Investors suspicious of greenwashing in CSR reports

24 January 2024 Consultancy.eu 2 min. read
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A remarkable 94% of investors distrust sustainability reports created by corporations, with this huge majority suspecting the reports of touting unsupported claims, a practice known as ‘greenwashing’. That is according to the Global Investor Survey from consulting firm PwC, which surveyed over 300 investors and analysts in different countries.

The report illustrates an investor landscape marred by scepticism and concerns over greenwashing, which tends to be greatly counterproductive to sustainability goals because it destroys confidence and reputations.

Most respondents said that they want clearer and more consistent information on the various issues companies are facing, in terms of both sustainability and adoption of new technologies like artificial intelligence (AI).

Investors suspicious of greenwashing in CSR reports

“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 about how companies are addressing those issues in their strategy, how they assess risk and opportunity and what is truly material for them,” said James Chalmers, Global Assurance leader at PwC.

The increasing suspicion around sustainability reporting has led to demands for greater clarity and consistency, with expectations that stricter regulations and standards should play a role. In fact, 57% of investors said that with better reporting standards, they would be more satisfied with the information they need to make important decisions.

When it comes to ESG initiatives, 76% of respondents want to see better reporting on the real costs that companies incur in meeting their sustainability commitments, whether net-zero or social targets. That increased significantly since last year, when only 60% said the same.

Investors suspicious of greenwashing in CSR reports

Technology concerns

Besides ESG, another key concern for investors is technological integration, with most respondents (61%) saying they want to see companies implement AI technologies in a hurry. That is despite the risks involved with rapid deployment of technologies that may still be developing and not yet fully fail-proof.

As far as which AI risks were seen as most worrying, respondents pointed to issues like data security, privacy threats, misinformation, and problems that could arise due to insufficient oversight. A total of 86% said they see data security and privacy as a potential risk.

“Corporate reporting needs to continue to evolve so it provides reliable, consistent and comparable information investors and other stakeholders can rely on,” added Chalmers.