Investors See Strong Link Between Corporate Sustainability and Financial Performance

Up to 90% of professional investors measure a company’s sustainability performance before making investment decisions

A new study finds that 90% of investors are likely to measure a company’s sustainability performance before making any investment decisions. MIT Sloan Management Review and Boston Consulting Group released “Investing for a Sustainable Future,” a report summarizing data from interviews conducted with executive-level investors.

In this case, corporate sustainability is defined as environmental, social and governance (ESG) efforts, and investors are seeing a strong link between such efforts and financial performance. ESG efforts can include auditing and reporting on regulatory compliance, ethical sourcing, supply chain transparency, and many other aspects of sustainability and governance. According to the report, a company showing commitment to sustainability is signaling to investors that they are thinking seriously about long-term growth.

Roughly half of investors said that they would not invest in a company if they have poor sustainability performance. Investors were asked the reasons for which they value sustainability performance, and the top three reasons were: increased potential for long-term value creation, improved revenue potential, and demonstration of operational efficiency.

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