Nearly nine out of ten investors (87%) said that corporate sustainability reporting contains “unsupported claims”, and 69% say that they should be done with the same rigour as financial reporting, according to the PwC Global Investor Survey 2022.
Moreover, they believe that the information provided by agencies that assess companies’ performance against environmental, social and governance (ESG) criteria does not fill the trust gap, with only 22% of investors surveyed saying that they use it to a great or very great extent.
“Investors are concerned about the risks of greenwashing that erode their confidence in companies’ real commitment to sustainability. For this reason, companies need to ensure that corporate reporting is transparent and provides relevant and accurate information about their impact on society and the environment, based on measurable and comparable indicators. In other words, figures and financial results are no longer enough to convince investors that an external audit process would enhance the credibility of sustainability reporting. In the EU, a first step in this direction was taken in November 2022, when the European Parliament adopted the Directive on Corporate Sustainability Reporting which clarifies the rules companies will have to follow in the reporting process, and EFRAG (European Financial Reporting Advisory Group) launched the first proposal for a set of rules that will enter into force on 1 January 2024”, said Monica Movileanu, Partner and ESG Leader, PwC Romania.
The report shows that two thirds of the investors want companies to disclose the monetary value of the effect their operations or other activities have on the environment or society. In addition, 73% of investors want companies to report the costs of meeting the sustainability commitments they have set.
As far as auditors are concerned, three quarters of respondents say that their specialisation and training in sustainability reporting is essential and that assessments should be carried out based on independent standards.
Investors have increasing expectations regarding the quality of reporting
Investors reported some notable shortcomings in company efficiency on two fronts: delivering results that matter to investors and reporting on these efforts. The report thus highlights the challenge that investors face in assessing how well companies achieve their goals. This may explain why investors prioritise some sources of information over others when assessing how companies manage risks and opportunities.
If investors find that company reporting is not enough to help them assess their priorities, it is difficult for them to allocate capital to those priority areas.
The outcomes that investors want companies to prioritise in reporting are: achieving profitable financial performance, ensuring effective corporate governance and ensuring data security and privacy.
In September and October 2022, PwC interviewed 227 investors and analysts in 43 countries/territories globally.
