By Marc H. Iyeki, Head of Listings Strategy, Green Impact Exchange
In today’s dynamic market, being green is no longer simply a desirable characteristic; it’s a critical business imperative. Investors increasingly demand tangible action from companies, not just rhetoric, when it comes to sustainability.
Data demonstrates that companies fully integrating sustainability into their core operations, including governance, outperform their less committed counterparts over the long term. Sustainability is not just about “feeling good.” It’s about creating value and mitigating risk.
However, navigating the complex landscape of ESG can be challenging for companies and investors alike. Inconsistent and selective disclosures by companies make meaningful comparisons difficult, hindering informed investment decisions based on ESG criteria.
Additionally, while valuable, the proliferation of sustainability ratings can further complicate the process of identifying truly sustainable companies. Investors are spending between $175,000 and $360,000 on ESG data and ratings, despite concerns about their effectiveness, according to a survey by sustainability consulting firm ERM.
Further exacerbating the issue is the growing phenomenon of greenwashing, where companies mislead stakeholders about their commitment to sustainability. This erodes trust and frustrates investors seeking genuine opportunities to align their investments with their environmental values.
For CEOs and CFOs seeking to establish their companies as genuine sustainability leaders and capitalize on the burgeoning market demand for such investments, a new solution is needed.
Companies need a transparent and standardized platform to showcase their green initiatives and progress. This would help foster trust with investors seeking evidence of genuine commitment to sustainability. However, standardized reporting won’t solve every challenge.
A comprehensive set of green governance principles is also needed to help companies cultivate a culture of sustainability within their organization. This ensures that “green” becomes more than just a buzzword; it becomes the very essence of the company’s DNA.
This would foster confidence in investors and stakeholders, providing them with the assurance that companies are truly walking the talk when it comes to sustainability.
With the growing importance of sustainable investing, it is more important than ever to bridge the trust gap between companies committed to sustainability and investors seeking both good returns and investments that align with their values.
Marc Iyeki is the former Senior Advisor, APAC – Global Listings at the NYSE and was Chief Representative, NYSE Beijing Representative Office. He was previously the Regional Head for the NYSE’s Asia Pacific listings.
