Take control of SRI/ESG investor communications

Questionnaires can be the most frustrating face of SRI for many companies – they can be long, take considerable effort and use valuable internal political capital for uncertain reward. Four rules can help companies negotiate this area efficiently:

• Prioritise ruthlessly
• Apply a public domain rule
• Publish responses
• Set the timetable

Prioritise ruthlessly

Questions are sent from four sources: asset managers, brokers, ratings agencies and investor coalitions.

• Asset manager questions should be given highest priority as these are usually sent with a view to adding a company to a ‘buy list’ or to verifying its continued position on that list.
• Brokers’ research teams very rarely ask general questions and when they do, they are almost always directed towards specific research pieces that will be published and actively marketed to a wide global network of SRI and mainstream investors.  This focus means that questions from this source are usually worth answering.
• Ratings agency questions should be prioritised according to the number of relevant clients that the agency in question represents, the volume of screened assets that they supply research for and their influence (if any) on any publicly-disclosed indices.  These are listed within the SRI-CONNECT profiles of SRI agencies – and can be searched by companies.
• Investor coalition questions should be vetted according to the same screening processes that apply to ratings agencies

In addition to the above, companies should give additional credit for questions that they think are well-considered or may be picked up by other analysts in future.

Apply a public domain rule

Companies should not feel obliged to complete questionnaires with data that they have already put in the public domain.

Publish responses

Companies should publish their responses to questionnaires online to build up the amount of publically available data and thereby reduce the duplication of questions.

Set the timetable

As part of taking control of the SRI communications timetable, companies should set and publicise ‘open’ and ‘closed’ periods – i.e. periods when they will and won’t respond to investor questions.  The process of answering all SRI questions in the same period should reduce the duplication of effort that companies go through.