Only 8 percent of institutional investors see CEOs as effective in communication on ESG-related issues
Chief executive officers greatly overestimate their own abilities to communicate their sustainability strategies to investors, while others may be equally overconfident when explaining the advantages of such programs, a survey by the UN-sponsored Principles for Responsible Investment (PRI) finds.
About 57 percent of chief executives surveyed by the organization say they are capable of explaining their sustainability strategy to investors, while only 8 percent of investors surveyed believe the CEOs are able to explain it at all, the PRI investor study shows. It also finds that although 38 percent of CEOs say they have the ability to quantify the business value of their sustainability strategies, only 7 percent of their investors agree with them.
‘These striking gaps expose the shortcomings of many companies in communicating their approach to sustainability and its links to traditional measures of business value and success,’ the study authors say. The data offers ‘a strong signal that companies and investors may have radically different perspectives on what sustainability is, and what appropriate valuation might look like.’
The survey notes that 88 percent of investors and 79 percent of CEOs see sustainability as a route to a competitive business advantage, representing broad agreement on the subject. It also shows that 52 percent of CEOs and 53 percent of investors consider investor interest a motivator for companies to pursue sustainability.
But only 23 percent of CEOs consider their investors to be among the key stakeholders regarding sustainability issues. That number has gown little since 2007, when 19 percent of CEOs said the same thing, according to the survey.
Of the investors surveyed, 49 percent say quarterly reporting requirements present a barrier to sustainability initiatives and almost 40 percent say they would abolish quarterly reporting if they had the power. Another 73 percent say lack of recognition from the investment community also presents a barrier to progress on corporate sustainability.
