Institutional investors highlighted a total of 15 sectors where ESG issues have a significant impact on financial value, representing over 50% of the market capitalisation of the FTSE All World Developed index. In the ’top 10′ sectors they identified, the survey found that over 90% of investors believe that ESG issues will impact on company value over the short to medium term. In two of the business sectors judged to be most at risk from ESG issues – oil and gas producers and gas water and multiutilities – investors identified almost a quarter of the value of companies to be at risk from ESG issues.
Investors also ranked the top five ESG issues for each of the 15 sectors they identified. Climate change emerged as the key ESG issue most likely to impact upon company performance and was ranked as one of the five most financially significant ESG issues for nine of the ’top 10′ sectors.
Report author and EIRIS’ strategic research and development manager Stephanie Maier said: “Our unique research quantifies the significant financial value investors now attach to ESG issues. Climate change and other sustainability issues are now very real concerns for investors with the potential to significantly impact long-term returns”.
EIRIS Executive Director Peter Webster said: “ESG issues will continue to create both risks and opportunities for investors. Factoring these issues into the investment process can further the dual aims of improving financial return and better aligning investors’ objectives with those of companies’ wider stakeholders. As a leading global sustainability research specialist, EIRIS is well placed to provide the research investors need to integrate ESG considerations into their investments”
Other key findings from the survey include:
* Investors ranked climate change as the top ESG issue for the automobile, airline, electricity and forestry & paper sectors
* Environmental degradation outweighed climate change as the top ESG risk issue for oil and gas and mining sectors
* Investors believe 45% of the value of the food production sectors is at risk from ESG factors such as product safety
* Investors believe 25% of the pharmaceutical and biotech sector is at risk from product liability and other ESG issues