To the extent that investors do consider nonfinancial performance in their decision-making, they are much more comfortable looking at the immediate future than further ahead. Only 25% of respondents say they are equipped to assess the long-term impacts of ESG policies and performance, while 57% say they feel able to look at short-term impacts.
Only slightly more than half of the investors surveyed (55%) believe climate change will have any impact at all on their investment strategies, with 63% saying the main factor will be changes to the business cycle, and 62% influenced most heavily by possible changes in trade restrictions and tariffs around the world.
In addition, the vast majority of investors who participated in the survey (93%) claim they are confident that companies will still meet their targets for sustainability and decarbonization and 62% say they are well equipped to assess companies’ climate change reports, however the source of this confidence seems uncertain: only 17% say they monitor changes in companies’ climate policies.
This failure to prioritize ESG issues could be in part down to a suspicion across the investor community that companies are not presenting accurate information on their sustainability credentials. Almost nine in ten investors who responded (85%) see greenwashing as a bigger problem than it was five years ago.
There is also clear dissatisfaction with the efforts companies are making to deliver nonfinancial reporting – more than one-third (36%) of investors who took part in the survey say not enough progress has been made on this front. Eight in ten (80%) say reports need to more clearly highlight truly material (i.e. significant) statements and be produced in a way that makes them easier to compare and contrast with other company reports. Nearly two thirds (64%) say there is a need for independent auditing of companies’ sustainability disclosures.