An overwhelming 94% of investors suspect sustainability performance reports made by corporations contain unsupported claims, according to the 2023 PwC Global Investor Survey.
Over 345 investors and analysts globally, covering various assets classes and investment methods, contributed to the annual analysis, providing insights on key elements shaping their investment process and the companies they cover.
The survey results show that while macroeconomic and concerns about inflation continue to hold investor attention, the intensity of these worries has dwindled from their 2022 peak. Alarmingly, the survey indicates a significant rise in climate risks, placing them on par with cyber risks, each standing at 32%.
The survey draws a picture of an investment landscape majorly guided by technology alterations, with 59% highlighting technological change as the likely leading influencer on company value creation over the coming three years. An impressive 61% of participants consider fast-track adoption of AI to be of extreme importance.
James Chalmers, Global Assurance Leader at PwC UK, said, "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."
"In this context, corporate reporting needs to continue to evolve so it provides reliable, consistent and comparable information investors and other stakeholders can rely on."
The 2023 results show burgeoning investor suspicion about the reliability of corporate sustainability reporting and information, frequently labelled 'greenwashing'. Almost all the participants, 94%, believe sustainability performance corporate reports contain a certain degree of unsupported claims. This represents an increase from 87% in 2022, with 15% opining that such claims exist considerably.
This suspicion has likely fuelled demand for regulators and standards setters to bring clarity and consistency into corporate reporting. More than half (57%) of investors believe that if companies meet the impending regulations and standards, it will significantly satisfy their information needs for decision-making.
Investor interest in how companies will meet ESG commitments' cost has also surged, with 76% finding this aspect significant. Furthermore, three quarters of investors agree that corporations should disclose the financial value of their impact on the environment or societal issues.
The current survey reveals investors consider quickened AI adoption crucial to value creation, while acknowledging the need for risk management. More than 60% of investors think accelerated adoption is extremely important.
When including those who perceive it moderately important, the percentage leaps to 85%. However, the downside of AI is not overlooked. A considerable 86% of respondents see AI as a source of substantial risk, particularly pertaining to data security and privacy, inadequate governance and controls, misinformation, and bias and discrimination.
Nadja Picard, Global Reporting Leader at PwC Germany, concludes, "We are seeing significant steps towards more consistent reporting from companies around climate change. However, there is a need for improvement. Investors are calling for greater engagement around how companies manage the opportunities and risks of new technologies, particularly generative AI, as these increasingly drive business transformation and investment."