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Investor Relations teams at small- and mid-cap companies have always struggled to get and maintain sell-side analyst research coverage. Then the EU’s MiFID II regulation came along, adding to the challenge for U.S. listed companies due to the global nature of capital markets.
ESG/Sustainability: Strategic differentiator for companies (and the sell-side)
MiFID II is already affecting, and will continue to affect, research firms’ business model adaptation efforts and smaller company sell-side coverage in the U.S. through the 30 months reprieve, which will expire Spring 2020. There is now a short window of opportunity for smaller U.S. companies to strategically position themselves to try to maintain or even grow investor and analyst attention by expanding ESG/Sustainability disclosure.
Direct cap-size competitors may be ahead of you in using sustainability reporting to attract coveted capital market stakeholders’ attention and investment capital allocation that you would like to win instead. ESG/Sustainability can be a compelling differentiator and ROI contributor.