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Responsible capital markets clearly have a positive influence, oekom research has concluded in its latest Impact Study (2017). According to a survey of nearly 500 companies, the impact that responsible investors, banks and ratings agencies have on companies' sustainability efforts has increased considerably since the last survey was conducted in 2013.
Sustainability ratings agencies are the main driver of change
Sustainability ratings agencies play a decisive role in this, whereas the UN Sustainable Development Goals (SDGs) are currently less significant for most companies. The global study was conducted in partnership with the PRI (Principles of Responsible Investment).
Companies generally agree on the importance of sustainability. More than 90% of firms asked described it as being of 'great' or 'very great' importance.
The strongest driver of increased awareness of, and commitment to, sustainability among companies are the demands and analyses of sustainability ratings agencies. A total of 61.3% of companies state that they have been motivated to look into sustainability issues by such agencies (the same percentage as four years ago) making this the most important factor for the first time. Customer requirements and expectations moved into second place, having previously been the top driver, at 60.3%.
Over 36% of companies, an increase of four percentage points from four years ago, said that the requirements of sustainability analyses have had an influence on their general business strategy.
Why and how companies use sustainability ratings
A majority of firms surveyed want to be attractive to investors, by increasing their focus on sustainability activities. Eighty per cent of companies said it is important to be listed in sustainability funds and indexes.
Almost two-thirds of companies (62.2%) said they include information on sustainability management in their financial reporting. Nearly all companies (93.1%) assume that liaising with financial institutions which operate sustainably will be of growing importance in the future.
Not only do investors use sustainability agencies’ ratings and research, but companies use that information too. Ninety-one per cent of those surveyed said the requirements of sustainability rating agencies represent an early warning system, which helps them to recognise relevant social and environmental sustainability trends.
More than 70% stated that they regularly used sustainability ratings to benchmark themselves against competitors.
According to Robert Hassler, CEO of oekom research:
"The impact of responsible investment has increased in the last few years. We are particularly proud of the fact that ratings agencies, compared to our first Impact Study in 2013, are considered even more relevant and have become an important driver for corporate sustainability activities. Sustainability ratings have a huge leverage effect. However, this high significance is coupled with considerable responsibility, which must be reflected in the use of a strong quality management system by agencies."
UN SDGs: Orientation and incentive to improve sustainability management
The UN SDGs were developed as a referential framework for uniform sustainability targets. Study findings indicate that corporates may need help and guidance to reference the framework.
Currently, only 17.4% of companies actively align their sustainability management systems to the UN SDGs. Fifteen per cent of firms said that the SDGs constitute at least a "point of reference" for their own sustainability reporting. However, a narrow majority of companies (58%) would feel motivated to improve their sustainability efforts and make a greater commitment to put the SDGs into practice if there was a specific SDG label which investors could refer to when making their decisions.
The oekom Impact Study 2017 was conducted in partnership with the PRI (Principles of Responsible Investment), and is the new extended edition of an earlier study conducted in 2013. In total, 3,660 companies were approached, of which a total of 475 companies from 36 countries and across 50 industries participated. The study was supported by Metzler Asset Management and the Evangelische Bank, as well as other institutional investors and asset managers.
The complete study can be downloaded here:
