Investors look to stronger reporting standards amid greenwashing concerns
Investors this year highlighted a strong undercurrent of doubt around the reliability of sustainability reporting and information that they use, often referred to as “greenwashing”. 94% of investors believe corporate reporting on sustainability performance contains some level of unsupported claims (up from 87% in 2022), including 15% who think they are there to a “very large extent”. The proportion who said unsupported claims are present to a moderate or greater extent is up one percentage point on last year at 79%.
These perceptions of greenwashing may explain why investors are looking to regulators and standard setters to create clarity and consistency in companies’ reporting. 57% of investors said that if companies meet the upcoming regulations and standards (including CSRD, the SEC proposed climate disclosure rules in the US, and ISSB standards), it will meet their information needs for decision-making to a “large” or “very large extent”. Furthermore, 85% say that reasonable assurance (akin to audit of financial statements) would give them confidence in sustainability reporting to a “moderate”, “large”, or “very large extent”.
The focus of investors on meeting the cost of ESG commitments has also risen, with 76% finding this information important or very important. Investors also want information on a company’s impact on society or the environment, and of those, 75% agree that companies should disclose the monetary value of their impact on the environment or society, up from 66% in 2022.
Investors favour accelerated AI adoption, despite risks
This year’s survey findings show investors view the accelerated adoption of artificial intelligence (AI) as critical to value creation, while recognising the importance of managing risks. 61% of investors say faster adoption is “very”, or “extremely important”. Including responses noting “moderately important”, this jumps to 85%. Investors identified technological change (59%) as the factor most likely to influence how companies create value over the next three years. Furthermore, investors ranked innovation and emerging technologies (including AI, the metaverse, and blockchain) among their top five priorities when evaluating companies. Nonetheless, 86% see AI presenting considerable risk from a ”moderate” to “very large extent” when it comes to data security and privacy; insufficient governance and controls (84%), misinformation (83%); and bias and discrimination (72%).