How will ESG performance shape your future?

Research from the 2020 EY Climate Change and Sustainability Services (CCaSS) Institutional Investor survey suggests that environmental, social and governance (ESG) information has never been more important, with the majority of investors surveyed (98%) signaling a move to a more disciplined and rigorous approach to evaluating companies’ nonfinancial performance.

Podcast host Myles Corson welcomes Dr. Matthew Bell, EY’s Asia Pacific CCaSS Leader, to discuss his varied career path and key findings from How will ESG performance shape your future?

The majority of investors surveyed signal a move to a more disciplined and rigorous approach to evaluating companies’ nonfinancial performance. 83% of investors surveyed consider formal frameworks to be necessary in assessing long-term value.

In addition, the survey also indicates that investors have become increasingly dissatisfied with the information they receive on ESG risks. Investors are looking for companies to provide standardized and rigorous nonfinancial data to support their approach to ESG evaluation. Choosing not to engage on ESG, or weighting performance solely toward positive aspects, may lead to investors coming to their own conclusions.

Lastly, the discussion moves into one of the areas that the investors responded was vitally important to them: third party oversight. Investors want to ensure that there is greater integrity over nonfinancial data sets, which are becoming fundamentally important. 

Key Takeaways

• Companies failing to meet investor expectations on ESG factors risk losing access to capital markets.
• There exists strong investor appetite to see ESG disclosures underpinned by appropriate governance structures, reviews and controls.
• The economic recovery from COVID 19 will be heavily influenced by green recovery agenda.
• Investors want to ensure that their capital is being allocated to the growth sectors that are going to be supercharged in a decarbonized future.