Among the many noteworthy insights from PwC’s US institutional investor survey is investors’ unwillingness to compromise on their rate of return on investment (ROI).
Specifically, a plurality (48%) of investors expressed an unwillingness to accept a lower ROI in companies that undertake sustainability activities that have a beneficial impact on society or the environment, and 43% were unwilling to accept a lower ROI for sustainability activities relevant to their business performance and prospects. 38% and 43% of investors, respectively, were willing to accept a one percentage point or less reduction in overall returns, leaving just 14% of investors (in both scenarios) willing to accept a greater reduction in returns.
Innovation, profitability (financial performance), and data security & privacy were identified as the top three business priorities by 84%, 73%, and 55% of respondents, respectively, with effective corporate governance coming in fourth at 52%.
While 63% of investors identified the potential to protect investment returns as a driver of investor interest in ESG or sustainability investing, this factor ranked below client demand, regulatory risk management, and societal interest in these issues (78%, 75%, and 75%, respectively). The potential to reduce market (beta) risk ranked last (52%), behind the potential to increase investment returns, an opportunity for the capital markets to have a positive impact on the environment or society, and an opportunity for the capital markets to play a role in protecting the environment or society.
The report is based on PwC’s fall 2022 survey of 132 US and US-based investors.