More information does not automatically create a better investment case – or a clear sense of value
Too many companies still treat sustainability as something to be reported, not something to be priced. The result is familiar: longer annual reports, more ESG tables, better-looking slides. Yet investors are still asking the same basic question: What does this actually mean for value?
That is the real challenge for investor relations. Sustainability disclosure has improved, regulation has expanded and ESG data is now everywhere. But more information does not automatically create a better investment case. In fact, poorly structured sustainability communication can do the opposite. It can bury the real story under a pile of targets, policies and generic commitments.
Translating sustainability into capital-markets language
For IR teams, the task is not to repeat the sustainability report but to translate sustainability into capital-markets language.
Investors want to understand how ESG issues affect growth, margins, capital expenditure, risk, cost of capital and competitive positioning. Which parts of the business benefit from sustainability tailwinds? Which assets face transition risk? Does regulation create pressure or advantage? Will the company need to invest heavily before the financial benefits materialize? And is the transition plan credible and feasible?
The opportunity is in the transition, not the already-green
This matters because sustainable finance is no longer only about financing companies that are already ‘green’. A large part of the opportunity lies in companies that are not yet sustainable but have a credible path to improvement.
More information does not automatically create a better investment case
For sectors such as energy, materials, transport, mining, chemicals or cement, the market is not looking for perfection. It is looking for transparency, evidence and a believable transition pathway. A cement producer with high emissions can still engage investors if its strategy shows how alternative fuels and carbon capture will reduce that footprint while protecting margins. That is where profitability meets sustainability. The same logic applies to a logistics company with a credible fleet electrification plan tied to customer demand and capital discipline.
That is how many companies lose the room. They present sustainability as a side story: a few polished slides on purpose, people and planet, usually placed near the end of the investor deck. The language sounds good, but the link to the business model is weak. Investors do not want to hear that a company is ‘committed to a better future’. They want to hear that a decarbonization capex program is expected to cut energy costs by a specific percentage by 2030, is already partly committed and carries a defined payback. That is the difference between a purpose slide and an equity story.
One ESG message won’t work for everyone
The audience also matters. A financial analyst and a sustainability analyst may sit in the same meeting, but they are not asking the same questions.
The financial analyst wants to know how sustainability affects valuation. The sustainability analyst wants to know whether the targets, data and transition pathway are robust. For example, if an industrial company announces a large decarbonization investment, the financial analyst may focus on capex, margin pressure and payback periods, while the sustainability analyst will test whether the technology choice, interim milestones and emissions assumptions are credible. A portfolio manager weighs risk-adjusted return; a pension fund may also weigh measurable impact.
The point for IR is not to memorize investor types but to know, before each meeting, which type of question the person across the table is presumably going to ask. One ESG message will not work for all of them.
Start with materiality
The best sustainability communication starts with materiality. Not every ESG topic deserves equal attention. A mining company and a software company have very different value drivers. For a mining company, water use, tailings safety and community relations may be central to valuation and license to operate. For a software company, energy use in data centers and AI governance may matter far more important than the issues that dominate a capital-intensive industry. Good IR communication identifies the few issues that truly matter and explains why they matter.
Companies need to explain both how sustainability issues affect the business and how the business affects society and the environment
Double materiality helps here. Companies need to explain both how sustainability issues affect the business and how the business affects society and the environment. These two dimensions are not separate for long. Today’s externality – emissions, water use, labor practices – becomes tomorrow’s financial risk through regulation, litigation, technology change or loss of license to operate, which is exactly why frameworks like CSRD now require companies to report both.
Don’t chase ratings – understand them
ESG ratings are another element here. And while chasing them is a mistake; ignoring them is also a mistake. Ratings are imperfect and often opaque, and they sometimes reward disclosure quality over real performance – but they still drive investor perception, index inclusion, passive flows and sometimes the cost of capital. The IR job is to understand what moves the score, to correct factual errors with the agencies and explain real performance beyond the rating.
Credibility over slogans
Investors are increasingly allergic to slogans – and quick to call greenwashing – making credibility even more important. They want baselines, targets, timelines, investment plans and progress. A company that highlights Scope 1 and 2 reductions while ignoring a much larger Scope 3 footprint creates suspicion. A company that reports dozens of KPIs without explaining which ones are material creates noise, not confidence.
The better approach is simple, but not easy: show where the company stands today, where it is going, what it will cost, what could go wrong and how the transition strengthens long-term competitiveness.
Weave sustainability into the equity story
Some companies already communicate this way. Schneider Electric, for instance, does not present sustainability as a separate report; it frames electrification and energy efficiency as the core growth drivers of the business, so the climate case and the investment case tell the same story – an approach the UK’s Investor Relations Society recognized by naming it Best Communication of Sustainability. The lesson for IR is not that every company must look like Schneider, but that sustainability earns investor confidence only when it is woven into the equity story rather than bolted on beside it.
The companies that win the capital will not just report ESG – they will explain value, turning sustainability from a disclosure obligation into a reason to invest.
Stefano De Caterina is a senior investor relations manager with cross-industry experience spanning Europe, the US, the UAE and Saudi Arabia. He is also a regular contributor to IR Impact and a faculty member of the Euronext IR Academy.
