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COMPANIES FAILING TO ADOPT ESG RISK LOSING INVESTORS – PWC SURVEY Whether it’s because of the pandemic or increasing concern about climate change, leading investors are demanding that the companies they invest in are making progress on ESG and sustainability issues. ENVIRONMENTAL, social and governance (ESG) factors increasingly drive investment strategies, and new research from PwC finds ESG has now become a make-or-break consideration for leading investors globally. Almost half of investors surveyed (49%) expressed willingness to divest from companies that aren’t taking sufficient action on ESG issues. More than half (59%) also said lack of action on ESG issues makes it likely they would vote against an executive pay agreement, while a third say they have already taken this action. A large majority, 79%, say the way a company manages ESG risks and opportunities is an important factor in their investment decision making. The PwC 2021 Global Investor ESG Survey captured the views of 325 investors from around the world – primarily asset managers and analysts with investment firms, investment banks or brokerage firms. An additional 40 in-depth interviews were conducted globally with investors and analysts having more than a combined US$11.6 trillion assets under management. While 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%) said they would accept no more than one percentage point less in investment returns for pursuit of ESG goals. James Chalmers, global assurance leader, PwC UK, said: “Our research shows investors are simultaneously focused on short-term results as well as the longer-term societal issues that can create both risks and opportunities for their investments. It is clear that investors expect ESG to be an integral part of corporate strategy. That includes making expenditures to address ESG issues, while clearly communicating the rationale and benefits to the business strategy. If investors don’t see that commitment, they won’t hesitate to take action, and that can include divesting their position in a company and taking their clients’ money elsewhere.” ESG EVALUATION AND REPORTING Investors increasingly want to hear more from companies about their ESG-related commitments
