Influence of the growing ETF industry on active investor relations work 59Influence of the ETF industry on IR work question whether the time spent on certain activ ities is spend wisely If for example 80 of the shares are held by passive investors the consider ation should be whether less time spent on classic active investor targeting activities would be more useful Focusing on other activities related to pas sive investors would also lead to a more efficient use of resources such as human capacity Less time on roadshows would not only free up time for IR but also for the board especially the CFO With such a high proportion of passive investors this freed up time could for example be used for establishing contacts to those passive investors or for analyzing what information this target group in particular needs Active index targeting strategy Setting up an active index targeting strategy is another approach but depending on the overall company strategy it might be more important for some companies than for others Especially for large cap companies it could become a topic in the future Factors such as transparency and knowl edge of indices and criteria can be key elements for the implementation of a successful index tar geting strategy Expert interview 3 2021 see annex 3 Analysis in which ETFs and indices the company is listed in In general knowledge in which ETFs the company is listed in will become an important factor for IR departments Currently many companies only know in which indices they are listed not in which ETFs Anyhow it is difficult to get this information as ETF providers do not publish them To obtain the information if one is listed in an index compa nies have to pay to receipt that information At the moment this is seen with low priority for many IR departments The situation is somewhat different with regard to indices Companies in general know that the index affiliation depends on factors like free float Many companies therefore try to work towards indices e g by revenues However it is likely that a change will occur where revenues and free float are not the main criteria to be included in an index Revenues are forecasted to become a less important selection criteria for indices in the future and criteria connected to ESG are very likely to gain in importance There is a relatively high likelihood that analyzing which criteria have to be fulfilled to get into certain indices will become a task for IR in the future This is reflected by 90 of the respondents who can imagine that such an analysis turns into a part of IR work In the future a pure analysis of whether an index inclusion depends on ratings or other factors will no longer be sufficient The consideration of how these rat ing results can specifically be improved and how the company could be brought into position will be a further necessary step in relation to indices Besides finding out which criteria are needed actively working towards achieving those criteria will be essential which is likely to be done by IR This is also reflected in the result of the survey in which 85 of the respondents would advocate for the achievement of for example ESG criteria in the company Objectives of IR The fact that IR is in a state of change and is undergoing a slow transformation can also be seen in the shift in relevance of specific IR tar gets IR departments will focus on targets which will become increasingly important The topic of an equity story and its placement on the capital market will be one of the most relevant goals for IR across all sectors Story telling and placing the equity story are not only part of an active IR approach but are also directly linked to the passive investment industry In the future it will become increasingly important to select the topics included in the equity story in such a way that it automatically gets on the radar screen of ETF providers AI is used to automatically screen equity stories of companies for certain keywords

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