Investor relations: it’s all about communication

Vasco Cecchini

Vasco Cecchini is PSP Swiss Property Chief Communications Officer and Chair of the EPRA Investor Relations Committee.

The EPRA Investor Relations Committee (EIRC) presently comprises 15 members representing companies with a range of geographies, sectors and sizes. The main goal of the Committee is to “develop the industry message to investors and assist investor outreach to disseminate it.” The EIRC meets twice a year to discuss the different issues and trends impacting our business. It aims to share experiences to improve the EIRC’s ability to interact with investors and other stakeholders. Committee members are expected to contribute on behalf of the wider investor relations (IR) community as well as their own interests. EPRA is grateful for the involvement and assistance from Committee members past and present.
At the most recent committee meeting held at the 2018 EPRA Conference in Berlin, the main areas of focus were:

  • MiFID II’s impact on shareholder interaction

  • The rise of passive investing

  • The increasing importance of third-party voting advisers and

  • The increasing importance of Environmental, Social and Governance (ESG) when dealing with investors.

MiFID II’s impact on shareholder interaction

In this post-MiFID II world, we expect all companies listed on stock exchanges to be more proactive in the internal management of their shareholder registers. This is because the introduction of MiFID II is likely to reduce incentives to banks, brokers and analysts to provide corporate access and, in some cases, research.
One outcome is an increasing onus on IR departments to educate internal stakeholders about the shareholder register and its constituents to ensure key decision-makers are aware of its evolving nature and the impact of different stakeholders with specific views on issues such as corporate structure and Board nominations.

The rise of passive investing

The Committee found that the average level of passive investors within their registers was between 15% and 20% and noted this level had increased significantly in recent years. It is expected that this level of allocation is likely to increase in the future.
Passive managers believe it is difficult to consistently outsmart the market, so they attempt to match market or sector performance through the construction of well-diversified portfolios that may replicate specific indexes. As there are more of these strategies, the inclusion and exclusion from indexes are likely to become increasingly important. At present, there is approximately USD 10.5 billion tracking FTSE EPRA Nareit indexes through exchange-traded funds.
This level of allocation is significant since passive investors are increasingly active in using their voting rights, with some funds arguing that they can use their power to ensure higher ESG standards across the whole market. Therefore, IR teams need to be aware of their holdings on their registers to gauge the effectiveness of investor feedback and their impact on shareholder voting intentions at general or extraordinary meetings.
However, in many cases these funds are neither structured nor resourced to enable regular dialogue with the underlying management or IR departments of their investments. This aspect raises the significance of third-party proxy voting and ESG strategies.

Third-party proxy voting advisers

Third-party proxy voting advisers typically provide advice to institutions on how they should vote on various topics and then, in many cases, process the institution’s instruction. These advisers have built up considerable expertise in analysing shareholder requests. Often, their advice becomes the default position of the investor, particularly if the investor itself does not have the resources to employ on the subject.
The EIRC wanted to highlight the importance of understanding third-party proxy voting service processes, which appear to have improved and become more transparent over recent years. Where possible, the Committee advised contacting or meeting service providers before significant corporate events. There may also be an opportunity for the company to see a draft report from the service provider to understand their ranking and respond in advance of a final report. It is worthwhile engaging in advance of specific corporate resolutions to explain the detail from the company’s perspective and understand the service provider’s initial opinion. It was noted that once the service provider produces a final opinion, it is available to the public. At this point, it is increasingly likely to be picked up by media representatives and reported. It will, therefore, make it more challenging for the company to change this initial perspective.

The increasing importance of ESG

The relevance of ESG for the capital market is still evolving and becoming increasingly important for all investors. For the time being, the Committee’s focus is on fully interacting with institutional investors adopting an ESG approach and applying issue-related structures. The Committee intends to identify opportunities that could be integrated into the strategic elements of the IR programme.


Please feel free to contact either the EPRA investor outreach team (io@epra.com) or EIRC Chair Vasco Cecchini (CCO, PSP Swiss Property, vasco.cecchini@psp.info) to raise any subject you think relevant for the Committee to discuss in the future. It would be great to hear your feedback to ensure the IR Committee is providing a relevant service to all EPRA members. We aim to keep the membership regularly informed of discussions within the Committee.