94% of Investors Doubt Sustainability Reporting, Seek Stronger Standards: PwC Survey Reveals

PricewaterhouseCoopers (PwC) has unveiled the findings of its 2023 Global Investor Survey, shedding light on the growing skepticism among investors regarding the reliability of sustainability reporting. The survey, now in its third consecutive year, engaged 345 investors and analysts across diverse geographies, asset classes, and investment approaches, providing insights into the factors influencing their investment decisions.

The survey underscores the significance of sustainability in investment decisions, with three-quarters of investors expressing its importance. However, a staggering 94% of respondents harbor doubts about the credibility of corporate reporting on sustainability performance. This marks a notable increase from 87% in 2022, reflecting a pervasive concern among investors.

While macroeconomic and inflationary concerns have eased from 2022's highs, climate risks have surged, now standing at 32% and aligning with cyber risks. This shift in priorities indicates a growing awareness of the environmental impact on investments.

The investment landscape is evidently shaped by technological transformation, as 59% of respondents identify technological change as the most likely factor influencing how companies create value over the next three years. In particular, 61% emphasize the urgency of faster adoption of artificial intelligence (AI), recognizing its critical role in value creation.

Greenwashing Concerns and Calls for Stronger Standards

Investors express skepticism about sustainability reporting, often attributing it to "greenwashing." The survey indicates that 94% believe corporate reporting on sustainability performance contains unsupported claims. This concern has fueled a demand for clearer and more consistent reporting standards, with 57% of investors indicating support for upcoming regulations and standards, including the CSRD, SEC proposed climate disclosure rules in the US, and ISSB standards.

The survey reveals that investors seek assurance and transparency in sustainability reporting, with 85% stating that reasonable assurance, akin to the audit of financial statements, would instill confidence in sustainability reporting to a "moderate," "large," or "very large extent."

Investors express a growing interest in companies meeting the costs of Environmental, Social, and Governance (ESG) commitments, with 76% considering this information important or very important. Despite acknowledging the risks associated with AI adoption, 61% of investors highlight its importance, emphasizing the need for companies to manage the opportunities and risks of new technologies.

As James Chalmers, Global Assurance Leader at PwC UK, remarks, "Corporate reporting needs to continue to evolve so it provides reliable, consistent, and comparable information investors – and other stakeholders – can rely on." The survey underscores the urgency for companies to address investor concerns, enhance reporting standards, and navigate the evolving landscape of sustainability and technological transformation.

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