Are investors souring on ESG? Don’t bet on it

If anything, says PwC’s Nadja Picard, they’re telling companies that sustainability—and better reporting on it—is a higher priority than ever.

Nadja Picard

Global Sustainability Reporting Leader, Partner, PwC Germany

+49 (0)211 9812978


I can’t say I’d blame a busy CEO for looking at the top-line findings from PwC’s 2023 Global Investor Survey and hastily concluding that investors are easing back on sustainability. After all, when the survey asked them to cite the top risks to the companies they invest in or cover, climate change didn’t even crack the top three.

But look again at that chart. In the span of a year—between the 2022 survey and this year’s—the share of respondents citing climate change as a key risk jumped by a full 10 percentage points. To me, this says that even as investors see companies grappling with urgent disruptions (like inflation and war), their concerns about climate change are here to stay.

OK, fine, that same busy CEO might say, but what about this finding: the share of investors who think ESG issues should be embedded in companies’ strategy and expenditures and in investment decision-making has actually gone down. Doesn’t that mean the ESG backlash I keep reading about is real? 

Again, I’d invite the CEO to take a fresh look at the findings. Yes, there’s been a discernible drop in positive views about ESG since 2021, but check out the yellow part of those bars: investors with positive views remain a huge majority.

Need further proof of how important sustainability is to investors? How about the fact that three-quarters of them want to know the impact a company has on society and the environment, a jump of 15 percentage points from 2022. Or this: 67% say they would increase their investment in companies that change their business conduct to benefit society and the environment. 

Look, I understand that setting and meeting sustainability goals is hard, even painful, but this year’s survey makes clear that investors want companies to make a positive impact on their communities and the planet. What’s more, they want better reporting on how that’s being done, both in the immediate term and over the next three, five, and ten years—including disclosures about the material impact of those activities on a company’s performance. Of respondents who want to know a company’s impact on society and the environment, three-quarters want to know the actual monetary value of that impact—a complicated metric that even the most ESG-forward businesses are only starting to get their heads around. That’s up nine percentage points from last year’s survey. Add to all that another figure that’s gone up: the share of investors who don’t fully trust sustainability reporting. A startling 94% of them believe that corporate reporting on sustainability performance contains at least some level of greenwashing.

It’s no surprise that many executives, including those at companies I work with, feel overwhelmed. But the way I look at it, investors—by seeking clearer and more trustworthy sustainability reporting—are handing companies a road map for transformation. Following it starts with three fundamental imperatives:

  • Take an honest look at yourself. Engaging in clear-eyed introspection can help you see the complete spectrum of sustainability-related risks and opportunities that have a bearing on your organisation’s ability to create value. How and where is your company polluting? Is it using land in ways that affect biodiversity? How does its hiring policy impact the communities where it does business? If you’re not collecting and disclosing this information, investors will turn to companies that are. Engage in a thorough stakeholder analysis. Think hard about how those stakeholders—not just investors, but customers and civil society—might look at your business, and chart your course accordingly.

  • Get better data. The number one frustration I face when helping companies with sustainability reporting is a lack of quality data. Companies need well-controlled and automated processes—like those already used for financial reporting—that capture meaningful information on emissions and other impacts. It’s one thing to know the amount of electricity a business’s offices consume; it’s a different matter to measure the carbon emissions from energy consumption across the full value chain of a multinational company. And in managing their decarbonisation efforts, organisations need to aim for a higher level of granularity—for example, accounting for emissions on a monthly (not yearly) basis, and with detailed breakouts for business segments and territories. 

  • Bake sustainability into your company’s strategy. The business leaders who will make the greatest strides in meeting investor expectations on sustainability are those who embed it in their company’s governance, purpose and strategy. This goes beyond qualitative, aspirational goal-setting. Businesses need to develop systematic ways of quantifying their company’s impacts—good and bad—on people and the planet, so that those impacts can be seen, with full transparency, alongside financial outcomes in the company’s balance sheet. 

That may seem like a lot to take on, but business leaders should be encouraged by this survey finding: 69% of investors say they’ll increase their level of investment in companies that can successfully manage sustainability issues relevant to the business’s performance. Investors know that thriving in the face of climate change and societal disruption means getting sustainability right.

Explore the full findings of PwC’s 2023 Global Investor Survey.

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Nadja Picard

Nadja Picard

Global Sustainability Reporting Leader, Partner, PwC Germany

Tel: +49 (0)211 9812978