Sustainability is increasingly important to investors, but companies need back up their claims when it comes to climate-related reporting and sustainability performance.
That’s according to PwC’s Global Investor Survey 2023, which queried 345 investors and analysts across geographies, asset classes, and investment approaches for their insights on how they assess threats and opportunities, allocate capital, and weigh decision-making.
One of the most universal revelations of the survey was that a whopping 94% of investors believe that corporate reporting on sustainability performance contains at least some unsupported claims. That figure increased from last year and underscores the growing need for companies to offer transparency on their environment, social, and governance (ESG) reporting.
"We are moving from a period of awareness raising around the importance of climate and technological change to a time where investors are increasingly asking specific and tough questions about how companies are addressing those issues in their strategy, how they assess risk and opportunity, and what is truly material for them. In this context, corporate reporting needs to continue to evolve so it provides reliable, consistent, and comparable information investors -- and other stakeholders -- can rely on," said James Chalmers, global assurance leader at PwC U.K.
The findings come as ESG reporting standards are making their way into global acceptance.
This year, the International Sustainability Standards Board (ISSB) issued its first-ever standards related to sustainability disclosures by companies. The standards aim to create a common language around ESG reporting, which could instill more confidence among investors. The standards were taken under review in the United Kingdom earlier this year.
Sustainability is top of mind for investors, and 75% of respondents said how a company manages sustainability-related risks and opportunities is an important factor in their investment decisions. Similarly, 75% said they wanted to know about the impact a company has on the environment or society––up from 60% last year. Plus, three in four agreed companies should disclose the monetary value of their impact on the environment or society, compared to 66% who said the same in 2022.
Despite the value placed on sustainability reporting, there is a pervasive doubt that some of this reporting is greenwashing. Of the 94% of investors who believe corporate reporting on sustainability performance contains some level of unsupported claims, 15% think the claims are unsupported “to a very large extent.”
That may be why 57% of investors said that if companies meet the upcoming regulations and standards -- including those proposed by ISSB, as well as CSRD and the SEC proposed climate disclosure rules in the U.S. -- it will meet their information needs for decision-making to a "large" or "very large extent.”
[Adapting to CSRD and Other Emerging ESG Regulations]
Another 85% agreed in the survey that reasonable assurance, such as an audit of financial statements, would give them confidence in sustainability reporting to a "moderate," "large" or "very large extent.” Despite the doubt, 76% said ESG information is important or very important.
