S3 E7: Embracing ESG in Investor Relations with Joanne Chan

Adrian McIntyre: 00:02

From the Public Relations Global Network, this is PRGN Presents. I'm Adrian McIntyre.

Abbie Fink: 00:07

And I'm Abbie Fink, vice president/general manager of HMA Public Relations in Phoenix, Arizona and a founding member of PRGN. With public relations leaders embedded into the fabric of the communities we serve, clients hire our agencies for the local knowledge, expertise, and connections in markets spanning six continents across the world.

Adrian McIntyre: 00:28

Our guests on this biweekly podcast series are all members of the Public Relations Global Network. They discuss such topics as the importance of sustainability and Environmental, Social, and Governance programs, crisis communications, content marketing, reputation management, and outside of the box thinking for growing your business.

Abbie Fink: 00:48

For more information about PRGN and our members, please visit prgn.com. And now, let's meet our guest for this episode.

Joanne Chan: 00:59

Hello, I'm Joanne Chan from LBS Communications in Hong Kong. We are a professional investor relations consulting firm. Our major role is to connect listed companies to investors and help them to speak the investment story to investors.

Abbie Fink: 01:17

And what has become such an important part of the investor story over the last several years is this idea of ESG or environmental, social, and corporate governance. Businesses, large and small, have to start considering what their ESG strategy is going to be, both as a business entity and those of us that look to partner with organizations.

And Joanne, that's something that you've been working with and really thinking about how to integrate very strategically ESG into a company's business strategy and their investment platform. Can you talk a little bit about that?

Joanne Chan: 01:58

For the past few years, ESG has become a very important topic in the financial market. Actually, the trend in Hong Kong is growing more important, especially driven by the stricter regulation imposed by the regulatory bodies. However, a lot of listed companies in Hong Kong are not really familiar with how to strategically integrate the ESG into the investor relations strategy.

Abbie Fink: 02:31

So what does that mean, really, to think about it and the role that you play in advising companies and thinking more about this.

Joanne Chan: 02:39

As an investor relations consultancy for our clients, we're actually very familiar with the investment stories and all the promotion channels that they have been using in connecting with their shareholders.

But for us, the future value of a company really lies in how they integrate their ESG value into the investment story. Our role is very important to effectively integrate the IR communications with ESG communications.

For example, we have to make good use of various methods and channels such as the annual report, corporate website, investor presentation, or any other investor engagement channels, through which they have to speak not only the investment story but also the risks and opportunities that they have seen related to ESG.

Abbie Fink: 03:42

So the conversations I think are twofold when we're looking at ESG. It's the businesses themselves have to, I'm going to use the word investment in in the sense of make a commitment to really living that ESG philosophy and focusing their business around those three entities.

But those that are making that investment financially into a business are asking those questions right? So how do we help stakeholders understand you know the needs and concerns of this and what ESG means and why it's important.

Joanne Chan: 04:20

I think it is very important because every stakeholder is unique and they all have their own set of ESG related concerns. Some may see climate-related risk as more important of higher priorities or other they're more focusing on labor practices, for example human rights, board diversity, etc. So our role is to help the companies to prioritize and understand the diverse needs and tailor the communication strategies to address the concerns and the expectation of our stakeholders and investors.

Abbie Fink: 05:03

Now, is it oftentimes, or can it be that they're not necessarily fulfilling completely a commitment to each one of those categories, right? There's very different philosophies regarding the environment versus their social concerns or their governance concerns. And I know one of the things that's so important is being transparent about where you are on those particular areas and demonstrating improvements or changes or consistency in efforts. So when you're looking at an overall strategy, how do you balance the different elements of those things?

Joanne Chan: 05:45

Yes. I think transparency is something a lot of us are talking about when we are evaluating the ESG performance. So transparency and consistency of ESG disclosure is the bedrock of an effective ESG communication campaign.

We say this because we observe that investors don't really understand the client's ESG accomplishments and future goals, etc. So it will affect the capacity to relay the whole investment story effectively. So it is really important for the listed companies to understand the transparency and consistency in ESG communication.

Adrian McIntyre: 06:32

Joanne, what do you think is driving this conversation forward in the market? I'm sure it's many things, including regulatory bodies, but is the primary interest in this coming from the investor side, and the listed companies are having to respond appropriately? Or is it something you need to convince the companies of doing because it's the right thing to do and the investors are starting to learn that as well. Where is the impetus for this movement coming from?

Joanne Chan: 07:01

For the listed company, the issuers, they have to understand, it is a mutual benefit, no matter for the investor or for the long-term business growth of a company. So ESG is actually something to reflect the long-term risks and opportunities of a business. If they are not really familiar with the future plan of the ESG strategy, I think it is always good to leverage recognized ESG reporting standards and frameworks—for example, GRI, SASB, TCFD—so they can leverage this kind of disclosure and standard to set as a target for them to achieve.

Adrian McIntyre: 07:44

One of the things about this topic, because it is somewhat technical and relatively new, people can't imagine what it looks like to do this work. When you get a new client and you're working with them on their investment story, when you know that investors are now increasingly interested in understanding the ESG metrics and score, if you will, when you get down to doing the work with a client, what sorts of things do you do? You mentioned websites and annual reports and things of that nature. But take us into that scene when you and your team are actually working with a client. What is happening? What issues are you talking about? What sort of work needs to be done to make this a part of their investor relations communication strategy.

Joanne Chan: 08:33

I think first of all, we have to prioritize the needs, the risks, and the future opportunities of a company. Because from now on, under the strict disclosure requirement from the regulatory bodies, I know a lot of our clients start to worry or a little bit confused of the way to go. For example, should they just fulfill the regulatory requirement or they should step up to do more to engage more investor, more potential investor in the future.

I think first of all we got to prioritize their needs and also the business risks and opportunities. So they got to really understand the business in terms of the exposure, the ESG risk. So this is the first thing that we have to work with our client.

And then the second is, as I mentioned before, there are different reporting standards and frameworks that can help a corporate to learn how to analyze and to disclose their risk and opportunities in terms of ESG three different areas. For example, there are Global Reporting Initiative, GRI, and the Task Force on Climate-Related Financial Disclosure, TCFD, and the Sustainable Accounting Standard Board, SASB. For example, in Hong Kong, GRI and TCFD are more completely adopted for the company to disclose their ESG exposure.

And then the second thing is to gain the confidence of the company in being more transparent and disclose their progress in terms of ESG achievement. Like I mentioned before, not only confined to annual reports, for example, during the investor presentations and when you talk to the shareholders investors, they always try to remind them where is their position in terms of the ESG development. So it is a way to assure the shareholders that the ESG commitment they have made today may not be something for them to achieve a short-term return, but in the long run, it will be very beneficial for the company to gain a bigger success in the future.

Adrian McIntyre: 11:07

Thanks for listening to this episode of PRGN Presents, brought to you by the Public Relations Global Network.

Abbie Fink: 11:13

We publish new episodes every other week, so follow PRGN Presents in your favorite podcast app. Episodes are also available on our website—along with more information about PRGN and our members—at prgn.com.