An appetite for nonfinancial information

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Investment professionals are increasingly interested in nonfinancial information. But are they getting the environmental, social and governance data they need?

In EY’s latest annual survey of institutional investors, 92% of respondents agree that environmental, social and governance (ESG) issues – from climate change to diversity and board effectiveness – have real and quantifiable effects. Investors clearly see a pivotal role for nonfinancial information in investment decision-making.

But, as our latest video shows, the majority of investors are disappointed by disclosures of ESG risks. They believe disclosures aren’t adequately linked to material risks, they do not reflect the full value of businesses or clearly articulate environmental and social challenges.

Sixty percent of respondents said “no” when asked if companies adequately disclose their ESG risks. That is an increase of 21 percentage points on the previous year’s survey.

The survey suggests the pressure is on for companies to provide more detail on ESG risks. The less they communicate on ESG factors, the more likely it is that they may be negatively rated by investors.

Find out more in the video shared above and in our article The Poll: ESG investor survey.

For a copy of the full report, Is your financial performance revealing the true value of your business to investors?, please go to ey.com/investorsurvey2017.

 

June 2017