Just over 59 percent of large companies say the demands of sustainability-oriented investors are a ‘decisive’ factor in formulating their policies toward sustainability issues, according to a survey by oekom, the German research firm specializing in ESG-related investment issues.
The impact of sustainable investors, however, was slightly lower than that of sustainability ratings agencies, at 61.3 percent, and demands of customers, at 65.8 percent, the survey shows. The activities of competitors in the area are also a ‘decisive’ factor at 48.7 percent of large companies, with initiatives by the board or shareholders rated fifth, at 46.7 percent.
‘Even though sustainable investors today clearly also have other motives, particularly that of reducing reputational and performance risks, the motive of influencing companies continues to play an important role,’ says oekom CEO Robert Hassler in the study’s executive summary. But ‘the extent to which sustainability strategies and measures are motivated by the sustainable capital market or even geared specifically to the expectations of sustainable investors remains unclear.’
The survey of 199 large companies, carried out in collaboration with the United Nations Principles for Responsible Investment (PRI) initiative and the German Global Compact Network, was designed to determine the impact of sustainable investors on the ‘design of structures, processes and performance in the companies.’
According to the study – which includes respondents in 30 countries from 34 sectors – €10 tn are currently being invested worldwide under some SRI criteria, making up about 22 percent of the total global market.
More than 58 percent of large companies rate the importance of sustainable development to their future as ‘very high’, while another 38.9 percent rate it as ‘fairly high’, the study shows. Only 3 percent rate it ‘fairly low’ and 0.5 percent ‒ or a single respondent ‒ rates sustainable development as ‘very low’ on the list of priorities.
Sustainability ratings affect the remuneration of certain managers at 21.6 percent of the companies surveyed, and it has some impact on remuneration of all managers at 8.5 percent, according to the study. The ratings have no impact at 62.3 percent of the companies surveyed, while the remainder give no comment on the question.
When it comes to responsibility for ESG, investor relations departments are responsible for responding to inquiries from sustainability ratings agencies at only 12.6 percent of the companies surveyed, the study shows. At 77.4 percent of the companies, the inquiries are handled by devoted CSR or sustainability departments, while corporate communications departments field the inquiries at 7.5 percent of the corporations.
