Would US investors trust sustainability more if the data were better?

Would US investors trust sustainability more if the data were better?
Deloitte study reveals challenge for public companies.
MAR 18, 2024

Sustainable investing remains a growing trend but while a recent report found rising interest among retail investors, new research highlights concerns among larger investors.

Deloitte and The Fletcher School at Tufts University investigated trust in public companies’ ESG data among investment management professionals at U.S. institutional investors and found it continues to lag desire to embrace sustainable investing strategies.

In the past five years there has been a sharp rise in the share of investment professionals saying they have a sustainable ESG investing policy in place to consider the impact of any investments made. In 2019 just 27% said they did while in 2024 this has surged to 83%, with just 1% saying they have no intentions to introduce such a policy.

But while 81% of respondents said they look for sustainability information as part of their due diligence when considering investments, the availability and reliability of data is a concern.

"Many factors, including evolving regulatory requirements, financial performance pressures, and stakeholder expectations, are driving the U.S. movement toward integrating sustainability and ESG into investment decision-making," said Chris Ruggeri, a Deloitte Risk & Financial Advisory principal and sustainability, climate and equity leader at Deloitte Transactions and Business Analytics. "As such, company leaders and their boards have an important opportunity to take actions that can improve investor confidence and trust levels in those investments, such as making enhancements to the sustainability information, disclosures, and other sources that inform buy, sell, and hold decisions."

Among the study’s participants’ issues with implementing ESG investment strategies:

  • lack of measurable outcomes discernible from corporate disclosures (60%)
  • lack of clarity on how to integrate ESG information (63%)
  • inconsistency or incomparability of ESG ratings data (63%)

Stakeholder influence and pressure was cited by 62% as a barrier to implementing strategies.

"There is considerable room for improvement in how organizations collect, measure, report on, and validate sustainability data to earn investor trust," said Michael Bondar, a Deloitte Risk & Financial Advisory principal and global enterprise trust leader at Deloitte Transactions and Business Analytics. "But more consistency and dependability in sustainability reporting for measurement and analysis purposes should help enhance confidence for stakeholders throughout the corporate ecosystem."

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