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Institutional investors: Companies failing to meet expectations on ESG factors risk losing access to capital markets

Friday, July 24, 2020

Laxman Pai, Opalesque Asia:

Companies failing to meet investor expectations on environmental, social and governance (ESG) factors risk losing access to capital markets, said a study.

Institutional investors are raising the stakes when it comes to assessing company performance using environmental, social and governance factors, said the 2020 EY Climate Change and Sustainability Services (CCaSS) Institutional Investor survey.

The survey revealed that ESG information has never been more important, with the majority of investors surveyed (98%) signaling a move to a more disciplined and rigorous approach to evaluating companies' non-financial performance.

The research also showed that investors surveyed had become increasingly dissatisfied with the information they received on ESG risks when compared with 2018.

A concerning finding as 91% of respondents also said that nonfinancial performance played a pivotal role in investment decision-making. This has led to strong investor appetite to see ESG disclosures underpinned by appropriate governance structures, reviews, and controls.

The research shows that investors are stepping up the game when it comes to assessing the performance of companies using ESG or nonfinancial factors, with a major commitment from investors to move to more rigorous evaluation.

The research said that investors are embracing Task Force on Climate-related Financial Disclosures (TCFD) as part of evaluations. 67% of investors surveyed......................

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