An overwhelming majority of investors in Irish companies believe reporting on sustainability performance tends to contain unsupported claims, a new global survey has suggested.
The study, conducted by PwC, reveals what the Big Four firm described as a “strong undercurrent of doubt” among investors about firms’ environmental claims as concerns about corporate greenwashing become more prevalent globally.
Based on a poll of 345 investors in 30 countries, 97 per cent of respondents who have invested in Irish companies said they were concerned about the veracity of corporate sustainability reporting generally.
To remedy the knowledge deficit, half of investors said they would be satisfied if companies conformed to new reporting standards such as European Union’s Corporation Sustainability Reporting Directive (CSRD), which came into force last year. Businesses across the bloc will have to apply the new rules, obliging them to disclose the risks they face from climate change as well as their own environmental impact, for the first time next year.
Without that level of disclosure, investors told PwC they would be willing to take action against companies that fail to demonstrate a commitment to addressing environmental issues. Some 34 per cent of investors in Irish firms said they would vote against executive pay agreements if the company was not taking sufficient action and 39 per cent said they would vote against director appointments.
Close to a quarter of investors said they would sell their investment altogether if they were not satisfied with the level of information provided.
Investors “lack confidence in much of the information they have” about what companies were doing to address the climate crisis and also the environmental impact of new technologies like artificial intelligence (AI), said David McGee, environmental, social and corporate governance (ESG) practice leader at PwC Ireland.
“We are moving from a period of awareness raising around the importance of climate and technological change to a time where investors are increasingly asking specific and tough questions,” he said. “Investors want to know how companies are addressing climate and sustainability issues in their strategy, how they assess risk and opportunity and what is truly material for them. In this context, corporate reporting needs to continue to evolve so it provides reliable, consistent and comparable information that investors – and other stakeholders – can rely on.”
Meanwhile, 58 per cent investors in Irish companies said AI was the most important emerging technology for businesses to adopt this year. Yet, 100 per cent of survey respondents said they see it as presenting considerable risk relating to data security and privacy.
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