Investors expect small caps to boost focus on ESG, finds survey

Sep 10, 2021
Nearly half of respondents see dramatic change in disclosure practices over the next three years

Investors expect smaller companies to boost their attention on ESG issues and disclosure over the coming years, according to new research.

The study, which polled 40 UK-based professional investors managing a collective £83 bn ($115 bn) in assets, finds 82 percent think small and micro-caps will increase their focus on and investment in ESG over the next three years. More than a third (37 percent) say the increase will be dramatic.

In addition, 92 percent of respondents say small and micro-caps will enhance their reporting and transparency on ESG policies and strategies over the same time period, with 49 percent expecting a dramatic change in disclosure practices. The research was conducted by MBH Corporation, an investment holding company listed in Germany and the US.

The growing focus on ESG issues by investors, regulators and NGOs means companies of all cap sizes are coming under pressure to discuss topics like their impact on the environment and the sustainability of their business model.

In a sign of the rising expectations for smaller companies, the European Commission recently proposed extending its sustainable reporting rules from covering just large businesses to all companies listed on a regulated EU market.

The research by MBH Corporation also finds that 87 percent of investors expect the overall focus on ESG issues to increase over the next 12 months, with no respondents saying it will decrease.

‘ESG issues sit right at the heart of the corporate and investor agenda, and our study demonstrates that they will only grow in importance for investors and small and micro-cap companies,’ says Vikki Sylvester, CEO of Acacia Training and MBH Corporation’s executive director, in a statement.

‘ESG is not just something for major companies and our commitment to ESG is integral to our business as we continually look to find new ways to make sure we continue to have a positive impact on our people and the planet.’

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