Investors issue warning to firms over their environmental and sustainability conduct

60% of surveyed investors said a lack of action would prompt them to vote against executive pay plans at the company in which they have invested

While global in its nature, the study’s central findings will resonate with Irish investors, and will have an impact on Irish companies, PwC said. File Picture: iStock

Companies that disregard and fail to act on environmental, social, and governance (ESG) responsibilities risk losing investors, a survey from PwC has warned.

While global in its nature, the study’s central findings will resonate with Irish investors, and will have an impact on Irish companies, PwC said.

The survey found that almost half of investors would be willing to divest from companies that are not taking sufficient action to tackle ESG issues. 

Nearly 60% said a lack of action would prompt them to vote against executive pay plans at the company in which they have invested — with a third of respondents saying they have already done so.

Nearly 80% of surveyed investors said the way a company manages its ESG risks and responsibilities is an important factor in their investment decisions.

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“With Ireland being a leading global asset management centre, we expect the results in the survey to resonate among Ireland’s investment community also,” said Trish Johnston, asset management leader at PwC Ireland.

“Our research shows that investors are simultaneously focused on short-term results, as well as the longer-term societal issues that can create both risks and opportunities for their investments.

"It is clear that investors expect ESG to be an integral part of corporate strategy.”

That, Ms Johnston said, includes making expenditures to address ESG issues and 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,” she said.

Olwyn Alexander, global leader for investment management at PwC, said: “Our survey reinforces the need for a single set of globally aligned sustainability reporting standards.

“Without global standards, investors are severely challenged in evaluating ESG performance. 

"It is also much more difficult for companies to report on ESG performance without common benchmarks or frameworks to follow."