A growing body of research confirms that investors around the world are incorporating environmental, social and governance (ESG) issues into their investment decision-making.1 Adding to the evidence, a recent study of institutional investors in Canada found that investors do consider ESG issues when making investment decisions. And that’s not surprising considering the growing evidence that sustainability is linked to corporate performance.2
But investors have made it clear they’re not getting the information they need from companies’ securities filings or from their CSR reports. What they want is a clear link between ESG issues and a company’s strategy, risk management and operations.
This doesn’t mean Canadian companies aren’t already considering ESG issues in their corporate strategy, risk management and operational context, and even in their executive compensation programs. What it tells us is that it isn’t coming through in their reporting.
We surveyed a group of 24 institutional investors representing over $1.7 trillion in assets under management, including some of Canada’s largest pension funds, mutual and pooled funds and other investment managers. The survey was completed by members of the investment team (40%), senior management (30%), the governance team (20%), and one board director. Key takeaways are:
- 65% of investors often or always consider environmental and social issues, and 95% consider governance issues for all investments.
- Investors want to see a clear link between ESG issues and corporate strategy, risk management and operational context.
- 75% said they prefer to get ESG information from third parties, but that they’re not getting what they need to understand materiality.
- Only 30% of investors find the ESG information companies provide good enough to help them assess materiality to the company’s business.
- 85% agree or strongly agree that the quality of ESG disclosure has an impact on their perception of management and/or the board.
If you are a subscriber click here to login and read the complete article. For more information about the JSFB click here or contact us to learn more about Cornerstone’s research and service offering.