PwC Investor Survey - press release

Investors are hampered by a trust deficit in much of the sustainability information shared by the market. More than nine in ten respondents (97%) who invest in or cover Irish companies are of the view that corporate reporting on sustainability performance contains unsupported claims (Global investors in companies around the world: 94%), according to PwC’s latest Investor Survey, the Irish results of which are published today.  

The survey – now in its third year – queried 345 investors and analysts across 30 countries globally -  to establish the factors that most impact  the companies they invest in and cover. This press release deals with the results of 38 global respondents who invested in or covered companies in Ireland, which we refer to as ‘investors in Irish companies’. The global comparators refer to the 345 global investors in companies around the world. 

The survey paints a picture of an investment landscape driven by technological transformation: 68% of  investors in Irish companies identified technological change as the single most likely factor to influence how Irish companies create value over the next three years (Global: 59%). In particular, 58% of investors in Irish companies say that faster adoption of AI is “very” or “extremely important” (Global: 60%).

Sustainability is pivotal for investment decisions in Irish companies, more so than for global investors in companies around the world 

Sustainability continues to remain pivotal to investors: 82% of investors in Irish companies say that how a company manages sustainability related risks and opportunities is an important factor in their investment decisions, higher than global investors in companies around the world (74%). 

62% of investors in Irish companies said that they would increase their level of investment if those companies were to address sustainability issues relevant to their business’s performance and future prospects (Global: 68%).

Financial return and protecting the environment equally important

According to the survey, increasing financial returns and protecting the environment are equally important when it comes to what drives investor interest. Almost eight out of ten (79%) investors in Irish companies said that the potential to increase investment returns are important when it comes to drivers of investor interest (Global: 87%).  At the same time, 76% said that the opportunity for the capital markets to have a positive impact on the environment or society is as important (Global: 86%).  

David McGee, Leader, ESG Practice, PwC Ireland, said: “Investors want to know how companies are managing sustainability and emerging technologies like AI, but they lack confidence in much of the information they have about both. It’s time for companies—and their leaders—to take action. 

“We are moving from a period of awareness raising around the importance of climate and technological change to a time where investors are increasingly asking specific and tough questions.  Investors want to know how companies are addressing climate and sustainability issues in their strategy, how they assess risk and opportunity and what is truly material for them. In this context, corporate reporting needs to continue to evolve so it provides reliable, consistent and comparable information to investors – and other stakeholders – can rely on.”

Investors look to stronger reporting standards amid greenwashing concerns

With 97% of investors in Irish companies believing corporate reporting on sustainability performance contains some level of unsupported claims, investors highlighted a strong undercurrent of doubt around the reliability of sustainability reporting and information that they use, often referred to as “greenwashing”.

The perceptions of greenwashing may explain why investors are looking to regulators and standard setters to create clarity and consistency in companies’ reporting. For example, 50% of investors in Irish companies said that if organisations meet the upcoming regulations and standards (including CSRD, the SEC proposed climate disclosure rules in the US, and ISSB standards), it would meet their information needs for decision-making to a “large” or “very large extent” (Global: 57%). 

Cost of impact on the environment should be disclosed: investors will take action

The focus of investors on companies’ impact on the environment is also in focus. Two-thirds (67%) of investors in Irish companies agreed that companies should disclose the monetary value of their organisation’s impact on the environment or society (Global: 75%).  

The survey also highlights the willingness for investors to take action if a company is not demonstrating its commitment to addressing ESG issues.  For example, 34% of investors in Irish companies would vote against the executive pay arrangements if a company is not taking sufficient action (Global: 46%); 39% would vote against director appointments (Global: 42%) and 23% would sell their investment (Global: 42%). 

Investors favour accelerated AI adoption, despite risks 

This year’s survey shows that investors view the accelerated adoption of artificial intelligence (AI) as critical to value creation, while recognising the importance of managing risks. 58% of investors in Irish companies said that faster AI adoption is “very”, or “extremely important” (Global: 60%). 

Furthermore, investors ranked emerging technologies (including AI, the metaverse, and blockchain) among their top priorities when evaluating companies, higher than global companies (Ireland: 42%; Global: 33%). Nonetheless, all of investors (100%) in Irish companies surveyed see AI presenting considerable risk, ranging from a ”very large” to a “moderate extent” when it comes to data security and privacy (Global: 86%); insufficient governance and controls (Irish companies: 90%;  Global: 84%), misinformation (Irish companies: 92%; Global: 83%); and bias and discrimination (Irish companies: 74%; Global: 72%). 

Mary Ruane, Leader, Asset & Wealth Management, PwC Ireland, concluded: “We are seeing significant steps towards more consistent reporting from companies around climate change, however there is room for improvement. Investors are also demanding that companies should disclose the monetary value of their impact on the environment or society. All the while, investors are calling for greater engagement around how companies manage the opportunities and risks of new technologies, particularly generative AI,  as new technologies increasingly drive business transformation and investment.”

Ends

Notes to Editors: 

About the Survey

PwC surveyed 345 investors and analysts across 30 countries and territories globally, and conducted 15 in-depth interviews. The research included 38 respondents who invested in or covered companies in Ireland. Respondents were predominantly institutional investors, comprising portfolio managers (19%), analysts (18%) and chief investment officers (17%), with 48% having more than ten years of experience in the industry. Their investments covered a range of asset classes, investing approaches and time horizons, and the assets under management (AUM) at their organisations range from <US$500 million to US$1 trillion or more; 65% of respondents are from organisations with a total AUM of more than US$1 billion.