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- Greenwashing concern rises: 85% of investors view greenwashing as a more significant issue now than five years ago.
- Short-term over long-term focus: 92% of investors prioritize short-term gains over long-term ESG benefits, with 66% likely to reduce the weight of ESG factors in future decisions.
- Call for better reporting: 64% of investors demand independent audits of sustainability disclosures, while 36% express dissatisfaction with current nonfinancial reporting progress.
A new EY Institutional Investor Survey highlights growing skepticism and inaction within the investment community regarding ESG (Environmental, Social, and Governance) priorities.
Investors wary of ESG reporting
The survey of 350 decision-makers from global investment firms reveals a deepening concern over greenwashing, with 85% identifying it as a more severe problem than five years ago. While 88% say their firms increased the use of ESG information last year, it appears more performative than impactful, as only 25% feel equipped to assess the long-term impacts of ESG policies.
Dr. Matthew Bell, EY Global Climate Change and Sustainability Services Leader, emphasizes the disconnect:
“The global investor community should be front and center of the drive for sustainability, but instead what we’re witnessing is worrying levels of apathy… There’s a pervasive view that immediate gains matter more than the valuable slow-burn rewards from ESG investments.”
Misplaced confidence in sustainability targets
Despite reservations, 93% of investors maintain confidence that companies will meet decarbonization and sustainability goals. However, only 17% actively monitor changes in corporate climate policies, raising questions about the basis of this optimism.
RELATED ARTICLE: Over Half (56%) of C-Suite Leaders Report Significant Sustainability Progress: ERM Survey
Dr. Bell underscores the risks:
“Unchecked climate risks can spell disaster for companies and their financial backers… If the world is to stand any chance of hitting net zero goals, we’ll need trillions of dollars of funding and an investor community that treats sustainability as a source of value rather than purely as a risk.”
Calls for improved ESG reporting
The survey also reveals dissatisfaction with current corporate reporting standards:
- Material clarity: 80% demand more explicit and comparable reporting on material ESG factors.
- Audited disclosures: 64% advocate for independent auditing of sustainability reports to combat greenwashing.
Bell concludes:
“Done right, we could see an uptick in capital flowing into vital climate change projects, providing a much-needed shot in the arm for climate finance and untold ripple effects in the battle against climate change.”
This growing awareness of greenwashing and demand for better ESG reporting highlight the challenges and opportunities for bridging the gap between sustainability rhetoric and actionable investment strategies
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