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ESG Makes Companies More Attractive to Big Investors

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Three-quarters of institutional investors in a recent survey say building environmental, social and governance initiatives into a company’s business model is a smart business decision, and 98% say a company with strong ESG initiatives makes for a more attractive investment.

The survey results, incorporated in a white paper developed by public relations firm Burson-Marsteller and its sister agency Penn Schoen Berland, found that 95% of investors agreed it was important to their clients that companies share and improve their ESG performance.

Another 89% said their clients are well-informed about companies’ ESG initiatives.

“The responsible investment movement is here to stay,” Tim Mohin, chief executive of the Global Reporting Initiative, a standards organization, said in a statement released by Burson-Marsteller.

“Savvy investors realize that aligning their capital with sustainable business practice is a smart, long-term strategy.”

Indeed, investment advisors no longer find ESG investing optional; it’s essential. A recent report said one out of every five dollars under professional management is being invested according to socially responsible investment strategies.

Data Demands

Which ESG data are most important to institutional investors? Forty-one percent of respondents in the Burson-Marsteller survey said the return on dollars invested in social and environmental initiatives, and 31% said impact data, such as quantified reduction in carbon emissions.

Also important were year-over-year trend data (ideally up to five years) to measure the impact of an initiative, planning for future initiatives, case studies and company priorities.

Six in 10 investors said ESG reports should provide comprehensive and detailed information, while 37% preferred them to be short and concise.

Most agreed that reports should be data-driven and focused on both information related to investments and company priorities.

Institutional investors were divided on the preferred format of an ESG report.

Fifty-two percent considered digital ESG reports sufficient, while 48% looked for a more in-depth PDF report that could be saved or printed.

While more than a third of investors said digital reports made it easier to find data and share content, nearly all said it was very important that a report be downloadable.

Fifty-two percent also said it was important that ESG digital reports be mobile-friendly.

“The financial impacts of a company’s sustainability policies and initiatives are no longer in question,” Jane Madden, managing director for U.S. corporate responsibility at Burson-Marsteller, said in the statement.

“This study shows the importance of content, format and credibility to ESG reporting. The findings suggest institutional investors are keenly interested in ESG performance. Companies need to communicate ESG performance with data, transparency and links to business impacts.”

The white paper includes suggestions how companies can tailor their ESG reports for the institutional investor audience.

— Check out Socially Responsible Investing Starts With the Bottom Line on ThinkAdvisor.


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