Investors Really Do Care About Sustainability – There’s a Gap Between Them and Corporate Executives

Posted on May 23, 2016 by Hank Boerner – Chair & Chief Strategist

#Corporate Responsibility #Corporate Sustainability #ESG Issues #Investment Case #Investor Engagement #SRI #Sustainability Reporting #Sustainable Investing 

Corporate CEOs, CFOs and others in the C-suite typically ask, “do investors really care about corporate sustainability…or is it a fad, a PR thing?”  MIT Sloan Management Review and The Boston Consulting Group (BCG) set out to explore that question.  The answer is in their recently released report:  “Investing for a Sustainable Future: Investors Care More About Sustainability Than Many Executives Believe.”
An unfortunate note here:  In the survey of more than 3,000 corporate executives and managers in 100+ countries, executives’ and managers’ perceptions are out of synch with the investing world realities, think the study authors.  Co-author David Kiron (who is exec-editor of the MIT publication) thinks there is a communications gap at work here.  “We found that investor relations professionals in companies are not really talking about value of sustainability to the bottom line, even though investors place real value on sustainability performance.”
Data availability is an important driver of increased investor engagement with sustainability.  “Today’s investors,” say the authors, “armed with richer data and more sophisticated analytics, can take a more nuanced and inclusive perspective.”  And, more than 75% of investment community respondents to the survey feel that increased operational efficiency often accompanies sustainability progress.   (Three-quarters of senior managers surveyed at investment firms said a company’s sustainability performance is material, and half said that they would not invest in a company with a poor sustainability track record.)
Alas, on the corporate side, there’s the gap:  only 60% of corporate senior executives agreed with their senior investment owners or prospective owners (the asset managers surveyed) about the importance of corporate sustainability; 90% of senior corporate executives see sustainability as “important,” but only 60% of companies have a sustainability strategy in place…and just 25% have a clear business case [for sustainability], says BCG senior partner Knut Haanaes.
The MIT Sloan and BCG survey results offer corporate executives suggestions on how to meet the needs of the sustainable investor (a universe that is rapidly expanding).  The study authors will be discussing their findings and suggestion on a webinar on May 26th.   Study results are at:
Highlights of all this are in the story linked below:
Investors Care More About Sustainability Than Many Executives Believe, Study Shows 
(Friday – May 13, 2016)
Source: MarketWired – Sustainability is increasingly important for a growing number of investors, as evidence mounts that companies’ environmental, social, and governance (ESG) performance has an impact on their long-term financial success…