly is there – and recognise that communications tool, not simply a that it is managed in the same way as any the focus on transparency is here to stay. repository for information. other business issue. 4. Innovations in digital delivery Conclusion As well as changes in the content and style The four areas outlined above reflect a of corporate reports, we are also significant shift towards using the annual Companies will experiencing shifts in the way that the report to tell a more meaningful story about ‘ information is delivered. Over the last few the business. In this way it provides a key years annual reports have got longer, opportunity to tie together external need to ensure that making it increasingly difficult for communications, by reflecting on the shareholders to distil the information they previous year and establishing key sustainability is need. As a result, it is digital technologies corporate messages. that are playing a growing role in making The direction in which we are heading integrated into information more accessible. indicates that better reporting is on the In addition, corporate reporting is way; how fast we get there, however, strategic decision- increasingly becoming a year-long depends on companies, investors and connected conversation, which lends itself regulators seizing the opportunities to the digital environment. Companies are presented by the current impetus for making rethinking their reporting strategies to change and continually striving for best ’ ■ ensure they are communicating their practice.
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Carbon emission reporting
The long-awaited carbon emission legislation is coming fast to UK listed companies. Stine Jensen of MerchantCantos provides an overview of the legislation and the challenges that companies will face as they prepare for 2013.
t the Rio 20+ the UK Government own energy consumption and the emissions CARBON EMISSIONS Aannounced that it would introduce the stemming from purchased energy, as world’s first legislation on mandatory contained within the International • The legislation is expected to come emission reporting for UK listed companies. Greenhouse Gas Protocol. The exceptions to into force in April 2013. The hope was that by asking companies to this include land use change and supply • Companies will have to make firm review emissions, it would lead to chain, or scope three emissions. The decisions on which numbers to use management teams putting a real effort into government has, however, already stated that now and for the foreseeable future. decreasing them over time. it may wish to include this at a later stage Now, years later, the legislation is still in its when the entire law will be reviewed in five last weeks of its consultation stage, and years’ time. although we haven’t seen the final document, So for now, companies are asked to report companies across the UK have started to get on emissions stemming from: their teeth into what is required. And there is a great deal for UK business to chew on both • operation or control of any manufacturing in terms of management and reporting. process undertaken by the company; • use of any means of transport, machinery or Who, when and what? equipment operated, owned or controlled For now, the draft legislation is aimed at all by the company; and companies listed on the London Stock • fuel consumption in any premises, Exchange, any European Economic Area machinery or equipment operated, owned (EEA) state, or admitted to dealing on either or controlled by the company. the New York Stock Exchange or the Nasdaq. It excludes AIM and private companies. All the above must include fugitive The plan is that government will review the emissions, for example from leakages or other first two years of the reporting in 2015 and releases. And it is not just a single or few then decide in 2016 whether the reporting greenhouse gases; all the following will have requirement will be expanded to include all to be included: carbon dioxide, methane, companies over a certain size, including non- hydrofluorocarbons, nitrous oxide, listed businesses, in the UK. perflurorocarbons and sulphur hexafluoride, As the document is in its last stages of the using carbon dioxide equivalent units. consultation phase, we still don’t know Companies must also include the whether there will be a 'comply or explain' emissions associated with purchased clause that might mean some companies do electricity, heat, steam, or cooling. not need to report. Apart from the overall scope numbers, The legislation is expected to come into companies are also required to report their force in April 2013. This means companies ‘intensity ratio’, calculating overall numbers producing annual reports and accounts after versus a specific measure, for instance this date will be obliged to include carbon number of employees. Companies are free to emission numbers. As the lead time for rolling choose the specific ratio they want to use and out frameworks to manage the emissions area they can also choose the management and producing annual reports can be lengthy, standards they wish to follow. companies are now hurrying to prepare themselves before the new legislation Can companies manage it? Stine Jensen is director, becomes applicable. While many companies have embraced the sustainability, at MerchantCantos Companies will need to report scope one idea of transparency within the [email protected] and two type emissions, which are related to environmental area, the practicalities of
24 IR SOCIETY AUTUMN 2012 NARRATIVE REPORTING
managing and reporting on it, pose a real have seen that not assuring the numbers can challenge for quite a few. Five quick facts on carbon open up to criticism from external First of all, many have in the past been emission legislation stakeholders, who are challenging the validity asking whether it is worth preparing for the of the data and questioning whether the legislation when there was still a chance that • Comes into force in 2013. company is in effect doing ‘greenwash’. The there would be a ‘comply or explain’ clause. • Requires companies to disclose auditing process of environmental data can Therefore many companies have been slow scope one and two emissions. be a long-winded process, which needs to be in getting the ball rolling internally, meaning • Applies to all UK listed companies. built into the planning of the report. there is now a lot of work to be done in a • Has to be included in the directors’ And then there is the question of how to relatively short period of time, especially for report in the annual report. integrate environmental KPIs with financial companies outside of the ‘energy heavy’ • May be extended to cover all UK KPIs and where to place them in the report. sectors, who have not been reporting on their companies at a later stage. While it looks like a minor detail, it can environmental impacts in the past. make a huge difference to the flow of the Managing the actual data to include is not narrative of the document. straightforward. With businesses constantly same time manages all elements, both fully undergoing internal and external change, owned and leased, is not easy and many feel Are companies ready? managing group-wide policies and reporting that this task has not been helped by the fact The new carbon legislation will be hitting consistently on certain numbers can quickly that there is no preferred management our tables within a couple of weeks. Many become a mammoth task. Initiatives to save framework to lean on. businesses have been rather slow in getting energy in Manchester may not be relevant in to grips with what is required and are now sunny Mozambique. Energy measures may Is reporting straightforward? having to hurry up. traditionally have been considered more in Numbers are required to be consistent year- Although supplier emissions are not places where energy comes at a premium on-year, unless there are changes to the included in the requirements, many than where it has been cheap. But the new company structure. This means companies businesses are struggling to identify the right reporting requirement stipulates the need to have to make rather firm decisions on which numbers as their KPIs and are racing against cover all operations. numbers to use now and for the foreseeable time on rolling out management tools to Many companies have therefore seen a future, often at the same time as they are capture the data. Many have also come to need to improve co-operation across teams coming to terms with how to manage the realise that unaudited environmental data on multiple levels from plant to local, area. is a risk long-term and that the inclusion national and global levels to align ways of The performance metrics section and its of non-financial information in the annual managing and calculating emissions. constituents won’t have to be externally report needs to be thought through from Different functions within the business need audited. This may at first seem to come as a the beginning to ensure that the document to come together, so that for instance great relief for many. However, several is communicating a clear and consistent Procurement speaks to and understands the companies have already seen that unaudited story. requirements from operations and helps to environmental data in their reporting does The new legislation can be a great tool to choose the right energy provider, and the come with its disadvantages. For instance, help companies decrease their emissions planning department is on-board with the how do you make it clear which parts of the long-term, but there are still a few teething energy saving targets when new premises are director’s report are then assured? And many problems to overcome. ■ considered. Sometimes new partnership approaches outside the business also need to be considered. This is relevant for instance in the What exactly does the draft legislation say? case of how to deal with partly owned or leased properties and transport vehicles, (1) A directors’ report must state the annual quantity of emissions in tonnes of carbon which have typically not been reported on by dioxide equivalent resulting directly from any of the following activities many companies so far. undertaken by the company: Establishing a global framework that takes (a) the combustion of fuel in any premises, machinery or equipment operated, regional differences into account, and at the owned or controlled by the company; (b) the use of any means of transport, machinery or equipment operated, owned or controlled by the company; and The new reporting (c) the operation or control of any manufacturing process undertaken by the ‘ company. requirement (2) For the purposes of paragraph (1), the annual quantity stated must include the leakage or other escape of emissions resulting directly or indirectly from any of stipulates the need to the activities referred to in that paragraph. (3) A directors’ report must state the annual quantity of emissions in tonnes of carbon cover all operations dioxide equivalent resulting from the purchase of electricity, heat, steam or ’ cooling by the company.
IR SOCIETY 25 NARRATIVE REPORTING INFORMED
Best practice in SRI communications
Mike Tyrrell explains how to achieve effective communication of your sustainable and responsible investment (SRI) strategy.
ommunicating corporate social Ultimately, it all boils down to the SRI COMMUNCATIONS Cresponsibility (CSR) and sustainability following. When communicating with SRI performance to investors is easy. This may investors, companies should apply six • Sustainability is of growing relevance surprise IR and CSR teams who feel ‘golden rules’. to company strategy and these issues besieged by questionnaires, indices and by are starting to interest mainstream ratings that they don’t understand from The golden rules investors. organisations that they don’t know. • Apply the six ‘golden rules’ when Equally it will come as a surprise to IROs 1. The IRO stays in charge of the process. communicating with SRI investors. whose efforts to reach out to ‘mainstream’ SRI investors should be treated like • A simple 10-step process helps investors on issues of genuine long-term investors – not as employees or companies work through the stages significance to their business are met with customers or pressure groups. of SRI investor communications. a wall of total indifference. Although they require different information from ‘mainstream’ investors and explore SRI investors are brilliant… different angles, they are still investors and Corporate communication of sustainability communications with them, therefore, issues to the investment community (both should fall within the responsibilities of the SRI specialists and ‘mainstream’ investors) IR team. has become increasingly important. SRI It is certainly tempting for an IR team to investment has grown and is still growing; outsource the completion of interminable sustainability is of increasing relevance to SRI questionnaires to their CSR company strategy; the issues are starting to departments. It’s fine to do this – just as interest ‘mainstream investors’; SRI analysts you would for any specialist investor have good radar screens which can help question. But IROs should not hand over companies in their risk management; and control of (or responsibility for) the process. these analysts tend to be longer-term and The process is often best handled by a more supportive shareholders. junior member of the IR team working in partnership with a company’s … apart from when they are not CSR/sustainability team. Alongside all of these supportive attributes, the SRI industry has, however, created for companies a labyrinthine bureaucracy around the gathering and transmission of It is certainly information and analysis. ‘ This needs to be rationalised and demystified to prevent it overburdening the tempting for an IR companies that supply the information and the investors that are expected to use it. team to outsource... That’s my current mission! To condense 15 years of experience (gained at Jupiter, but IROs should HSBC & Citi) of corporate SRI communications into a digestible format. not hand over First, I wrote an 80-page report, then I Mike Tyrrell is editor of reduced it to a 40-slide presentation, then control of the www.SRI-CONNECT.com. He also runs the to a 12-minute YouTube clip, now to an Sustainable Investor consultancy. 800-word article. My next target is 140 process [email protected] characters… ’
26 IR SOCIETY AUTUMN 2012 NARRATIVE REPORTING
5. Focus on your company’s needs and (www.sustainableinvestor.org) specialises in investors – not general expectations or organising conference calls that enable If you follow these ‘best practice’. companies to present their CSR ‘ Many people (myself included) will advise performance directly to all SRI agency six golden rules you on what constitutes ‘best practice’ in analysts at the same time – thereby this area. Ignore them. To be successful improving the quality of their analysis and your communications must be based on reducing the need for questionnaires. and the 10 simple what YOUR shareholders (and target Most of the major brokers can now shareholders) want to hear about YOUR organise SRI roadshows (for free, of course) steps, the process of company. to most major investment centres and a reasonable number of relatively well- communication 6. Don’t be afraid to ask for help. targeted conferences are hosted every year. For all my protestations above about how So, advice and guidance are available for with SRI investors easy the whole process is, it is still new to companies that need it to get started; but, many companies and many of them need there’s no need for any company to be spun should be painless ‘a little bit’ of help to get going in this area. into a 20-day consultancy proposition. ’ The good news is that this help is now If you follow these six golden rules and available and, because the process is the 10 simple steps, the process of relatively straightforward, it is not communication with SRI investors should expensive. be straightforward, painless and even dull. The consultancies that advise companies The conversations that you have with SRI on CSR and sustainability reporting are analysts will never be dull. But you 2. ‘Pro-active’ is much, much easier than now better able to advise on how to take wouldn’t want that, would you? ■ ‘reactive’. communications beyond the report out into Obviously! If you wait for each individual the investor community. Context and SRI investor or analyst to come to you on Sustainability are probably most explicit SRI-CONNECT is a free-to-access online their timetable, with their priorities, their about their work in this area, but Corporate network aimed at improving questions and their focus, your life will be Citizenship and Two Tomorrows also communications on CSR and chaotic. If, instead, you define the reporting understand the area. sustainability between companies and and communications timetable as well as The IR consultancies are also starting to institutional investors the points of contact and the management apply their advisory skills to the SRI space. (www.sri-connect.com). access that these investors will receive, the Alasdair Wight of Makinson Cowell and A free guide, presentation & YouTube process can be managed in a tight and Simon Lindsey-Bray of Capital Precision do clip can be found at SRI-CONNECT / efficient way. particularly thorough work on investor Info & Comment / SRI Dynamics / targeting – but there are also others. My Take Control of SRI communications 3. Use a simple, structured process for own consultancy, Sustainable Investor maximum efficiency. Structure is essential for efficient SRI communications. To help companies with 10 steps to help with SRI investor communications this, I have developed a 10-step process – which is summarised in the box (right). • Step 1 Understand SRI – a basic overview of the various SRI strategies and the main players is desirable; an in-depth understanding of the finer niceties is not needed. 4. Run the process efficiently and the • Step 2 Identify SRI investor interest levels – so you don’t under- or over-commit messages will take care of themselves. resources to the area. But what should we talk about? What are • Step 3 Create a ‘Register of SRI interest’ – just as you would know which mainstream these investors interested in? What should sell-side and rating agency analysts cover your stock and which buy-side asset we put in a presentation? managers hold it. For more sophisticated companies, Step • Step 4 Record recent activity – I am always amazed by how few companies can 6 (see ‘10 steps’ box, right, with further provide a basic five point overview of their recent SRI engagement. details online) advises on the questions that • Step 5 Develop an SR-IR Plan – one page of A4 is plenty. companies should ask themselves to ensure • Step 6 Shape the key messages – this is the interesting bit! that they engage ‘mainstream’ and SRI • Step 7 Publish a CSR / Sustainability Report – note, this is the seventh step, not the first! investors in the company’s long-term • Step 8 Undertake an SRI roadshow – the size and reach of these will depend on your strategic and sustainable direction. company’s business activities, its size and its domicile; but it is simply not good enough For first timers, however, the answer is to post a CSR report on the company’s website and go on holiday. simpler. Find out which of your Top 20 • Step 9 Respond to selected requests and questionnaires – the key word here is investors are interested in your company’s ‘selected’. sustainability performance, pack a bag, go • Step 10 Rest – seriously, if you set the agenda, you can also define ‘closed’ (no and see them, learn from the experience, communications) periods to allow you to focus on running the business. do it again next year.
IR SOCIETY 27 NARRATIVE REPORTING INFORMED
Getting the SRI answers
Here, a number of SRI and communications professionals address some key questions about the practice of communication in their area. These are supplied, with permission, by SRI-CONNECT who conduct regular interviews on SRI topics.
How is SRI research and What three simple changes Can you take us through what engagement structured in your could companies make to you do each year to report to organisation? help SRI investment analysts? and engage with SRI investors?
Vicki Bakhshi is an Based in New Dawn Rittenhouse associate director York, Michael is director of at F&C Investments Sadowski is a sustainable and advises on the vice president at development for investment risks SustainAbility and the DuPont and opportunities leads the firm's Company with arising from work in the responsibilities to climate change. finance sector assist DuPont She has worked on including helping businesses integrate climate change corporates engage sustainability policy for almost 10 years, including with investors on environmental, social strategies into their management processes. within the 10 Downing Street policy and governance topics. directorate and as a member of the Stern On reporting, we publish a ‘progress review team. Evolve their thinking on report’ that focuses on our voluntary materiality. For many companies ‘goals and also a GRI report that strives to F&C has a specialist in-house team ‘this has resulted in dozens of issues answer the broader set of questions that covering three key areas of activity: being identified as ‘material’. stakeholders are interested in. ‘voting, engagement and screened funds. The Companies need to have the fortitude We then have a set of prioritised surveys team works closely with the company’s SRI to name the few issues that are most that we complete. We get so many of them fund managers in equities, bonds and material, and to make the case that we can’t do them all. So we try to private equity. around these to SRI investors. complete a few of them and also post as Our responsibilities are split by sector, Ask SRI analysts to join earnings much information on our website, so that issue and region. Reflecting the wide global calls and other investor events – this others can get access to the information spread of our work, in our London office, will help SRI analysts better when they need it. we have a Japanese and Chinese speaker to understand the company and its Also, we are happy to have one-on-one cover those markets, and we have three business model, competitive conversations with SRI analysts to discuss team members abroad – two in the US and pressures, etc. DuPont’s strategies and activities. These one in India. When a company releases its enable us to answer any questions and to The team includes specialists on a whole annual sustainability report, they address any concerns that analysts may range of sectors and issues and there is a lot should invite SRI analysts to a brief (c. have about our activity. They also enable us of sharing of information and expertise. one hour) conference call to share to understand what lies behind the analysts’ Some current priorities include: highlights and field questions. This questions which gives us a better context on remuneration, especially in the banking will improve the analysts’ what we need to focus on and why. Also, it sector; health and safety in the nuclear and understanding, and also hopefully cut helps us to build a business case internally extractive industries; shale gas; human rights down on the number of questions for our activities and areas of focus. in difficult areas; and engagement on fixed ratings firms ask of companies. ’ income portfolios. DuPont has been bringing world-class ’ SustainAbility is a think tank ’ science and engineering to the global F&C manages 98.2 billion of assets for and strategic advisory firm working to marketplace in the form of innovative insurance clients, institutional investors and catalyse business leadership on products, materials, and services since private individuals. sustainability. 1802. See www.dupont.com.
28 IR SOCIETY SUMMER 2012 NARRATIVE REPORTING
What should the IRO’s role be How many days a year do you spend on in SRI communications? SRI work?
John Dawson is Kirsty Collins is days of work and involves others across chairman of the global CR the business to give the right level of IR Society and director with detail. Then on other days you may need head of IR at GlaxoSmithKline to respond to specific ad-hoc questions National Grid and leads from analysts that have picked up plc. John joined engagement with something in the media about GSK. National Grid in the SRI Of course, a lot of the work is driven March 2011. community by investors’ own timetables – a number Previously he was working closely of analysts and research firms have their director of IR at with the IR team. own rolling review cycle – which we’re Cadbury plc from She is also not really in control of. 2008 to 2010 and vice president, investor responsible for working with the business By focusing more time on this area, I relations and corporate communications on CR performance measurement, will be able to dig deeper into it - but for ICI from 2004 to 2008. elements of reporting and CR we’re still going to be very pragmatic governance. about what we prioritise and spend time IROs’ direct engagement with SRI tends on. to be patchy. You find much greater It’s almost impossible to answer your There are too many ratings and ‘engagement by companies that have faced question directly. What do you define indices out there to count and we a number of high-profile issues. There’s ‘as ‘SRI work’? prioritise what we respond to based on almost a vicious circle whereby companies At GSK, the CR team works with a number of factors including how they don’t really engage with the SRI community investor relations, we are in the same are used externally by investors and unless they have done something that department and are directly involved in others, their influence and impact, and makes the community worried. As a result, team meetings etc. In fact, one of the not least on the robustness of the a lot of good stories are delivered too priorities that we have for this year is to assessment methodology itself. This is an passively and tend to get lost. integrate mainstream and SRI ever-evolving area and it’s important to We should find better ways of having an communications better. be strategic about how you assess and active dialogue with the SRI community We are aware that CR analysis can be participate in these things. which are less confrontational, so that very integrated within asset management companies that are doing good things on a houses or completely separate. What we GlaxoSmithKline – one of the’ world’s progressive basis find mechanisms for want to do is make sure that our own leading research-based pharmaceutical raising the profile of these activities through communications are integrated so that and healthcare companies – is dialogue with SRI investors. everyone gets the same message. committed to improving the quality of For National Grid, in particular, our Some work, such as completing the human life by enabling people to do sustainability performance is a critical issue Dow Jones questionnaire can take several more, feel better and live longer. for the SRI investment funds that we are keen to have on-board as long-term shareholders. We have a very relevant investment proposition for them and we should appeal on a number of fronts. Therefore, the role of the IR team here is Do you find direct meetings with companies on to help the CR team and the senior sustainability issues useful? management of National Grid to access the SRI community. We need to ensure that Pär Löfving is They also force companies to focus on these investors have the opportunity to find senior analyst for material issues and do not allow them to out what we’re doing, to understand its responsible hide behind a cloud of numbers and nice relevance to them and to make the right investments at DNB CSR-projects as they sometimes do in decision about whether we are a good since 2006 and is reports. story or a story that they should be actively in charge of ESG I am definitely not the first one to say it, managing. analysis and RI but broad questionnaires are a waste of strategy. everyone’s time and money. National Grid’ is an international Questionnaires that are very specifically- electricity and gas company and one of Direct meetings with companies are designed and targeted might have some the largest investor-owned energy good in many ways. They really force value, however. companies in the world. It plays a vital you‘ to get to know and understand role in providing energy to millions of companies (before the meeting) and they DNB is the largest’ financial institution of customers across the northeastern U.S. are great opportunities to confirm or reject Norway with DNB Asset Management € and Great Britain. your views. managing assets of around 70bn. >>
IR SOCIETY 29 NARRATIVE REPORTING INFORMED
What corporate governance Will 'integrated reporting' be a stimulus to a strategic issues are all analysts watching thinking or an exercise in box-ticking? currently? Simon Propper is start to impose itself on the annual Robert Walker is a the founder and reporting community. We really need to senior research CEO of Context. get sustainability reporting in order (and analyst at Credit After completing that means the reform of GRI, in my Agricole a chemical opinion) before we can have any hope of Cheuvreux. He engineering integrating intelligently. The IIRC pilot aims to highlight degree in the exercise faces a daunting challenge. I the potential of early 80’s his hope a company will emerge to show corporate attention was how this can be done efficiently and governance as a drawn to without expansion in length. But I fear the significant part of pollution and same people who think GRI is a good equity risk. what companies could do to avoid it. way to report sustainability will be influential in the IIRC. In which case Board competence, expertise and board It has the potential to be the former double your reporting budget. diversity remain key issues along with and it should end up producing more However, there’s nothing to stop ‘succession planning. Also, I think we need balanced‘ annual reports – which include individual companies saying “we really to recognise the potential risks and social, ethical and environmental don’t need to worry about all of those opportunities of governance momentum subjects where they are important – and templates and we know how to do an across European markets. doesn’t marginalise them to little intelligent integrated report - we’re just sections on their own about going to get on with it.” A number of Credit Agricole Cheuvreux’ is a leading philanthropy or good news stories. It companies are already doing that outside European full service broker within the could ensure that those issues aren’t the IIRC. I can give you three good Credit Agricole Group, offering its clients neglected and are properly reflected in examples of annual reports that have services in equity research, sales and the report in terms of risk and been getting progressively more integrated execution. opportunity for the business. without making a big fuss about it: WPP, What is likely to happen, however, is Centrica and Vodafone. I’m sure there are something different because the current others. template for sustainability and CR What do quoted companies reporting is poorly-thought through and Context’ is a global corporate need to know about the PRI?* cumbersome. sustainability consultancy, founded by If we can’t get stand-alone reporting Propper in 1997 alongside FT journalist right, the act of integration is almost Peter Knight. They felt that strategic Katie Beith is a certain to be a mess. And, at this stage, I advice needed good communications to responsible don’t think that the sustainability make it fly. They now have offices in investment reporting community is in a fit state to London, New York and Los Angeles. specialist who brings over 12 years of relevant work experience to the PRI. What three tips would you give to companies looking to increase their exposure with ‘sustainable shareholders’? First and foremost, they need to know ‘that there is a huge global community of investors interested in sustainability issues. Ivar Smits is investors in a regular shareholding ID The PRI has over 1,000 signatories now manager, investor round. The second step would be to actively and, globally, there is a desire for better relations, at share the company’s sustainability story with information from companies on these AkzoNobel, and is the SRI community via roadshows and subjects. Actually, that’s it I think. Given the a spokesperson for broker conferences, of which more and PRI is an investor led initiative, that’s the the group within more are being organised. main thing companies need to know! the global As a third step, it is important to engage financial with key SRI analysis agencies, in order to * The United Nations-backed Principles’ for community. obtain a proper independently verified Responsible Investment Initiative (PRI, profile. www.unpri.org) is a network of The first step for an IR officer is to international investors working together to acknowledge the importance of long- AkzoNobel’ is a world leader in paints and put the six Principles for Responsible ‘term investors with a sustainability focus coatings, and a major producer of specialty Investment into practice. and start to identify and measure the SRI chemicals.
30 IR SOCIETY AUTUMN 2012
How do you like to be communicated with by companies and SRI researchers?
Amanda Young is the SRI officer at Study for Success Newton Investment Management, charged with CIR programme conducting research, analysis and engagement work on environmental and The Certificate in Investor Relations (CIR) is an internationally social issues of the recognised entry-level qualification in investor relations (IR). It is company in which Newton invests. regarded as an essential prerequisite for those entering the IR Electronically and in person! By email, I profession. In 2012 the CIR is running in the UK, Hong Kong, like to know when companies have Malaysia, Singapore and Russia. The qualification ensures an ‘published their corporate responsibility appropriate level of factual knowledge of both the regulatory reports. After that, for companies that we hold, I like direct face-to-face dialogue – requirements and the financial and market environment, which will rather than email correspondence. ’ enable the practitioner to operate competently and safely. Newton Investment Management is a London-based subsidiary of The Bank of New York Mellon Corporation, With assets under management of over £46bn (as of 31 December 2011), Newton provides a broad range of investment products and services to a wide range of clients.
Other interviews are free-to-access at the SRI-CONNECT/SRI Network/Meet... where you can also ‘connect’ with any interviewees that you find interesting.
Are you an IR service provider? If so, why not ensure that your message reaches IROs at the heart of the UK corporate community? Become an IR Society Service Dates for 2012 and early 2013: Provider and advertise in print and online to our professional CIR Revision Course CIR Exam readership. 15 November, 30 January, 10 April 29 November, 11 February, 24 April See pages 36-38 in this issue. To learn more, please call For more information: 01285 831789 or email email [email protected] visit www.irs.org.uk call +44 (0)20 7379 1763 [email protected]
IR SOCIETY 31 EVENTS INFORMED
The events below are scheduled over the rest of 2012 for IR Society members. Events Further details will be announced in due course. For the latest information and to register for our events, please visit www.irs.org.uk/events.
OCTOBER – DECEMBER 2012
IR SEMINAR: MARKET UPDATE SEMINAR IR WEBINAR: CORPORATE GOVERNANCE AND CSR Tuesday 9 October REPORTING - SHOULD IR BE INVOLVED? Time: 8.30am - 12.30pm Tuesday 6 November Venue: Citi Depositary Receipt Services, Stirling Square, 5-7 Time: 12.30pm - 1.30pm Carlton Gardens, London. SW1Y 5AD Venue: Online Costs: Free of charge to STD+ members: £0 Costs: Free to members & non-members Members £100 +VAT: £120 Non-members £200 +VAT: £240 IR NOW LUNCH: MEET THE FUND MANAGERS Tuesday 13 November Leading practitioners will provide insights into the many Time: 12.30pm - 2.00pm regulatory, structural and policy changes that are sweeping the Venue: TBC markets. The Seminar will cover a broad range of issues that Costs: Members free of charge have a direct and indirect impact on the UK IRO now and in Non-members £50 +VAT: £60 the future, including updates on changes in the buy-side, sell- side and the accounting standards framework. We will also IR SOCIETY ANNUAL DINNER AND BEST PRACTICE look at how FATCA, the impending global tax-gathering AWARDS initiative from the US Treasury, will affect your company. Tuesday 20 November Chaired by Richard Davies, Managing Director of RD:IR Time: 6.30pm - 11.30pm Speakers include: Venue: The Pavilion, Tower of London, London. EC3N 4AB • Neil Dawson, Analyst, Citi Investment Research & Costs: Table of 10 £2,500 + VAT : £3000 Analysis; 2 Tables of 10 £4,750 +VAT : £5700 • Nick Dawson, Capita Registrars; • Julie Patterson, IMA; Individual tickets £275 +VAT : £330 • Phineas Glover, ABI; and • Emma Burdett, Partner, Maitland. The IR Society Annual Dinner is a highlight of the IR calendar and gives the IR community an opportunity to enjoy the Areas we will be covering; company of colleagues and peers in a relaxed and luxurious • Accounting Standards Update (PF rules, IAS etc) environment. The evening begins with a champagne • Buyside Update (RDR / AIFMD / etc) reception, followed by a delicious meal, the presentation of • FATCA • Regulatory Roundup (ESMA Credit Rating Agencies + the 2012 best practice awards and finishes with a disco and PAA reviews / FSA structure changes / Kay Review / the opportunity for further networking in the reception bar. Corporate Governance Code + Stewardship Code Following the success of the 2011 event, which was Reviews) attended by 450 IR professionals, this year's event will once again be held at the fantastic Pavilion at the Tower of London. This half day seminar is one not to be missed so please book Please check back regularly for details on the venue and the your place as soon as possible. itinerary for the evening.
IR WEBINAR: IR & THE PRIVATE INVESTOR Tuesday 11 December IR SOCIETY BEST Time: 12.30pm - 1.30pm PRACTICE AWARDS 2012 Venue: Online Tuesday 20th November Tower of London Costs: Free of charge to members & non-members 6.30pm To book your table or tickets call If you have any events queries, please contact +44 (0)20 7379 1763 or visit www.irs.org.uk Dipty Patel at [email protected] or call 020 7379 1763
32 IR SOCIETY Whether you are BIG or small, you need IR...
All companies need to communicate effectively with their investors, especially when the going gets tough. And if your company is small or medium-sized, you have a particular challenge to make your voice heard amid the market noise.
The Investor Relations Society can help you.
Whether you are just starting or simply trying to keep up with best IR practice, we can provide you with the knowledge, skills and resources to enhance your professional development and build your career.
If you are not already a member, why not join now – just call us on 020 7379 1763, or see our website www.irs.org.uk
Events. Courses. Publications. Annual conference. Members’ website. Reading material. Professional development. Social networking. Weekly news bulletin. Quarterly magazine. Updates on industry news. Responses to regulatory consultation papers. Policy initiatives. Advice on IR tools and techniques. Putting IR into action. Best practice guidance. Awards. A knowledge base. And much more... COURSES INFORMED
The IR Society provides a comprehensive programme of training courses as well Courses as half and full day seminars. For further information, visit www.irs.org.uk.
PROFESSIONAL DEVELOPMENT PROGRAMME WINTER 2012 & SPRING 2013
● Foundation INTRODUCTION TO FINANCIAL MARKETS FOR IR ● Thursday 22 November ‘12 level This course gives you a basic introduction to investor relations and the financial ● Thursday 24 January ‘13 environment in which IR professionals work. It explains how the financial markets ● Thursday 12 March ‘13 operate and are regulated. ● Thursday 16 May ‘13
● Foundation IR – OPTIMISING CITY RELATIONSHIPS ● Tuesday 4 December ‘12 level This interactive day of workshops presented by senior practitioners explores their day- to-day roles and helps you understand their interaction with companies. This course builds on the aspects covered in ‘Introduction to financial markets for IR’.
● Foundation PRACTICAL IR TOOLS AND TECHNIQUES ● Thursday 25 October ‘12 level IR is communication. This interactive day of workshops presented by senior IR executives explores the most current communication tools and techniques relevant to IR practitioners in their day-to-day roles.
● Foundation INVESTOR RELATIONS FOR PERSONAL AND EXECUTIVE ASSISTANTS ● Wednesday 20 March ‘13 level Executive assistants and board level personal assistants who come into contact with investors and external advisors need to understand the dynamics of the financial markets. Who should they prioritise for meetings and phone calls? What information can be disclosed and how can they support senior management.
● Core IR DEMYSTIFYING COMPANY ACCOUNTS – MODULES ONE AND TWO ● Tuesday 6/Wednesday 7 November ‘12 Skills If you are working in investor relations or financial PR you need to understand ● Wednesday 6/Thursday 7 March ‘13 financial statements and be able to answer questions from analysts, investors and the financial press. This two part course will help you achieve this by providing foundation knowledge in accounting.
● Core IR IR REGULATION & COMPLIANCE ESSENTIALS ● Wednesday 21 November ‘12 Skills This course provides essential information and updates for both new and experienced ● Wednesday 6 February ‘13 IR professionals. Understand the legal compliance requirements for IR communications ● Tuesday 30 May ‘13 and how they are best applied in practice.
● Core IR IR REGULATION UPDATE ● Tuesday 9 October ‘12 Skills This half day course will bring you up to date with latest rules and regulations. ● Thursday 14 March ‘13
● Core IR EFFECTIVE INVESTOR TARGETING ● Thursday 18 October ‘12 Skills Gain an understanding of how to effectively target investors nationally and internationally, through using practical tools and leveraging external advice and resources. Understand how to maximise the investment in brokers, sales teams and other service providers and get a perspective on the key requirements for executing a successful roadshow.
34 IR SOCIETY AUTUMN 2012 COURSES
To join the Professional Development programme, sponsored by Deutsche Bank, call 020 7379 1763 or email [email protected].
PROFESSIONAL DEVELOPMENT PROGRAMME WINTER 2012 & SPRING 2013
● Core IR UNDERSTANDING THE MEDIA FOR IROS ● Wednesday 10 October ‘12 Skills It’s easy to get the wrong headline, but how can you use the press to develop your corporate profile in a positive way? On this course you will hear directly from a journalist on what they look for in a story; from a PR advisor on how to position your company with the media; and from an IR practitioner on how its done in practice.
● Specialist DEBT IR – THE NEW FRONTIER ● Planned for Spring ‘13 course This course will explain the nature of debt instruments and help professionals to understand the information requirements of holders.
● BEHIND THE TRADERS’ SCREENS – HOW SECURITIES ARE TRADED ● Thursday 6 December ‘12 Specialist This course provides a basic knowledge and understanding of the key aspects of course equities-related securities trading including the operation of markets, use of new trading platforms and dark pools, securities lending and borrowing and the interaction with short selling and derivatives trading.
● BEYOND THE TRADITIONAL INVESTOR BASE – HEDGE FUNDS AND ● Tuesday 21 May ‘13 Specialist SOVEREIGN WEALTH FUNDS course This course provides an overview of how hedge funds and sovereign wealth funds operate in today’s global financial market place. It will offer an insight into the thinking behind some of the investor behavious which has attracted much comment in the financial press – not all of it well informed.
IR FOR DIRECTORS AND SENIOR EXECUTIVES ● Bespoke course run in-house ● Specialist The new Corporate Governance Code and the UK Stewardship Code has put increased emphasis on effective communication between boards and investors. It is therefore course ever more important to understand how investor relations can facilitate effective contact with the investor community. This course provides a unique opportunity to understand how to make the best use of IR resources, what IR can do to help to increase liquidity in your shares, and more.
CERTIFICATE IN INVESTOR RELATIONS (CIR) 2012 & 2013
CIR REVISION COURSE ● Thursday 15 November ‘12 To revise the CIR Study Guide and assist candidates with any questions they may have ● Wednesday 30 January ‘13 on specific sections of the syllabus. ● Wednesday 10 April ‘13
CIR EXAM DATES ● Thursday 29 November ‘12 The following are exam dates for the Certificate in Investor Relations. ● Monday 11 February ‘13 ● Wednesday 24 April ‘13
The IR Society promotes the highest standards among its members and the wider IR community. Our training courses increase awareness of IR techniques, issues and best practice for IR practitioners at every stage of their careers. For more details see www.irs.org.uk.
IR SOCIETY 35 DIRECTORY INFORMED
ADVFN – www.advfn.com – news providers
The IR Service BLACK SUN – www.blacksunplc.com – annual reports, internet services, website development
Black Sun is one of Europe’s leading Contact: Sallie Pilot Providers strategic corporate communications Director of Research and Strategy consultancies. We bring together T:02077519509 corporate reporting, corporate E: [email protected] responsibility communications and Directory digital communications to enable our clients to create powerful integrated solutions. The Informed IR Service Providers Directory features those www.blacksunplc.com/corporate organisations who offer key services to the IR community and shows the categories in which they have chosen to appear. BNY MELLON – www.bnymellon.com/dr – ADR depositary services This section is published in parallel with the service provider section on the IR Society website – www.irs.org.uk. For more information and to list your business here, please call BNY Mellon acts as depositary for more than 2,100 American and global Libby Wimble on +44 (0)1285 831 789 or email depositary receipt programmes, acting [email protected]. in partnership with leading companies from 67 countries. Key to IR SERVICE PROVIDERS by category Learn more at www.bnymellon.com/dr ADR depositary services Investor roadshows BNY Mellon HSBC Deutsche Bank RD:IR BROADRIDGE – www.broadridge.com – investor relations Annual reports News providers Black Sun ADVFN Capita Financial Group Opinion research CAPITA FINANCIAL GROUP – www.capitafinancial.com/1462.htm – Emperor Design Orient Capital annual reports Investis RD:IR Jones and Palmer Proxy and corporate support CLARE WILLIAMS ASSOCIATES – www.clarewilliamsassociates.com – Langsford Corporate Design Equiniti investor relations, shareholder research, website development MerchantCantos Orient Capital Sampson May ProxyCensus Ltd SAS RD:IR Board advisory Publications Investor relations and investment ● Market perception studies. Fidelio IR Magazine communication services: we provide an ● Investment communication across a CRM databases Public relations independent, experienced and skilled range of channels. IR.soft Jones and Palmer fund manager’s perspective with an ● Bespoke research support and training. Nasdaq OMX Corporate Lansons established track record. ● Flexible tailored approach. T: +44 (0) 141 419 9900 Solutions MHP E W Orient Capital Pelham Bell Pottinger : [email protected] : www.clarewilliamsassociates.com RD:IR RLM Finsbury Executive search Registrars Fidelio Equiniti DEUTSCHE BANK – www.adr.db.com – ADR depositary services Fund management Shareholder research Exane BNP Paribas Clare Williams Deutsche Bank Internet services Associates Providing all the support necessary to set up and run Black Sun Equiniti a successful Depositary Receipt programme. global3digital Investor Perceptions For a more personal, specialist service please contact us. The Group Orient Capital Zafar Aziz – Tel: +44(20)7545 6619 Email: [email protected] MerchantCantos RD:IR Nasdaq OMX Corporate Shareholder targeting Solutions Equiniti WorkCast Nasdaq OMX Corporate Investor relations Solutions EMCO – www.em-co.ru/eng – investor relations Broadridge Orient Capital Clare Williams RD:IR Associates Webcasting EMPEROR DESIGN – www.emperordesign.co.uk – annual reports, EmCo h2glenfern website development Equiniti Investis Fidelio Nasdaq OMX Corporate Since 1996, Emperor has been designing and h2glenfern Solutions producing straightforward printed and online Imagination World Television annual reports, where accessibility of Investis Website development information, strong navigation, clarity of Maitland Black Sun communication and value are the key objectives. Makinson Cowell Clare Williams Tel: +44 (0)207 729 9090 MHP Associates +44 (0)121 262 3830 Call us today for a free consultation. Nasdaq OMX Corporate Emperor Design +44 (0)131 220 7990 www.emperordesign.co.uk Solutions global3digital Orient Capital The Group RD:IR Investis EQUINITI – www.equiniti.co.uk – investor relations, proxy and Temple Bar Advisory Jones and Palmer corporate support, registrars, shareholder research, shareholder WorkCast MerchantCantos targeting World Television Nasdaq OMX Corporate IR for small caps Solutions EXANE BNP PARIBAS – www.exanebnpparibas.com – fund Investis WorkCast RD:IR SAS management
36 IR SOCIETY AUTUMN 2012 DIRECTORY
FIDELIO – www.fideliopartners.com – board advisory, executive IR MAGAZINE – www.irmagazine.com – publications search, investor relations IR.SOFT LTD – www.irsoft.com – CRM databases
Fidelio Partners is an The IR.manager Investor Relationship International Executive Management platform helps in-house IR teams Search firm. Our unique capital markets and Investor Relations and IR advisors easily and efficiently manage Contact: Gillian Karran-Cumberlege perspective enables us to attract relationships with investors, analysts and the +44 (0) 20 7759 2200 senior talent which gives our Arnaud D Robin media. [email protected] clients a clear advantage in the Tel: +44 (20) 7060 4700 www.fideliopartners.com competition for capital. [email protected] IR.soft: Software solutions for optimal Investor TM www.irsoft.com Relations
GLOBAL3DIGITAL – www.global3digital.com – internet services, JONES AND PALMER – www.jonesandpalmer.co.uk – annual reports, website development public relations, website development
Jones and Palmer are specialists in empowering corporate and investor communications
O Online strategy and web development O Annual Reports (electronic and printed) O Consultancy (best practice recommendations and legislative requirements) www.jonesandpalmer.co.uk Contact: Jim Robinson, Corporate Communications Director on 0121 236 9007
LANGSFORD CORPORATE DESIGN – www.langsford.co.uk – THE GROUP – www.the-group.net – internet services, website annual reports development
H2GLENFERN – www.h2glenfern.com – investor relations, LANSONS – www.lansons.com – public relations webcasting MAITLAND – www.maitland.co.uk – investor relations Contact: Tim Huddart h2glenfern MAKINSON COWELL – www.makinson-cowell.com – investor 66 St. James’s Street relations We provide a range of IR services helping companies London SW1A 1NE worldwide to communicate more effectively with the capital markets, incorporating the provision of +44 (0)207 160 0570 MERCHANTCANTOS – www.merchantcantos.com – annual reports, bespoke webcasting and corporate video solutions www.h2glenfern.com internet services, website development
Contact: Richard Carpenter HSBC – www.hsbcib.com – investor roadshows [email protected] +44 (0) 20 7396 3581 MerchantCantos is one of Europe’s leading creative communications companies. IMAGINATION – www.imagination.com – investor relations We work across print, online, video and mobile. Our areas of expertise include: Branding, Corporate Advertising, Corporate Communications, Corporate INVESTIS – www.investis.com – annual reports, investor relations, IR Reporting, Corporate Responsibility, Digital, Employee Engagement, Investor for small caps, webcasting, website development Communications, Video Production and Webcasting.
@em\jk`jXi\k_\dXib\k$c\X[`e^jg\Z`Xc`jkj`egifm`[`e^ZfigfiXk\n\Yj`k\j Xe[fec`e\ZfigfiXk\Zfddle`ZXk`fejj\im`Z\jkfdfi\k_Xe(#'''Zc`\ekj`e MHP – www.mhpc.com – investor relations, public relations fm\i)'Zfleki`\jnfic[n`[\% J\im`Z\j iXe^\ ]ifd ZfigfiXk\ n\Yj`k\j# `em\jkfi n\Yj`k\j Xe[ `ekiXe\kj# kf j_Xi\ MHP is an award winning new agency – in fact we’ve gone gi`Z\]\\[jXe[n\Yj`k\kffcj#Xjn\ccXjn\YZXjk`e^Xe[@em\jk`jHlXik\icp:figfiXk\ straight into the top 10. We cover 15 sector specialisms and N\Yj`k\IXeb`e^% five PR disciplines (financial PR, brand PR, corporate reputation, CSR and public affairs). :fekXZkjXc\j1 M`j`kflin\Yj`k\1 "++ ' )'.'*/0')* `em\jk`j%Zfd Contact: Reg Hoare (Managing Director & Partner) [email protected] tel: + 44 (0) 20 3128 8793 INVESTOR PERCEPTIONS – www.investorperceptions.com – www.mhpc.com shareholder research
DELIVERING NASDAQ OMX CORPORATE SOLUTIONS – www.nasdaqomx.com/whatwedo/corporatesolutions – INDEPENDENT CRM databases, internet services, investor relations, shareholder INSIGHT targeting, webcasting, website development
[email protected] +44 (0) 20 7427 1574 www.investorperceptions.com 85 Fleet Street London EC4Y 1AE Contact: Stephen James Managing Director Global Corporate Solutions NASDAQ OMX +44 207 065 8000 To appear here, call 01285 831789 NASDAQ OMX Corporate Solutions provides the technology that powers global business communications with our suite of tools servicing the needs of or email [email protected] investor relations and corporate communications professionals. http://www.nasdaqomx.com/whatwedo/corporatesolutions
IR SOCIETY 37 DIRECTORY (continued)
ORIENT CAPITAL – www.orientcap.com – CRM databases, investor relations, opinion research, proxy & corporate support, shareholder research, shareholder targeting
Orient Capital is a global leader in share The Investor Relations Society ownership analysis, equity market intelligence, Bedford House, 3 Bedford Street, investor communication and shareholder London, WC2E 9HD management technology for listed companies. Tel: 020 7379 1763 Fax: 020 7240 1320 London: +44 20 77 76 75 74 www.irs.org.uk [email protected] www.orientcap.com THE BOARD
John Dawson (Chairman) National Grid PELHAM BELL POTTINGER – www.pelhambellpottinger.co.uk – Best practice committee chairman public relations Nominations committee chairman [email protected]
PROXYCENSUS LTD – www.proxycensus.com – proxy and corporate Karen Keyes (Deputy chairman) support Membership committee chairman [email protected] RD:IR – www.rdir.com – CRM databases, investor relations, IR for Ian Arnold (Treasurer) small caps, investor roadshows, opinion research, proxy and corporate Finance committee chairman support, shareholder research, shareholder targeting [email protected] Michael Mitchell The Investor Relations Society [email protected] Hazel Jarvis (Company secretary) J Sainsbury [email protected] Emma Burdett Maitland Policy committee chairman RLM FINSBURY – www.finsbury.com – public relations [email protected] SAMPSON MAY – www.sampsonmay.com – annual reports Richard Carpenter MerchantCantos SAS – www.saslondon.com – annual reports, website development [email protected] Sallie Cooke-Pilot SAS is a design and communications agency providing specialist Black Sun expertise across corporate, talent and brand communications. [email protected] We produce annual reports, sustainability communications, corporate websites, internal communications and branding for Rebecca Ford some of the world’s largest organisations. The Group Contact: Victoria Sugg E: [email protected] [email protected] T: +44 (0)20 7243 3232 www.saslondon.com Reg Hoare MHP Communications TEMPLE BAR ADVISORY – www.templebaradvisory.com – investor Corporate affairs committee chairman [email protected] relations Gillian Karran-Cumberlege WORKCAST – www.world-television.com – internet services, investor Conference committee chairman relations, webcasting [email protected]
The WorkCast Corporation is Europe's largest provider of Al Loehnis webinar, webcasting and virtual event solutions serving Investis over 150 global organisations including the IR Society [email protected] and IR magazine. WorkCast's award-winning webcasting platform, WebCast David Lloyd-Seed Contact: Manager and Services, are used for many enterprise-wide Dixons Retail Mike Bowman, Sales Manager applications such as investor and stakeholder relations, [email protected] Tel: +44 (0)844 870 4912 lead generation, employee communications, training & [email protected] product launches and user conferences. Danielle Poulain Banco Espirito Santo WORLD TELEVISION – www.world-television.com – investor Events committee chairman relations, webcasting [email protected] Keith Russell World Television is a leader in strategic video [email protected] communications. We are producers of award-winning programmes, webcasting specialists and experts in Sue Scholes delivering video online. AMEC Contact: Rob Jackson, UK Sales & Marketing Director Education committee chairman T: +44 (0)20 7243 7370 [email protected] [email protected] www.world-television.com
38 IR SOCIETY INVESTOR PERCEPTION STUDY EUROPE 2012 Winning companies, winning IR strategies
A comprehensive survey and directory of investor relations in Europe today, based on in-depth interviews with more than 700 analysts and portfolio managers in the region, as well as with corporate IROs, CEOs and CFOs.
This full-color report containing numerous charts, photos and illustrations answers many important IR-related questions, including:
– Which companies are excelling at investor relations and why? – Who are the IROs at Europe’s top 100 companies? What size are their teams? – What impact is the eurozone crisis having on European IR? – What do the top-ranked IROs, CEOs and CFOs think they are doing right?
To order your copy, contact Jonathan Cardle at +44 20 7107 2566 or [email protected]. To download or buy the report online from July, please go to www.InsideInvestorRelations.com/euroips. Send a strong signal to the global capital markets.
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Connecting issuers to investors is critical to the success of every depositary receipt program. BNY Mellon’s unparalleled expertise and outreach initiatives are central to this connection. Operating in 74 countries, we have opened a world of opportunities for issuers and investors — making us the world’s leading depositary bank. Working together, we can help reach your strategic goals.
bnymellon.com/dr
Products and services are provided in various countries by subsidiaries, affi liates, and joint ventures of The Bank of New York Mellon Corporation, including The Bank of New York Mellon, and in some instances by third party providers. Each is authorized and regulated as required within each jurisdiction. Products and services may be provided under various brand names, including BNY Mellon. This document and information contained herein is for general information and reference purposes only and does not constitute legal, tax, accounting or other professional advice nor is it an offer or solicitation of securities or services or an endorsement thereof in any jurisdiction or in any circumstance that is otherwise unlawful or not authorized. Depositary Receipts: NOT FDIC, STATE OR FEDERAL AGENCY INSURED; MAY LOSE VALUE; NO BANK, STATE OR FEDERAL AGENCY GUARANTEE. ©2011 The Bank of New York Mellon Corporation. All rights reserved.