EY Global Climate Change and Sustainability Services team has issued the 4th research into investors’ attitudes towards environmental, social and governance (ESG) information and nonfinancial reporting and its role in their decision-making.

This year’s study reveals a notable consensus on the importance of ESG or nonfinancial information in investor decision-making. 97% of the 220 institutional investors surveyed globally say they conduct either an informal evaluation or a structured, methodical evaluation of a target company’s nonfinancial disclosures when deciding future investments. Globally, investors expect more abundant, more useful reporting of material nonfinancial performance information at a consistent and high level of quality.

Key points:

  • An increasing reliance on ESG
  • A demand for more and more consistent data
  • More concern over the physical risks of climate change
  • A demand for investment-grade accounting standards
  • Collaboration is critical to close the information gap

Victor Kovalenko, EY Ukraine, Belarus, Caucasus and Central Asia Climate Change and Sustainability Services Director, says:

“And what does this mean for organizations in Ukraine? Large and middle-size companies in Ukraine are obligated to publish in 2019 management report with nonfinancial information. Large international institutional investors place strong reliance on ESG and nonfinancial information of issuers. So, we believe there are four main areas the companies should consider:

  • Understand that ESG reporting is a real and important tool for investor decision-making. It is therefore advisable to report on material aspects, avoiding «reports for the sake of reporting»
  • Measure the social and environmental impact of projects and investment decisions
  • Report in ESG format, but with a focus on creating a long-term value”