En­vi­ron­men­tal, so­cial and gov­er­nance (ESG) fac­tors have be­come cru­cial to in­vestors across the world, a study con­duct­ed by PwC has found.

The PwC 2021 Glob­al In­vestor ESG Sur­vey, which was con­duct­ed on­line in Sep­tem­ber 2021, re­vealed that ESG has now be­come a make-or-break con­sid­er­a­tion for lead­ing in­vestors glob­al­ly.
Al­most half (49 % of the 325 in­vest­ment pro­fes­sion­als from 43 ter­ri­to­ries, ex­pressed will­ing­ness to di­vest from com­pa­nies that aren’t tak­ing suf­fi­cient ac­tion on ESG is­sues.  More than half, 59%, said  lack of ac­tion on ESG is­sues makes it like­ly they would vote against an ex­ec­u­tive pay agree­ment, while ful­ly a third stat­ed they have al­ready tak­en this ac­tion.

The re­port re­vealed a large ma­jor­i­ty, 79%, said the way a com­pa­ny man­ages ESG risks and op­por­tu­ni­ties is an im­por­tant fac­tor in their in­vest­ment de­ci­sion mak­ing.

PwC con­duct­ed an ad­di­tion­al 40 in-depth in­ter­views with in­vestors and an­a­lysts who have over­seen more than a com­bined US$11.6 tril­lion as­sets un­der man­age­ment. Most in­vestors said they were like­ly to take ac­tion if com­pa­nies are not do­ing enough to ad­dress ESG is­sues, with most stat­ing that they don’t want a com­pa­ny’s ac­tion on ESG to sig­nif­i­cant­ly 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; near­ly half, (49%), were un­will­ing to ac­cept any re­duc­tion in re­turns.

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.”

In­vestors al­so stressed it was im­por­tant for com­pa­nies to be clear about their ESG-re­lat­ed com­mit­ments, as 83% sur­veyed said it is im­por­tant that ESG re­port­ing pro­vide de­tailed in­for­ma­tion about progress to­ward ESG goals.  How­ev­er, PwC stat­ed, “It is con­cern­ing that on­ly one third of in­vestors sur­veyed, on av­er­age, think that the qual­i­ty of ESG re­port­ing they are see­ing is good.”

Zia Pa­ton, PwC in the Caribbean Dig­i­tal Ser­vices leader,com­ment­ed: “Our 2021 Caribbean Dig­i­tal Readi­ness Sur­vey re­vealed that more than 80% of com­pa­nies were fo­cused on mod­ernising their brands with new dig­i­tal ca­pa­bil­i­ties. This will au­gur well for Caribbean com­pa­nies as they work to de­fine their ESG Strat­e­gy and build their ca­pa­bil­i­ty in ESG re­port­ing. Da­ta man­age­ment and clear da­ta dri­ven com­mu­ni­ca­tion will be im­per­a­tive to get the right mes­sages to all stake­hold­ers. As the move to manda­to­ry re­port­ing height­ens at the Glob­al lev­el, com­pa­nies that are al­ready on the jour­ney to em­bed­ding ESG and im­prov­ing da­ta ca­pa­bil­i­ties can ex­pect to reap ben­e­fits.”