Investor relations has long stood alone among the public relations functions of large companies, elevated in status by the primacy of shareholders in the stakeholder universe.

A re-statement of the purpose of the corporation released by the Business Roundtable in 2019 may have shaken the established order a little, but so far there has been little significant change in the way companies are structured, the way they communicate, or—most crucially—the way they operate.

Still, there are signs than in 2020 and beyond, shareholder communications will need to cooperate more closely with corporate communications to ensure that investor needs are not undermined by policy issues, environmental and social challenges, or other concerns.

1. Still Number One…

More than 20 years after adopting the Milton Friedmanesque idea that business exists primarily to maximize profits and benefit shareholders, the Business Roundtable issue a new “statement on the purpose of a corporation,” signed by 181 CEOs and reflecting a view of business that’s a little more nuanced in response to a rising tide of anti-capitalist sentiment.

The new statement says that “Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.”

It suggests that companies balance the needs of all stakeholders: “delivering value to our customers… investing in our employees…. dealing fairly and ethically with our suppliers… supporting the communities in which we work... and generating long-term value for shareholders.”

There’s a strong case to be made that focusing on all stakeholders is actually the best approach for shareholders, delivering strong financial performance that is sustainable over the long-term, but that didn’t prevent shareholders’ rights groups from squealing about having to share the limelight with other stakeholder groups.

The Council of Institutional Investors “expressed concern” about the new statement, grumbling that “the BRT statement suggests corporate obligations to a variety of stakeholders, placing shareholders last, and referencing shareholders simply as providers of capital rather than as owners. CII believes boards and managers need to sustain a focus on long-term shareholder value. To achieve long-term shareholder value, it is critical to respect stakeholders, but also to have clear accountability to company owners.

“Accountability to everyone means accountability to no one,” CII concluded, repeating the canard that managers are too dim or too lazy to find balance between the short and long-term needs of various constituencies. (The fact that shareholders come last in the BRT statement surely reflects the fact that if companies do the first four things right, shareholders will surely benefit.)

Not that CII or investors in general should worry. There’s every indication that the Business Roundtable and the CEO’s it represents are simply paying lip service to the notion of stakeholder balance. None of them have signed on to support Senator Elizabeth Warren’s Accountable Capitalism Act, for example, which would require the largest American corporations to do what the Business Roundtable says it wants companies to do.

All of which means that investor relations is likely to be seen as a function separate from (and in many cases, most important than) broader stakeholder relations. This may not be good news—except in terms of turf protection—but it is reality.

2. But There Will Be More Focus on ESG

That doesn’t mean companies won’t have to think about communicating their environmental, social and governance priorities, not just with employees, consumers, and communities, but also with shareholders.

BlackRock chairman and chief executive Larry Fink, who has been a leader in emphasizing environment and social performance in his company’s investment strategy, doubled down on that idea in a letter to CEOs at the beginning of 2020, telling companies: “Climate change has become a defining factor in companies’ long-term prospects. But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”

“This is a major, major crack in the dam,” said Bill McKibben, a writer and climate activist who has protested the financial sector in the past. “The financial powers in New York have tried to ignore climate risk, but that’s now impossible; the pressure from activists, and from the climate chaos in the real world, is simply too great.”

New York consultancy the10company agrees. In its look at the top 10 communications trends of 2020, CEO Valerie di Maria says, “Acting on ESG—environmental, social and governance issues—was often considered a nice but not business savvy priority. No more. Investors are more focused than ever on companies with strong track records in these areas and companies are more clearly defining their efforts, including linking executive compensation to ESG goals such as data privacy and cybersecurity, diversity and inclusion, and fighting global warming. PR and IR will need to join forces to tell their company’s ESG stories.”

Companies in the US can learn a lot from their counterparts in Europe. Writing in Harvard Business Review last year, Karen Firestone, president and CEO of Aureus Asset Management surveyed fund managers around the world. “Nearly all the European managers whom I surveyed said their clients have asked about their efforts in the ESG sphere,” she reported.

“Contrast that to what I heard from the USand Asian managers: not one acknowledged formal adoption of ESG-stock screening.” She cited a recent study suggesting that less than 30% of all US-managed assets are considered ESG compliant—far below that in Europe.

3. Regulatory hurdles for M&A

While the Trump administration has been reducing consumer and environmental protections broadly, regulatory interference in mergers and acquisitions is not going away—and in some cases has taken on a new dimension, with allegations that the president had interfered personally in the AT&T-Time-Warner merger and the Sprint-T-Mobile deal.

That means that shareholder communications will need to work ever more closely with public affairs if mergers and acquisitions are to succeed.

The Financial Times reported earlier this year that “the Trump administration embarked on an extensive effort to sway judges in antitrust cases in 2019, with the justice department filing more legal arguments in competition lawsuits where it was not a party over 12 months than the Obama administration did in eight years.”

And Europe continues to take an activist approach to anti-trust issues, blocking the ThyssenKrupp-Tata Steel merger early in 2019. “Millions of people in Europe work in these sectors and companies depend on competitive steel prices to sell on a global level,” said EU competition commissioner Margrethe Vestager.

Kekst CNC, the global financial communications specialist, expects regulatory concerns to play a major role in future transactions. “In addition to a complex global economic environment, regulatory changes in the US that have expanded the jurisdiction of the Committee on Foreign Investment are impacting M&A activity. At the same time, the Federal Trade Commission and the Department of Justice are aggressively scrutinizing deals for antitrust issues.

“Similar trends are emerging in Europe, where politicians and regulators have been taking an increasingly stern stance towards foreign direct investment especially from China.

“As a result, M&A messaging must continue to be viewed also through a regulatory and political lens, particularly for cross-border transactions. It is more important than ever to closely align communications strategy with a proactive government affairs program that can often begin well ahead of a transaction announcement, so that key government stakeholders understand the track record of the investing party as a good corporate citizen.”

4. Trade Wars

The other big public policy issue that continues to impact investors in a major way is trade, with the trade war between the US and China very much to the fore, but with growing concerns about US-EU relations and the future of the UK's trade partnerships post-Brexit.

Corporate and financial communications consultancy Brunswick recently conducted its second wave of US-China trade research and found rising levels of concern about the impact of the dispute and growing opposition to close business and economic ties between the two countries. It found, for example, that 58% of Chinese consumers say Chinese companies should invest less in the US, and 52% of American consumers say US companies should invest less in China.

In addition, 60% of Americans want US companies to move their operations and supply chains out of China.

BlackRock continues to see trade tensions as a threat to global markets, despite the moves toward signing a limited “phase one” trade deal between the US and China and the fact that the US-Mexico-Canada Agreement has passed in the US Congress, reducing uncertainty there. “Tensions between the US and Europe could rise as European governments step up the taxation of US tech companies and amid retaliatory tariffs from both sides over aircraft subsidies,” says the company. “The threat of auto tariffs still looms.”

In the UK, increased geopolitical tensions such as trade tariffs, are now cited as the number one risk to businesses in 2020 (65%), according to financial services company Stenn, while in the US firms are equally concerned about the risk of increased geopolitical tension, increased environmental concerns, and changing consumer behavior to businesses in 2020 (all 54%). As a result, just under half of firms surveyed in the UK (46%) and US (45%) predict their country will go into recession in 2020.

5. Pot of Gold

The cannabis industry finds itself in a situation similar to the biotech sector 30 years ago—a high-risk high-reward environment that calls for clear and consistent communications, particularly to investors. So its no surprise that many established financial communications firms have established focused units targeted CBD companies, and several specialist firms have opened up.

The cannabis market expanded first and fastest in Canada, where longtime market leader National PR has sound advice for cannabis communicators on the stories that need telling: “First, the quality of the management team and board. Investors want to feel confident that those leading the company have both the experience and professional background to build the business for the long-term.

“Next, cannabis companies need to demonstrate that they have a solid business plan and go-forward strategy. A company’s vision should be clear and differentiated from its peers…. Lastly, but most importantly, an attractive financial profile is key. Investors want to know that the company is not only healthily funded, but is allocating capital responsibly.“

In Europe, meanwhile, FTI Consulting is counseling a data-driven approach. According to senior managing director Hartmut Vennen, “I think to be successful in the medical cannabis industry in Germany, data will make all the difference. All of the industry players would be well advised to think about producing meaningful data, real world data, clinical data…. Those companies eager to build and maintain their freedom to operate, should take a longer term view and work on bringing real value to the system.”

The market contracted toward the end of 2019, and is bracing for a wave of bankruptcies (which can create new opportunities for PR and IR firms) in 2020. But Wall Street estimates the CBD industry could be worth $16 billion by 2025 and the industry would take off even faster if either Bernie Sanders or Elizabeth Warren wins the White House in 2020.