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Laxman Pai, Opalesque Asia:

Institutional investors are ramping up their efforts when it comes to assessing the performance of companies using environmental, social and governance (ESG) factors, according to an EY study.

The vast majority of investors (98%) evaluate nonfinancial performance based on corporate disclosures, with 72% saying they conduct a structured, methodical evaluation, said the fifth EY Climate Change and Sustainability Services (CCaSS) survey of 298 institutional investors globally.

This is a leap forward from the 32% who said they used a structured approach in the survey's fourth edition in 2018, according to the survey.

At the same time, investors are increasingly holding companies accountable, with ESG factors playing a central role in their decisions.

Investors say that nonfinancial performance has played a pivotal role in their investment decision-making over the past 12 months (91%), either frequently or occasionally, with the proportion of investors that say this happens frequently jumping to 43% from 34% in 2018.

Climate change, in particular, plays a significant part in investors' decision-making process, with 73% responding that they will devote considerable time and attention to evaluating the physical risk implications of climate change when they make asset allocation and selection decisions.

The survey also identifies a growing disconnect between the increased focus on evaluating ESG performance from investors and th......................

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