Freestyle reflections from the IRRI Editor

For the past four months - through the IRRI Survey process - I have strived to be wholly impartial and analytical about every aspect of the SRI & corporate governance value chain ... and I will go back into that mode again tomorrow morning as we start to distribute the IRRI Industry Insight reports to the 1,136 industry professionals who kindly gave up 20 minutes of their time to share their thoughts on the industry.

However, I'm having a night off tonight ... to share four gut-feel headline responses to the process of writing up the IRRI Survey.

From the gut...

The IRRI report (IRRI results here | Access Industry Insights via here) contains sixty-three detailed insights into very specific parts of the SRI & CG investment and research value chain ...

... but what is there for the people who can't be bothered with the detail? What are the headline messages?

(1) Into a period of professionalisation

The 'gentleman-amateur' period of SRI/CG is dead. Focus, efficiency and budgetary discipline will be paramount in the coming years as the big guns of financial services enter the marketplace - as asset managers, research providers, consultants etc.

For those of us who have followed the market since its very earliest days, there might be some sadness that the good intentions, creativity and enthusiasm that sustained the market for so long will count for so much less in the modern market ... but actually it's about time that we learned to mix it with the big kids ... and I feel confident that we'll be able to hold our own. So, on balance, I find this exciting rather than daunting.

(... and, to the point above, I suspect that the people who 'can't be bothered with the detail' should probably give up now. SRI & CG are now played by serious businesses in competitive markets with tight margins. Detail is the difference between success and failure!)

(2) Disruption due

The investment value chain ... and particularly investment research are going through a phase of significant disruption as regulation, technology and more sophisticated demand challenge existing providers to ensure that they are meeting the needs of clients.

On balance, the market currently looks likely to favour research buyers - rather than suppliers. However, asset owners and managers will only be able to take advantage of this opportunity if they articulate their needs precisely and clearly to themselves and to their suppliers and are highly pro-active about the way that they manage their research resources - whether these come from in-house capacity, sell-side research or independent research providers.

(3) War for talent; call for specialisation;

There is going to be growth; most firms plan to expect to resource this by building internal capacity; this seems likely to cause bottlenecks in capacity at particular places in the market (senior analysts / heads of research & senior communications seem to be the most likely points).

This creates an opportunity for analysts who are pro-active about their career development and for executive search firms who can help clients to engage the human resources that they need to deliver the strategy that they target.

It also implies that, to succeed, employers will need to be clear about exactly the skills that they need and to ensure that the best skills are deployed in the right places. (In other words, it is inefficient to ask natural advocates to act as analysts or to ask analysts to do sales and marketing work). Luckily, there is a growing pool of experienced independent consultants that can fill capacity shortfalls and facilitate smooth growth.

(4) Reporting => Transparency => Industry profile

An expectation of greater reporting cropped up in numerous insights - whether between companies and analysts ... or between research providers and their clients ... or between asset managers and asset owners. Also, there is a clear expectation that communication should flow both ways between clients and suppliers.

It appears to us that this need/expectation could be met in one of two ways:

Either, the need for greater reporting will be interpreted in a regulatory way and the resulting reporting will be conservative, locked in .pdfs and fairly unengaging for audiences.

By contrast, at SRI-CONNECT, we believe that the world has moved from:

• Reporting (tell me) through...
• Communication (show me) to...
• Profile (just be visible in the industry in everything that you do)

As a timely illustration, we highlight this recent research by IRRI-top-ranked asset manager, Mirova: Mobility: Vehicle manufacturers and suppliers: Sustainable Development Analysis Framework - not reporting, not communication, simply building profile by doing the day job in full public view.

So, we are optimistic (although we can't say that we explored this question in the Survey) that industry leaders will eschew conservative communications, get ahead of the changes in communications practice and embrace the need for transparency and industry profile...

... of course, this last hope is entirely self-interested as SRI-CONNECT is the best place in the industry to build this profile and we'll be happy to help ;-)

Next steps

So, those are my freestyle reflections. Tomorrow, normal service of considered analysis will be resumed as we set about:

• Sharing selected insights with respondents
• Selling the full set of industry insights to anyone that plans to engage seriously in SRI/CG over the years ahead
• Presenting them to anyone who will listen

Thank you for your attention; thank you to everyone who participated in the Survey