In 2022, activist campaigns grew by more than 36% globally with 235 campaigns targeting companies worth more than $500m of market capitalization. Shareholder activism has become prevalent representing, emphasizing investor engagement to gain support for key initiatives. Technology has emerged as a valuable tool for listed issuers to enhance engagement, providing transparency into operations, and fostering a sense of trust with investors. Data analytics plays an increasingly important role in this context, enabling companies to gain deeper insights into investor behavior and opinions. For example, data analytics can help identify the types of information investors are interested in, prioritize disclosures, and track sentiment and feedback. The combination of technology and data analytics can help companies build strong, productive relationships with investors, positively impacting their stock market standing.

In the following paragraphs, we will discuss how technology can revolutionize investor relations and help companies become more efficient and improve investors’ perceptions, making them more resilient against shareholder activism.

Know your company

Effective investor relations require management to have a comprehensive understanding of their company, and transparency is essential in this regard. It’s crucial for companies to be aware of their strengths and weaknesses and avoid biased or accommodating views and opinions when engaging with investors. Benchmarking analysis is a vital aspect of investment decisions, and identifying a universe of comparable companies and consistently monitoring relative performance is critical. Relying on intermediaries can lead to a lack of exhaustiveness and objectivity, making it necessary to aggregate data into a database for more accessible and objective benchmarking.

Technology allows for the analysis of data with just a few clicks, that would otherwise take days to perform. Collecting feedback from investors is also crucial, and digitalization can automate the process, making it more efficient and providing valuable market intelligence for an accurate assessment of the company’s performance. Lastly, it’s increasingly important for companies to ensure that their top management is sensitive to investor relations considerations, including diversity, employee wellness, and working conditions. Digitalization makes it easier to disseminate knowledge, especially to non-experts, through data visualization and easy-to-understand classification.

Know your shareholders

Knowing your shareholders is crucial, but it can be challenging to manage effectively. One of the key challenges in investor relations is understanding and anticipating shareholders’ expectations. To prepare for shareholder meetings and capital market days, companies must consider indicators such as the position of shareholders in comparable companies and the questions they asked at their AGMs, as well as overall market concerns, even beyond peer group – climate activism, social and ethics expectations, exec compensation image. They also need to understand the dynamic between their investors and other stakeholders, employees, media, GNOs for example. However, identifying which investors are invested in their peer companies what the hot topics are at shareholder meetings and even more market opinion changes can be difficult.

To address these challenges, companies can use customer relationship management (CRM) solutions specifically designed for investor relations. These solutions enable companies to track their investor database and record interactions with them. By leveraging data analysis and machine learning, companies can better understand the evolution of investors’ opinions over time, enabling them to refine investor profiles.

Implement an engagement plan

Companies need to prioritize transparency and trust as essential components for building long-term engagement strategies. To ensure that these strategies are effective, companies must align their objectives with the expectations of investors and the company’s vision. While setting these objectives, it is crucial to balance ambition and achievability to drive change and outperformance effectively.

Technology offers companies the opportunity to establish direct and transparent communication with investors, replacing intermediaries. Companies can use technology to conduct perception studies independently and more frequently, providing valuable market intelligence to management. By leveraging technology, companies can also improve the efficiency and effectiveness of their investor communication, further building productive relationships with their investors.

Target new investors

With the help of technology, issuers can now easily manage and control their shareholder and investor data, leading to a much deeper understanding of their investor base. By profiling typical investors thanks to machine learning, investor relations officers can identify the most relevant investors who are capable of supporting the company’s strategic goals, regardless of their size or level of notoriety.

 The future of Investor Relations thanks to generative AI

The emergence of generative AI tools like ChatGPT and BERT has recently created a lot of excitement given the numerous potential applications in many industries. These tools represent a significant step forward in the ability of machines to understand and generate natural language. The ability to generate human-like responses to complex queries or tasks has the potential to revolutionize the way we interact with technology, making it easier and more intuitive for users to get the information they need.Investor Relations won’t reman immune to this massive technological breakthrough.

For instance, generative AI can assist companies in (I) drafting press releases or equity stories, (II) managing Q&A processes, (III) creating corporate reports by automating the content creation process. With AI-powered tools, companies can input key data points and messaging, and the algorithm can generate a draft press release or equity story based on that information. This can save investor relations officers time and resources in drafting these materials, while also ensuring consistency and accuracy in messaging across various communications channels. Additionally, generative AI can analyze market trends, investor sentiment, and other data points to inform the messaging and tone of these materials, helping companies to better connect with investors and effectively communicate their value proposition.

The biggest challenge of generative AI models lies on their potential lack of accuracy and authenticity. Thus, owning qualitative proprietary data is essential for making the best use of generative AI because it allows companies to train and fine-tune AI models to their specific needs and goals. This can lead to more accurate and relevant results, as the AI model is more closely aligned with the company’s unique data and processes.

In conclusion, technology tools are revolutionizing investor relations by providing solutions to long-standing challenges. Through the use of technology and generative AI, companies can take control of their investor relations strategies, enabling them to become more autonomous, efficient, and focused on higher value-added tasks. As technology continues to evolve, investor relations will remain a crucial aspect of any company’s strategy, and companies must adapt to remain competitive.