Investors are increasingly concerned about corporate greenwashing, with almost all reporting claiming that corporate reporting on sustainability performance contains unsubstantiated claims, according to a new survey from global professional services firm PwC, which also found that investors want more information about companies’ costs . ESG obligations, and on the impact of their portfolio companies on the environment and society.
For the report, PwC’s Global Investor Survey 2023, PwC surveyed 345 investors and analysts across 30 countries and territories, with 65% of respondents working at organizations with total assets under management exceeding $1 billion.
The survey found that there was broad consensus among investors on the importance of ESG and sustainability issues. 70% agreed that ESG should be embedded directly into their business strategy, and 75% said companies’ management of sustainability-related risks and opportunities is an important factor. in decision-making. However, the report noted that these levels were lower than those of a previous 2021 survey, despite fewer investors disagreeing with these statements, while more investors were instead “neutral” on these issues.
Similarly, 69% of investors reported that they would increase their investments in companies that successfully manage sustainability issues relevant to the company’s performance and prospects, and 67% would increase their investments in companies that change their business behavior to achieve a to have a beneficial impact on society or society. environment.
While investors appear to continue to focus on sustainability issues in their decision-making, the research points to increasing concerns about greenwashing risk. 94% report that they believe corporate reporting on sustainability performance contains unsupported claims, up from 87% in the previous survey. and including 79% who said unsupported sustainability claims are present to a moderate or greater extent.
The report shows that many investors are looking to emerging sustainability reporting regimes to address their concerns about greenwashing. 57% say companies that comply with regulations and standards, including CSRD, the SEC Climate Disclosure Rule or ISSB standards, would meet their decision-making information needs to a great or very great extent, and 85% say a reasonable degree of assurance would give them confidence in sustainability reporting.
Nadja Picard, Global Reporting Leader, PwC Germany, said:
“We see significant steps toward more consistent reporting from companies on climate change, but there is a need for improvement.”
The survey also explored areas where investors were looking for sustainability-related information: 76% said it is important for companies to report on the costs of meeting their sustainability commitments, and 74% looked for roadmap reporting to meet meet these obligations.
Investors have also become more interested in information about companies’ impact on the environment and society; 75% want to report on these issues, compared to just 60% last year.
The report also shows that investors have been active in pursuing their sustainable investment agendas, with more than half saying they have focused on incentives such as including progress towards achieving ESG targets in executive compensation, while 50% report having filed ESG-related shareholder resolutions, and 42% say they have divested their stakes in companies that have not taken sufficient action on sustainability.
James Chalmers, Global Assurance Leader, PwC UK, said:
“We are moving from a period of awareness around the importance of climate change and technological change to a time when investors are increasingly asking specific and tough questions about how companies address these issues in their strategy, how they assess risks and opportunities, and what is truly material for them. In this context, corporate reporting must continue to evolve so that it provides reliable, consistent and comparable information that investors – and other stakeholders – can rely on.”