ESG priority for investors is avoiding corruption, says new survey
Avoiding companies with corrupt practices is one of the top ESG priorities for investors, a new survey has found.
And even if a company is back on the rails after suffering a scandal, investors still prefer to back corporates with a clean record.
In the survey of Hargreaves Lansdown clients, nearly 83 per cent said that avoiding corruption was “extremely” or “very” important before making investment decisions, according to Dominic Rowles, lead analyst on environmental, social and governance (ESG) issues at the investment platform.
And some 68 per cent preferred to invest in companies with a “completely clean record”.
Just 22 per cent of investors said they would consider an investment in a company recovering from a scandal if they thought improvement would be in its future.
“The message to companies is simple: transparency, ethical behaviour, and good governance practices are essential in attracting and retaining investors,” Rowles added. “It’s easy to see why investors feel so strongly.”
Rowles said while history is littered with corporate scandals, they aren’t consigned to the history books.
“Integrating ESG analysis into your investment decisions is a great way to reduce your chances of being exposed to corporate scandal. If a company is well-managed and managers receive adequate challenge, that reduces the potential for individuals to get away with acts of fraud or deceit,” he said.
The survey received responses from 766 of Hargreaves Lansdown’s 1.8m clients — representing all demographics in terms of age, gender and client segment.