Continuing from McKinsey: Investors “Focus on Value-Creation Fundamentals” Not Sustainability Metrics (Part 1)…
Aside from the metrics, investors also demand that the company’s messaging be consistent across all venues:
“over 90 percent of respondents said they believe a company’s equity story should align with other investor communications and guide the content of capital markets and investor days.
… inconsistencies can undermine investor confidence, creating the impression of a lack of strategic cohesion. To build trust and ensure the market receives a unified message, it’s essential for management teams to align on a single, compelling equity story that is consistently communicated at all levels and across all investor touchpoints…
To effectively highlight value creation and position themselves as attractive investment opportunities, companies can ensure their narratives are firmly anchored in the right financial metrics [as I highlighted in Part 1]. This includes focusing on fundamentals, such as ROIC to demonstrate returns and EBITDA to showcase growth…
Companies can also supply the metrics investors rely on to anchor on a long-term vision. Equity stories should be clear, supported by these metrics, and consistently communicated across investor interactions.”
Inconsistency of messaging also creates legal risks as was pointed out in a recent post on our Q&A Forum.
The survey also shows what is keeping investors awake at night:
According to the methodology statement:
“The survey was conducted between December 9 and 17, 2024, across Canada, Europe, and the United States, encompassing 81 investors across several industries, including technology, media, and communications; industrials; consumer; financials and insurance; pharmaceuticals; energy; materials; and travel and infrastructure. Roughly 75 percent of respondents manage portfolios exceeding $1 billion, and roughly 85 percent operate with a time horizon of at least four years.”
In the end, it is reasonable to question operational sustainability metrics and disclosures without an explicit link to business fundamentals.
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