During the first five months of 2021, global investors poured $54 billion into bonds of issuers specializing in environment, society and governance (ESG), compared with about $68 billion in all of 2020. In other words, the ethical investing trend is continuing, and investor interest keeps growing. But how do consumers feel about ESGs, or the executives and employees of those companies who must formulate policy based on ESG principles?
Consulting firm PwC conducted a global survey among consumers, executives and employees to try to understand whether people prefer to consume from or work with entities that espouse ESG values, and whether they would even pay more for healthier, safer, more environmentally friendly and socially conscious brands and products. According to the survey, 83% of consumers think that companies should be proactive and not just reactive in formulating ESG policies.
PwC also examined whether there is a difference in the way managers and employees perceive the employment market and the role of companies. According to the survey, 86% of employees prefer to support or work for companies that engaged in the values in which they are interested. While 91% of managers think that companies have a responsibility to act on issues related to ESGs, only 28% of managers are "ESG-trendy," meaning that they speak and work actively to advance ESG agendas at their companies and organizations.
PwC surveyed 5,005 consumers, 2,510 employees and 1,257 executives in the US, Brazil, England, Germany and India in March and April. According to the survey, consumers around the world want enterprises to play a significant role in accelerating ESG-related issues, with more than 75% of consumers stating they would reward those that companies do so.
The survey was not conducted in Israel. Eran Raz, partner and director of the Risk & Forensic department at PwC Israel, explains that Israel lags behind the rest of the world in this area. "In Israel, the picture is very different from the picture in the West, and green issues and socially responsible investment still don't take up a great deal of space, and are more considered a fad. On the consumer side, the issue is still considered niche and a 'green' trend, and doesn't get proper attention.
"On the other hand, Israeli companies operating abroad are ready, and have been preparing for the past two years, including establishing dedicated units and conducting risk surveys to obtain green rating certification, which will allow them to obtain credit and/or raise debt at low interest rates. In the area of responsible investment, we see that many institutions have already adopted a responsible investment policy, but at present this is not a significant investment channel compared with the classic investment tracks. In addition, the areas addressed by responsible investment don't yet relate to all aspects of the ESG: environmental, social and corporate governance." How do you explain this? "In Israel, this matter hasn’t gained momentum, mainly because regulators haven't pushed it. The issue is beginning to receive some attention through some regulators (the Israel Securities Authority, the Bank of Israel, the Capital Market Authority) and just this month the minister of finance announced the adoption, in the future, of a mechanism for imposing a carbon tax, regulation that exists in over 30 countries around the world. We think the issue is likely to shift, and Israel will, sooner or later, align itself with the global standard, mainly because of the growing involvement of foreign investment in Israel and with it the international standards associated with 'green' regulation. Other triggers of change in Israeli attitude could be a consumer boycott of 'polluters' and significant fines imposed on companies overseas that will alarm companies in Israel and drive managements and boards of directors to advance internal processes."
Published by Globes, Israel business news - en.globes.co.il - on July 11, 2021
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