Source: Ben Hernandez, ETFtrends.com
Environmental, Social and corporate Governance (ESG) is still trying to break through to the mainstream in the financial realm, but a new research report from Corbin Advisors helps to clarify common misconceptions for institutional investors and corporate executives.
The Corbin research, based on data from an ongoing study comprising 500+ institutional investors and nearly 100 Investor Relations Officers at top U.S. companies found that:
- 76% of investors assert ESG has become a greater factor in their investment process over the last two years.
- 73% report the “G” is important to critical to their investment decisions, compared to only ~30% for the “E” and “S.”
- 48% of investors identify Data Quality/Access, particularly for Small-caps, as the top frustration when it comes to ESG factors.
- Over 75% of IROs report they have identified material factors impacting their company.
The research, conducted in concert with the University of Connecticut, also identified several key takeaways for companies looking to better integrate ESG factors into company performance measurement and operations:
- ESG reports are one input for investors in their comprehensive research approach; a low ESG score will not necessarily result in a sell decision
- ESG is not a one-size-fits-all approach; it is critical to identify materiality factors for your industry and then conduct the same analysis for your company based on key stakeholder views
- While resources and budgets are more challenging for small-caps, it is critical to communicate where you are in your ESG journey; investors are looking for progress, not perfection
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