Environmental, social, and governance scores have a definite impact on investors’ perception of a company. In this sense, future ESG reporting could become a requirement for modernized businesses seeking to attract more investors in today’s market environment.
According to a recent Workiva Inc. survey of individual investors, about 70% of respondents pointed out that organizations have a responsibility to demonstrate ESG performance to investors, with Generation Z and younger millennial-aged investors showing the most demand when it comes to ESG credentials.
“Our survey findings represent a powerful motivation for organizations to take a serious look at how they are reporting ESG and other non-financial data,” Julie Iskow, chief operating officer of Workiva, said in a note. “We believe there is a real competitive advantage in attracting today’s modern investors with a commitment to corporate transparency.”
Specifically, awareness around ESG is especially high among the younger investors, with 84% of respondents showing awareness of ESG criteria. Among this group, about 64% claimed to know a lot about the subject.
ESG awareness was found to be most prevalent in German investors, with 93% of participants under 34 years old indicating they were already aware of ESG in investments.
Meanwhile, in the United States, 65% of Gen Z and Millennials said ESG in companies has become more important over the past year and will become more important due to climate change. Additionally, 72% of those 18 to 34 said they want to know whether or not a company lives up to their social and moral beliefs before investing.
However, current data sets do not induce a sense of trust. About 60% of respondents across all regions found it difficult to judge whether companies are doing the right thing with respect to environment and society.
“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 revolutionizing how companies approach ESG reporting with a solution that does just that,” Iskow added.
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