Learn about that factors that can build or erode the trust of a key stakeholder – your investors.
Organizations need to focus on strategies that will build and maintain investor trust. Investors are the stakeholders that actually drive overall organizational value as they either maintain or withdraw trust in an organization over time. Investor trust is truly driven by the company’s business purpose strategy, and performance (risk) appetite. Clear articulations of these elements to investors over time are critical.
Key factors to build investor trust
Investor trust requires consistency and transparency.
Investors expect well-communicated and well-predicted performance year over year. Whether it’s a newly minted startup or a Fortune 100 company, meeting these expectations is crucial regardless of the size of the organization. Investors also look for a healthy balance sheet that is designed for growth and conservative enough to withstand a challenging marketplace.
Investors value organizations with clearly articulated strategies, that execute the defined strategy and that report on overall business performance against the strategy. Transparency plays an instrumental role in building financial trust.
Investor trust grows when organizations embrace environmental, social and governance (ESG) principles.
Investors are rewarding organizations that embrace ESG factors because it helps them better understand the organization’s culture, behavior and focus on sustained performance. They are looking for organizations with well-defined ESG commitments that are able to demonstrate and measure progress against publicly stated goals.
Increasingly, investors in public, private and nonprofit organizations are determining where to allocate funds through an ESG lens. For example, from an environmental standpoint, investors seek organizations that pursue renewable energy and/or address climate change as levers to sustain long-term performance. From a social standpoint, investors value organizations that reliably treat their employees and customers fairly and embrace an inclusive workforce to drive the organization’s growth. From a governance standpoint, investor trust is enhanced when organizational leadership demonstrates a culture of accountability and sees strong governance practices as a competitive advantage.
Investor trust is strengthened when organizations fully embrace innovation.
Investors expect organizations to be agile, adapting to changes in the marketplace through innovative products or services that are fueled by technology and a reaction to new business models. Investors want to see that an organization is using technology wisely to sustain performance today, but also leverages it for future growth.
Investors expect high-performing organizations to have deeply embedded digital processes that improve the overall efficiency and effectiveness of operations. Investors see trusted organizations as the ones that act quickly — and precisely — to ride the waves of technological disruption. For example, investors value organizations that embrace new digital technologies (artificial intelligence (AI), mobile applications, robotic process automation, digital language processing, etc.) to accelerate the launch of new products and/ or services to accelerate growth.
