London, UK: New research from PwC has found that environmental, social and governance (ESG) factors have now become a make-or-break consideration for leading investors globally. It is a wake up call for all companies, large and small, to embrace triple bottom line business practises.
Almost half of investors surveyed expressed willingness to divest from companies that aren’t taking sufficient action on ESG issues, which are based on the 3 pillars of sustainability. More than half (59%) also said lack of action on ESG issues made it likely they would vote against an executive pay agreement, while a third said they had already taken this action. An impressive 79% said the way a company manages ESG risks and opportunities is an important factor in their investment decision making.
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Top Priority ESG Issues for Investors:
- Climate Change (65%)
- Worker Health and Safety (44%)
- Workforce and Executive Diversity, Equity and Inclusion (37%)
- Human Rights (33%)
- Sustainability reporting framework development (24%)
- Materiality process for identifying risks and opportunities (23%)
- Asset Stewardship Principles on climate change risk disclosure (17%)
According to PwC, investors increasingly want to hear more from companies about their ESG-related commitments – 83% surveyed said it is important that ESG reporting provide detailed information about progress toward ESG goals. Results of the survey showed that greater engagement with investors is critical along with transparent, trustworthy reporting. Only a third of investors surveyed, on average, thought the quality of ESG reporting they see is ‘good’. Investors gain greater confidence in ESG reporting that has been assured – 79% of those surveyed said they place more trust in ESG information that has been assured and 75% think it’s important that reported ESG-related metrics are independently assured.
Global sustainable Assurance Leader at PwC UK, James Chalmers 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.”
…PwC or PriceWaterHouseCoopers is a network of firms in 157 countries, 756 locations providing industry and service expertise to address clients’ local and global needs. PwC is often referred to as one of the ‘Big Four’ accounting firms which dominate the accountancy profession, alongside Deloitte Touche Tohmatsu, Ernst & Young and KPMG who all work with major corporations, public sector and individual clients.
In summary of this article, the major findings included:
– A consistent set of metrics for measuring ESG performance would be of significant benefit to investors and companies.
– Climate is the leading ESG consideration for investors surveyed, with reducing Scope 1 and 2 greenhouse gas (GHG) emissions being the most cited (by 65%) ESG issue for companies to prioritise.
– The top priority ESG issue for companies to address is reducing Scope 1 and 2 GHG emissions according to investors surveyed.
– More than half of those surveyed (53%) think it should be the CEO who is accountable for ensuring that ESG issues are addressed at their company.
In conclusion companies need to perform well in all areas of the Triple Bottom Line, especially on key ESG issues if they want to retain their investors. At the same time, managers need to be aware of the top priority ESG issues for investors and where they stand on those issues.
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ESG: The New Way of Doing Business in London, UK
Business and organizational sustainability is a complex issue in London, with many stakeholders and perspectives. It’s also an area where the stakes are high – if we don’t get it right, there will be dire consequences for our communities and the planet.
The good news is that more investors are taking notice of ESG issues when they invest in London companies and organizations. In fact, over the past decade institutional investors have been increasingly incorporating Environmental, Social and Governance factors into their investment decisions. And soon it will be impossible to win any RFP’s without it.
We want everyone (not just big institutions in London) to be able to incorporate ESG-related risk into their actions because Companies that don’t adapt to these changes will not survive. This change has many companies in London scrambling to figure out how they can stay competitive and be profitable while also contributing to a better future.
ESG The Report is one solution that helps businesses in London find their niche in this new landscape by providing information on risks and opportunities related to environmental, social and governance factors affecting them today. Our report offers insights into what investors are looking for from companies in London and around the globe.
ESG Frameworks provide investors with insight into how companies are performing in terms of corporate governance, social issues, labour standards and environmental impact. Ask about our ESG Frameworks package to help you get started on making your company, department or organization diverse, equitable and inclusive for all stakeholders.
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