A new global study by Deloitte and The Fletcher School at Tufts University has found that trust in environmental, social and governance (ESG) data used for investment decisions is trailing as sustainability becomes more important for investment professionals in the United States.Investor trust in sustainability dataDeloitte and The Fletcher School at Tufts University conducted the study titled “Investor trust in sustainability data.”
A recent survey indicates that sustainable investing has significantly expanded in the U.S. over the past five years, with 83% of investment professionals reporting having a sustainable ESG investing policy, a notable increase from just 27% five years ago.
A large portion of U.S. investors seek out ESG information to support fundamental analysis, including ESG disclosures, reports, ratings, and other information, as part of their due diligence efforts.
“Various factors such as regulatory requirements, financial performance pressures, and stakeholder expectations are propelling 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, Deloitte Transactions and Business Analytics LLP.Company leaders and boards have an important opportunity to enhance investor confidence and trust levels in their investments by improving sustainability information, disclosures, and other sources that inform buy, sell, and hold decisions.”
ESG data concerns from investment managers
Despite the increasing demand for sustainability information, U.S. investment professionals have expressed worries about the availability, access, and reliability of ESG data for their investment approaches.
“Improvement is needed in how organizations gather, measure, report, and validate sustainability data to gain investor trust.” said Michael Bondar, a Deloitte Risk & Financial Advisory Principal and global enterprise trust leader, Deloitte Transactions and Business Analytics LLP. Further consistency and reliability in sustainability reporting should boost stakeholders' confidence throughout the corporate ecosystem.Bhaskar Chakravorti”
Added , dean of Global Business at The Fletcher School at Tufts University: “The focus on sustainability data is increasing worldwide. India's top public companies must disclose ESG related activities, and the European Union now mandates sustainability disclosures under the Corporate Sustainability Reporting Directive starting in 2024. The United States also adopted rules this month.You can access the full report”
As sustainability becomes a more common consideration for investment management professionals in the United States, trust in the environmental, social and governance (ESG) data used to inform investment decisions by… here.
