PwC survey: Companies failing to act on ESG issues risk losing investors

Almost half ( 49 percent) of investors globally express willingness to divest from companies that aren’t taking sufficient action on ESG issues, 79 percent, say the way a company manages ESG risks and opportunities is an important factor in their investment decision making, according to PwC 2021 Global Investor ESG Survey.

Although most investors are likely to take action if companies are not doing enough to address ESG issues, most also say that they don’t want a company’s action on ESG to significantly, if at all, impact their investment returns.  The vast majority, 81 percent, said they would accept no more than one percentage point less in investment returns for pursuit of ESG goals; nearly half, (49 percent), were unwilling to accept any reduction in returns.

Climate is the leading ESG consideration for investors surveyed, followed by ensuring worker health and safety and improving workforce, diversity, equity and inclusion.

The survey highlighted a number of deficiencies in current ESG reporting: only one-third of investors, on average, think the quality of the reporting they’re seeing today is good enough. Simply put, much of today’s ESG reporting lacks relevant, timely, complete and comparable information – such that stakeholders cannot easily differentiate between companies on ESG-related performance – making capital allocation decisions difficult.

Thus, 83 percent surveyed said it is important that ESG reporting provide detailed information about progress toward ESG goals and 75 percent think it’s important that reported ESG-related metrics are independently assured.