November 2015
Featured in this insight: Financial services
Information on non-financial risks desired by investors, survey finds: According to a new report, businesses which provide inadequate information about non-financial risk, for example, environmental, social and governance (ESG) problems could end up losing potential investment.
The survey – which was conducted by consultancy giant, EY – has revealed that institutional investors would like more non-financial information detailing viable and measurable risks to a company’s performance.
EY Climate Change and Sustainability Services interviewed 200 institutional investors, 75 per cent of which were employed by institutions with assets worth $10bn or more. The investors were asked about the relative importance of non-financial information to their investment decisions.
64 per cent of the investors in the survey said that companies do not sufficiently outline ESG problems, whilst 62 per cent said that they consider non-financial data to be relevant across all sectors.
The number of investors who consider ESG issues is significantly higher than it was last year, when just 34 per cent of investors said that non-financial data was relevant.
The research also found that 76 per cent of investors would think twice about their investment if a company showed a risk of poor environmental performance. Another 73 per cent said that they would be worried if a company was neglecting risks in its supply chain.
Of the investors, 39 per cent said that more companies should disclose information more fully in the future.
36 per cent of the institutional investors said that they divested holdings of a business’ shares in the last 12 months as a result of a risk of ‘stranded assets’.
Whilst the number of investors who consider ESG issues is increasing, less than 25 per cent said that these factors were often important to their decision making processes.
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