Individual investors want ESG data they can trust, reports Workiva Inc
Workiva Inc has released results from a survey of individual investors that reveals approximately 70 per cent of respondents believe organisations have a responsibility to demonstrate ESG performance to investors, with Gen Z and younger millennial-aged investors (18-34 year-olds) the most demanding around ESG credentials.
The survey revealed transparency around ESG disclosures is becoming integral to investor decisions, and companies will undoubtedly experience increased pressure from investors to be able to report on their progress.
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When asked if they found it difficult to trust what companies are disclosing what they’re doing for the environment and society, only 10 per cent of respondents disagreed. In addition, 62 per cent of respondents stated they find it difficult to judge whether companies are doing the right thing when it comes to the environment and society.
One-third of survey respondents (31 per cent) noted they trust ESG performance more when reported through numbers and data than qualitative descriptions — this increased to 43 per cent for 18-34 year olds. 66 per cent of individual investors believe that companies should make it easier for them to judge ESG efforts through data. 44 per cent of individual investors surveyed expressed that they would be more likely to invest in a company that demonstrates its ESG performance. This sentiment increased to 55 per cent for Gen Z and Millennial aged investors across all regions.
Awareness around ESG is especially high for under 34 year olds, with 72 per cent being aware of ESG, and of this group nearly a quarter (24 per cent) claimed to know a lot about it.
57 per cent of Gen Z and Millennials believe that ESG will continue to become more important due to climate change.
Nearly three-quarters (72 per cent) of 18-34-year-olds want to know whether a company lives up to their social and moral beliefs before they invest in them.
This survey of individual investors comes on the heels of large institutional investors and asset managers extolling the benefits of integrating ESG metrics as a key factor in building their investment portfolios, as well as trends in new regulations requiring non-financial reporting.
“Our survey findings represent a powerful motivation for organisations to take a serious look at how they are reporting ESG and other non-financial data,” says Julie Iskow, chief operating officer of Workiva. “We believe there is a real competitive advantage in attracting today’s modern investors with a commitment to corporate transparency.”
“The survey indicates that investors want to see earnings growth, deeper data transparency and progress in all areas of ESG. This will require a technology solution that can deliver accuracy and simplify the complex process of collecting and reporting non-financial data; Workiva is revolutionising how companies approach ESG reporting with a solution that does just that,” adds Iskow.
Workiva's cloud-based platform creates a connected and controlled ecosystem that streamlines the integration of financial and non-financial information. ESG and finance teams can collect, assemble and report data on one secure platform, allowing businesses to keep pace with the rapidly growing demand for trusted transparent data and proof of ESG forward-looking business goals.