PWC Survey Reveals 94% of Investors Believe Sustainability Reporting Contains Unsupported Claims
Overview
PWC recently released its third annual “Global Investors Survey”. The report surveyed 345 investors and also completed in-depth interviews with 15 investment professionals across 30 countries. Most respondents were institutional investors, portfolio managers, analysts, or chief investment officers with 65% of investors at organizations with assets under management of more than US$1 billion. The goal of the survey was to investigate the factors that most affect the companies they invest in. Amongst these findings, respondents expressed great concern for corporate greenwashing and emphasized the need for companies to embed sustainability transparency within their business models.
PWC Global Investor Survey Findings
Broad Support for Sustainability
The results found a broad consensus among investors on preserving the importance of ESG and sustainability issues. 70% of respondents agreed that ESG should be embedded directly into corporate strategy, while 75% said that management of sustainability-related risks is an important factor in decision-making. Additionally, 69% of investors reported that they would increase investments in companies that prioritize sustainability issues relevant to business performance and prospects. This shows that sustainability is a well-established strategy throughout major player’s in the industry.
It is also important to note that the proportion of investors who strongly agree about ESG’s importance has declined from 2021 to 2023. PWC noted that there was not a strong particular reason for this decline in the strength of ESG, but a possible potential reason may be its growth as a sustainability buzzword which results in a lack of clarity around ESG’s clear targets.
Source: PWC Global Investor Survey 2023
Investors' opinion also emphasized the criticalness of companies revealing proposed plans and costs to meet net zero targets. This strategy would alleviate concerns for greenwashing as a defined roadmap and allocated costs showcases accountability throughout a firm. As 2025 and 2030 targets near, consumers and investors are looking toward transparent goals for sustainable accounting measures.
Source: PWC Global Investor Survey 2023
Skepticism over Greenwashing
More critically, the survey reflected growing greenwashing apprehension. 94% of respondents reported that they believe corporate reporting on sustainability performance contains unsupported claims, and this includes 79% of the respondents who said these unsupported sustainability claims were present at a moderate or greater extent. This is worrisome as companies are continually making promises for mitigating emission targets by 2025, 2030, and 2050.
To combat this growing problem, investors showed support for increasing public engagement with regulatory sustainability reporting standards such as the European Union’s Corporate Sustainability Reporting Directive (CSRD) or the International Sustainability Standards Board (ISSB). This was favored by investors as 85% stated that reasonable assurance would give them confidence in the companies’ accurate sustainability reporting. Additionally, investors have incentivized extra pay for companies that report accurate progress within ESG, while even 42% of investors stated they divested their stake in companies that haven’t demonstrated sufficient action within ESG.
These reports show the increasing popularity of ESG being interwoven within companies’ strategy, as well as, highlight the transition toward more accountability toward showcasing their sustainability strategy.
