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Firms failing to act on ESG issues risk losing investors, says PwC

59% of investors said ‘lack of action’ on ESG issues makes it likely they would vote against an executive pay agreement, while 79% said the way a company manages ESG risks and opportunities is an important factor in their decision making

Environmental, social and governance (ESG) has revealed that 49% of investors expressed willingness to divest from companies that aren’t taking sufficient action on ESG issues, according to a latest survey from PwC.

The PwC 2021 Global Investor ESG Survey captures the views of 325 investors from around the world, primarily active asset managers and analysts with investment firms, investment banks or brokerage firms. 

It revealed 59% of investors said “lack of action” on ESG issues makes it likely they would vote against an executive pay agreement, while 79% said the way a company manages ESG risks and opportunities is an important factor in their investment decision making.

While most investors are likely to take action if companies are not doing enough to address ESG issues, most also say that they don’t want a company’s action on ESG to significantly, if at all, impact their investment returns.  

According to the PwC survey, the “vast majority”, 81%, said they would accept no more than one percentage point less in investment returns for pursuit of ESG goals; nearly half, (49%), were unwilling to accept any reduction in returns. 

James Chalmers, global assurance leader at PwC UK, said: “It is clear that investors expect ESG to be an integral part of corporate strategy. That includes making expenditures to address ESG issues, while clearly communicating the rationale and benefits to the business strategy.”

“If investors don’t see that commitment, they won’t hesitate to take action and that can include divesting their position in a company and taking their clients’ money elsewhere.”

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