EY Institutional Investor Survey: Problems with Greenwashing in ESG Reporting
Overview
A recent EY survey reveals that 85% of investors view greenwashing as a growing problem in ESG reporting. Despite increased use of ESG data, trust in its accuracy and impact remains low, prompting calls for better sustainability reporting.
Source: EY
Investors Concerned About Greenwashing
According to the EY 2024 Institutional Investor Survey, 85% of investors believe greenwashing is a worsening issue. This skepticism is driven by the perception that many companies' sustainability claims are more performative than substantive.
Increased Use of ESG Data
The survey highlights that 88% of investors have ramped up their use of ESG data over the past year. However, this increase in usage has not translated into greater trust, with many investors questioning the reliability of the information provided.
Short-Term Focus Over Long-Term Benefits
A significant finding from the survey is that 92% of investors prioritize short-term gains over long-term ESG benefits. This shift in focus is attributed to immediate business cycle concerns and macroeconomic factors like trade restrictions.
Regional Differences in ESG Priorities
The survey also notes regional variations in how ESG factors influence investment strategies. Investors in North America and Europe are more likely to consider climate change impacts compared to their counterparts in other regions.
Calls for Improved Reporting Standards
Investors are demanding better ESG reporting, with 80% calling for more explicit and comparable disclosures. Additionally, 64% advocate for independent audits of sustainability reports to combat greenwashing.
The EY survey underscores a growing need for transparency and accountability in ESG reporting. As investors continue to navigate the complexities of sustainable investing, improved reporting standards and greater scrutiny of corporate claims will be crucial in building trust and driving meaningful change.
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