Environmental, social and corporate governance (ESG) policies will reshape the global economy in the coming years and will influence the investment success of investment funds. Therefore, it is crucial that they incorporate responsible investments and ESG criteria into their overall business strategy, according to a PwC study explained by Monica Movileanu, Partner and Cristina Angheluță, Senior Manager, PwC Romania.
Over the last seven years, the importance of ESG policies in investment fund decisions has taken off. Almost three quarters (72%) of respondents to a global survey conducted by PwC show that they always, in the pre-acquisition stage, analyze the target companies in terms of ESG risks and opportunities. Also, 56% refused to enter into partnerships or investments, for reasons related to ESG, according to the survey “The Global Private Equity Responsible Investment” which analyzed the responsible investments of 209 funds and companies in 35 countries.
The PwC report shows that ESG policies have moved from the early stages of being a specialized product for a small group of investors to the current stage where these actions have become a general framework that influences the strategic thinking of the whole company. About 56% of respondents said that ESG is on the agenda of boards at least once a year, up from 35% in 2019, and 15% said it was discussed at all board meetings.
The PwC study also shows that investment funds that place ESG at the heart of their business strategy will pave the way for the new sustainable economy. Thus, 65% of survey respondents developed a responsible investment or ESG policy and developed the tools for its implementation.
In 2019, most investment funds expressed concern about the climate risks in their portfolio, but did not take the issue seriously. However, this year more than half of the companies responding to the survey are already taking action and 36% say they take climate risk into account when making investment decisions.