Investors target sustainability

3rd July 2014


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  • Reporting ,
  • Management ,
  • Corporate governance

Author

Laura Duggan

Investors are increasingly considering sustainability issues in their decisions, according to research by PwC. However, many investors outside Europe are not happy with the quality of corporate reporting on sustainability.

A survey of a diverse range of institutional investors, representing more than US$7.6 trillion in total assets under management (AUM), found that four investors in five had considered sustainability issues in one or more investment contexts in the past year. And 85% expected to do so three years from now.

Most investors considering sustainability did so when they were voting proxies and deciding whether to engage directly with a portfolio company about a subject of concern. Very largeinvestors – those with AUM of more than US$100 billion – were most likely to incorporate sustainability issues into their investment strategies.

PwC’s research found that, in the past 12 months, 82% of respondents had considered climate change and/or resource scarcity in future investment decisions, while 79% took into account social responsibility and/or good citizenship. Most investors who identified sustainability issues as relevant said it was “very likely” they would communicate with their portfolio companies about this topic in the next 12 months.

Risk mitigation is the main reason investors are looking at sustainability, with nearly three-quarters (73%) identifying this as their primary driver.

Enhancing performance returns (52%) and avoiding firms with unethical conduct (55%) are other key drivers. Investors were generally dissatisfied with companies’ current sustainability reporting, as well as the lack of common standards to assess the materiality of environmental or social issues.


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