September 15, 2017

Form 8-A & Reg A: 3 New CDIs

Yesterday, Corp Fin issued 3 new CDIs about Exchange Act registration on Form 8-A in connection with a Regulation A offering:

CDI 182.21
CDI 182.22
CDI 182.23

Sustainable & Passive Investing: IR Opportunity?

There are changes afoot in the investment industry. According to this AlphaSense blog, nearly 40% of US equity assets are now held in “passive” funds, and 20% of US equity assets are now using sustainability strategies in investment decisions.

And while most of us have been beating the corporate governance drum for a long time, these converging trends emphasize that there’s an IR opportunity and financial impact. Here’s an excerpt:

The “new” type of activist campaign focuses on corporate governance, and tends to be more successful because the topics align with the proxy voting guidelines of passive institutions. Proxy contests can also benefit from the presence of passive investors because they may be looking to sell poorly performing stocks in their portfolios.

Investors are increasingly interested in expanded communications to include sustainability goals and performance discussions, a.k.a. extra financial, non-financial and other intangible measures.

Between 20-30% of companies have made shifts in their IR strategy as a result of the increase in passive investors and the increasing attention to sustainability. There’s an opportunity for those who can reach this audience.

What aspects of the company’s sustainability story are unknown, unrecognized or misunderstood, that could contribute to value creation if told in compelling and meaningful IR messaging? Where might aspects of ESG be germane to expanded mainstream investor interest and communications? How might developing ongoing relationships with passive investors and sell-side analysts increase shareholder value, not only by increasing demand for the company’s publicly traded equity and debt, but also by decreasing the risk of rogue shareholder votes?

State Street’s Climate Disclosure Guidance

Check out this new “climate disclosure guidance” from State Street. It’s aim is to help investors in “high-impact” sectors – oil, gas, utilities & mining – be able to evaluate climate risk preparedness and business sustainability risks. Consistent disclosures would be a step in the right direction.

State Street also expects companies in “high-impact” sectors to address climate risks in their board committee charters.

Liz Dunshee