In the face of mounting challenges, the Environmental, Social, and Governance (ESG) framework continues to stand firm as a cornerstone of financial markets and corporate strategies, according to Bloomberg Intelligence’s inaugural ESG Market Navigator survey. The study, conducted in partnership with Bloomberg New Economy, gathered insights from 250 C-suite executives and 250 investors worldwide.
While geopolitical uncertainties and macroeconomic factors might temporarily sway priorities, the survey indicates enduring support for ESG among senior executives and major investors globally. Although only 55% of C-suite executives currently rank ESG among their top two concerns, the research highlights robust long-term backing, with 85% of surveyed companies and investors planning to increase ESG investments over the next five years.
Despite challenges related to transition costs and regulatory compliance, executives recognize the benefits of ESG, including enhanced reputation, improved access to capital, and heightened competitiveness.
A significant 84% of respondents believe ESG contributes to a more resilient corporate strategy, with an equal number viewing it as a pivotal factor in mergers and acquisitions.
Additionally, 81% express concerns about losing market share if they lag behind peers. Notably, 70% of executives perceive energy-transition initiatives as a competitive advantage, while 75% fear revenue loss and activism if they fail to plan adequately. Although articulating ESG goals becomes challenging due to “greenwashing,” 73% of respondents believe the associated benefits outweigh the scrutiny.
Investors echo these sentiments, with 85% affirming that ESG leads to superior returns, robust portfolios, and enhanced fundamental analysis. Despite data consistency challenges, 90% of all participants anticipate ESG driving superior returns over the next year compared to the broader market.
Additionally, 92% believe ESG contributes to a more resilient investment portfolio strategy, and 86% consider it essential for attracting and retaining clients.
Adeline Diab, global ESG research and strategy director at Bloomberg Intelligence, emphasized the shift of ESG from the periphery to mainstream and, finally, a mandated necessity.
She anticipates 2024 to usher in an era of ESG accountability, emphasizing the crucial role of investor-corporate dialogue. Sixty percent of investors now hold companies accountable for ESG, while over 40% of executives face ESG queries in more than half of their investor interactions. This scrutiny, Diab believes, will pave the way for a more credible ESG market in the future.
Furthermore, the survey identified key trends, including overwhelming support for Artificial Intelligence (AI) in the realm of ESG. Ninety percent of executives and investors hailed AI as a valuable ally, aiding in traceability, data enhancement, and uncovering controversies across languages.
Looking ahead to 2024, respondents highlighted the importance of regulations’ interoperability (15%) and climate risk assessments (12%) for investors, alongside measuring impact and litigation risks for corporations. Additionally, emerging themes such as water, circular economy, and biodiversity gained prominence alongside clean energy.
