What governance assessments should ask about investor relations

Existing frameworks already examine governance from several directions. MSCI’s December 2024 Governance-Quality Indexes methodology describes governance metrics across board, pay, ownership and control, and accounting themes. It also states an intention for context-sensitive scoring deductions to emphasise behaviour over policy.¹ A proposal concerning IR should build on that ambition, without assuming that all methodologies omit the same evidence.

The G20/OECD Principles recognise direct IR reporting to the board as good practice in some jurisdictions and call for clearly established responsibilities for disclosure and communication.² This provides a basis for examining the relationship. It does not establish that one organisational arrangement is appropriate for every company, or that adopting it demonstrates effective oversight.

The claim to test is narrower and more useful: significant investor concerns can reach the appropriate directors, be examined fairly and receive a considered disposition. That claim can be tested whether IR reports administratively to the CFO, the CEO or the board. Structure remains relevant because it enables or obstructs the process. It supplies evidence about how accountability might work. Establishing whether it does requires examination of the process itself.

Start with a concern and reconstruct its path: when it arrived, the underlying question, who decided its significance, which directors considered it, the conclusion reached and who was responsible for any action. A coherent account connects these stages without requiring the assessor to agree with the investor’s original position.

For illustration, an investor may challenge the cash demands of an expansion. Management might investigate and conclude that its original funding assumptions remain sound. A credible record would show the assumptions tested, the analysis considered and why the conclusion was retained. A response that merely records ‘investors were reassured’ establishes much less about the quality of oversight.

An assessment should avoid relying exclusively on a company’s most successful example. Where access permits, the assessor could select from a suitably anonymised issue register and include an unresolved concern or one on which management and investors disagreed. The purpose is to understand how the process handles friction. One well-presented success cannot establish that difficult cases receive the same attention.

This approach also distinguishes activity from consequence. The number of meetings held may explain workload or coverage. It does not show whether an objection reached a decision-maker or whether an agreed response was completed. A concise account of a concern’s disposition can be more informative than a long engagement calendar.

A public disclosure review, confidential assessment and internal board evaluation have different access to evidence. The conclusions should reflect that difference. Public reports may describe the mandate and engagement arrangements. A confidential review may be able to examine anonymised records or interview relevant directors. An internal evaluation may test whether the process operated consistently across a wider set of matters.

These are not interchangeable levels of assurance. A company’s assertion that directors receive regular feedback is a useful starting point. A record showing when a concern was discussed adds evidence. Corroboration of what followed adds more. An assessor should state which level supports the finding and where uncertainty remains.

The absence of a public description does not prove that an internal process is absent. Equally, confidentiality should not make an unsupported claim immune to scrutiny. The appropriate finding may be that the process could not be verified from the available evidence, alongside a separate observation about disclosure quality. Conflating those findings creates false precision.

Nor should companies be pressed to publish sensitive board papers or identify individual investors to demonstrate good governance. An anonymised account, corroborated where appropriate, can establish the sequence of consideration and response while protecting the substance of confidential deliberations. The assessor needs evidence relevant to the claim, not unrestricted access to everything around it.

Applying this approach across a large universe is demanding. Qualitative evidence is harder to collect consistently, can favour companies with polished reporting teams and requires judgement that may be difficult to reproduce. Turning each enquiry into another weighted indicator could introduce more apparent precision than genuine insight.

A proportionate response is to separate a comparable baseline from deeper review. The baseline might establish who receives concerns, how escalation works and whether follow-up is tracked. More detailed enquiry can then examine significant uncertainty, contradictory evidence or a sample of companies. A small company with a clear route to the chair should not need the same administrative machinery as a diversified group.

Consistency comes from common questions, explicit evidence standards and transparent reasoning. It need not require identical reporting lines. Assessors should also distinguish process quality from agreement with investors. A board that rejects a shareholder request after serious analysis may demonstrate stronger oversight than one that accepts it without examining the consequences.

An assessment can unintentionally encourage the behaviour it is trying to uncover. If companies are rewarded only for closed issues and positive outcomes, they have a reason to describe unresolved disagreement as successful engagement. A useful assessment allows uncertainty to remain visible and asks whether it has an owner, a review point and a credible plan for resolution.

The same logic applies to setbacks. A missed commitment followed by candid escalation and corrective action is different from an issue that disappears from reporting. Neither should be reduced to a single observation about whether the original target was achieved. The handling of adverse information is itself evidence about the process.

Boards can use this enquiry before any external assessor does. Ask an independent director, management and IR to describe the path of the same significant concern. Differences in their accounts may reveal unclear responsibilities, lost information or an action nobody realised remained open. Resolving those differences creates a practical improvement, whether or not an external score changes.