The Critical Role of Investor Relations in Bridging Internal and External Stakeholders

In capital markets, trust is everything. Misalignment between internal and external stakeholders can cost millions in market value. How can companies ensure their story is understood, not just told?

Executive Summary

Investor Relations (IR) plays a vital role in aligning a company’s internal and external stakeholders, ensuring that financial messaging, strategic vision, and market expectations are seamlessly integrated.

Beyond mere communication, IR functions as a strategic bridge that maintains investor confidence, strengthens stakeholder relationships, and enhances corporate transparency.

Effective IR teams not only relay financial results but also craft compelling narratives that balance operational performance with long-term strategic goals. By incorporating both qualitative and quantitative insights, they provide investors with a comprehensive view of the company’s trajectory. A strong IR function ensures that companies do not merely disclose information but actively shape market perceptions through clear, consistent, and impactful storytelling.

This document explores what I deem to be the essential components of best-in-class IR, including:

Narrative Development – Translating complex financial data into a clear, investor-friendly story that highlights both past achievements and future ambitions.

Appropriate Language & Metrics – Employing transparency, precision, and industry-leading best practices to enhance investor understanding.

Contextualising Updates – Adjusting communication strategies to reflect business cycles, competitive positioning, and investor expectations.

Next week, I will bring my thoughts on the fact that in today’s fast-evolving market landscape, IR needs continuous evolution and that can be achieved by adopting a rigorous, disciplined, and adaptable IR approach.

Introduction

Investor Relations (IR) is a strategic function that serves as the bridge between a company’s internal stakeholders - such as management and the board - and external stakeholders, including investors, analysts, and the financial media. An effective IR ensures that a company successfully aligns its messaging with investor expectations, maintains trust, and enhances market confidence.

The interplay between internal and external stakeholders is delicate. Ensuring that I's are dotted and T's are crossed is the bare minimum (or "table stakes", from the B2B elements of Value Pyramid in my previous article), as a misalignment in communication can create confusion, misinterpretation of financial results, or even erode trust. Thus, effective IR teams facilitate a two-way dialogue, ensuring that management understands investor concerns and that external stakeholders receive clear, accurate, and strategic insights.

By capturing insights from investor interactions, IR teams refine disclosures and ensure consistency with strategic priorities. One of the biggest challenges is distinguishing meaningful feedback from market noise - a task that becomes easier with experience but also benefits from multiple touchpoints. Surprisingly, many companies underestimate the importance of frequent, high-quality engagements, to keep an up-to-date understanding of the markets’ sentiment.

Telling the Story

A company’s success is not just about delivering strong financial performance: it’s about telling a compelling story that explains the operational progress within a precise strategic direction.

A well-crafted narrative should incorporate both leading and lagging indicators, giving investors a holistic view of how a company has performed and where it is heading. Many companies, particularly in regulated industries like banking and insurance, tend to focus too much on financial disclosures while failing to articulate their strategic vision effectively. Within an universe which has fewer and fewer specialised investors, this insularity can make it harder for portfolio managers to assess long-term potential.

A key question every IR professional should ask is: “Would I invest in my own company based on the available information?” - If the answer is uncertain, the communication strategy likely needs improvement.

Appropriate Language and Metrics

To engage investors effectively, IR teams must use the right language and metrics. This means ensuring clarity, transparency, and alignment with investor expectations.

Complex financial concepts should be translated into clear, investor-friendly language and best-in-class IR functions borrow techniques from other industries rather than limiting themselves to sector-specific jargon. There is no shame in adopting best practices from consumer-facing businesses that excel at storytelling.

Quantitative and qualitative metrics should work together to reinforce a company’s story. While revenue growth, margins, and return on equity are essential, qualitative elements—such as strategic vision, culture, and competitive differentiation—are equally important. Leading companies are those that strike the right balance between data-driven reporting and insightful storytelling.

Moreover, investor expectations continue to evolve, with a growing emphasis on Environmental, Social, and Governance (ESG) factors. IR teams must ensure that ESG metrics are integrated into financial disclosures, providing investors with a more comprehensive view of a company’s long-term sustainability and ethical commitments.

The Role of Context

Contextualizing updates is critical for building investor confidence. Companies must provide operational and strategic updates in a balanced way, adapting the mix depending on circumstances.

There are always exceptions, but broadly speaking I believe that regular updates should be roughly weighted 80% toward operational progress and 20% on strategic vision. These percentages can vary, but my main point is that investors look for operational updates within a strategic trajectory, so both are very important and should reinforce each other.

During major transitions — such as mergers, restructurings, leadership changes or medium/long-term strategic plans — this ratio should be reversed. European reinsurers, particularly German-speaking ones - Munich Re , Hannover Re - are known for excelling in this area. Their IR effectiveness is also reflected in their share price performance and high Price-to-Book valuation, demonstrating that well-communicated strategies lead to market confidence.

Personal Reflections

Having had the privilege of leading the IR team at SCOR during a pivotal period in its global resurgence, I experienced firsthand how crucial it is to communicate on both strategic and operational priorities . Working alongside charismatic and inspirational leaders like the late Chairman & CEO Denis Kessler and CFO (at the time) Paolo De Martin , I appreciated the meticulous effort that went into refining every aspect of financial communication.

The time spent ensuring complete alignment of external messaging was painstaking but necessary. Some might have found such a process excessive, but in my view it was a significant contributor to SCOR's top-end valuation and considered a top performer in investor communication (recognised by the US magazine, Institutional Investors, as “Top IR” in Europe).

Another lesson that stands out is that a compelling story must be told clearly - it cannot be left open to interpretation. In my opinion, this extends to financial reporting formats, such as quarterly versus semi-annual disclosures. While regulatory requirements often influence reporting frequency, the real challenge is ensuring each disclosure serves a purpose beyond just fulfilling obligations. The best IR teams use every opportunity to reinforce their company’s strategic positioning.

For example, in our Reinsurance industry, the January Renewals are a substantial event for many, but only few companies disclose them separately - in my view those who do not are missing a great touchpoint with their main stakeholders. Investors are looking for continuity and alignment with the strategic priorities and positioning of the company, and every inch in that direction strengthens the trust and confidence. Kudos to Thierry Léger & his team to keep communicating on it, with SCOR delivering a strong outperformance on their 1/1 disclosure, on 4 February, 2025.

Consistency in messaging must be achieved across all investor touchpoints such as earnings calls, press releases, and one-on-one meetings. Discrepancies in communication can lead to confusion, undermining investor trust. Synchronizing messaging ensures a cohesive and reliable narrative.

Takeaway

IR isn’t just about relaying information—it’s about shaping perception and driving valuation. The best IR teams:

? Craft compelling narratives – Financials must tell a clear and persuasive story.

? Use precise metrics & language – Transparency builds confidence, jargon erodes it.

? Contextualize updates – Investors need both operational insights and strategic clarity.

Companies that master these elements build long-term investor trust and see stronger valuations. Those that don’t? They risk being misunderstood—and undervalued.

Great IR isn’t reactive—it’s proactive, disciplined, and relentlessly strategic.

?? How does your company ensure strategic alignment in IR? Share your thoughts in the comments.