Investors are increasingly factoring ESG into their investment decisions, according to a PricewaterhouseCoopers survey released Thursday.
The PwC 2021 Global Investor ESG Survey found that 80% of those surveyed considered ESG an important factor. Nearly 70% thought it should be factored into executive compensation, with 59% saying that a company's lack of action on ESG issues would make them likely to vote against pay packages, and one-third already taking that action.
For companies not taking sufficient action on ESG issues, 49% of the investors were willing to divest.
When it comes to investment returns, 49% of respondents said they would accept no reduction when ESG goals are being pursued.
Investors also want to see more detailed reporting by companies on ESG goals and progress, with 83% saying that was important. Only one-third of investors surveyed considered ESG reporting quality to be good, and 75% considered it important that reported ESG-related metrics are independently assured.
Climate was the top ESG consideration for investors, with 65% wanting companies to prioritize reducing Scope 1 and 2 greenhouse gas emissions. On other issues, 44% wanted companies to ensure worker health and safety and 37% to improve workforce and executive diversity, equity and inclusion.
ESG should be embedded in corporate strategy, 82% of investors surveyed said, with 53% wanting the CEO to be accountable for it.
The survey was conducted in September with 325 investors around the world, primarily active asset managers and analysts. It also conducted 40 in-depth interviews with investors and analysts managing more than a combined $11.6 trillion assets.
"It is clear that investors expect ESG to be an integral part of corporate strategy. That includes making expenditures to address ESG issues, while clearly communicating the rationale and benefits to the business strategy. If investors don't see that commitment, they won't hesitate to take action and that can include divesting their position in a company and taking their clients' money elsewhere," James Chalmers, global assurance leader for PwC UK, said in the release.