93% institutional investors consider sustainability info essential: Study

However, it highlighted that there is a struggle to access trustworthy ESG data

As many as 93 per cent of Indian institutional investors now consider sustainability information as a part of their due diligence process before making an investment, according to a study released on Monday.

According to a study titled ‘Investor trust in sustainability data’ released by Deloitte and The Fletcher School at Tufts University, about 78 per cent of Indian institutional investors invest up to 30 per cent of their funds to finance organisations that aim to achieve specific and measurable Environmental, Social and Governance (ESG) objectives.

Among all drivers, the highest number of Indian investors (41 per cent) cited regulatory requirements as the top driver for incorporating sustainability factors into investment decisions. It was followed by the pursuit of improved social outcomes and improved environmental outcomes at 36 per cent each.

This is slightly different from global findings, where investors prioritise financial performance and risk diversification as well.

The study also said that around 80 per cent of Indian investors have already implemented sustainability policies. Of these, 14 per cent have had a policy in place for more than five years and 58 per cent have had a policy for over two years.

However, the report also highlighted that there is a struggle to access trustworthy data. As many as 73 per cent of the investors surveyed said the inconsistency or incomparability of ESG rating data reduces its trustworthiness.

It was followed by 71 per cent who said cost constraints on integrating ESG data into investment decision models and 70 per cent said lack of measurable outcomes in corporate disclosures, did so.

“There is a critical need for improved reporting standards to build investor confidence and facilitate informed decision-making,” said Viral Thakker, Partner and Sustainability & Climate Leader, Deloitte South Asia.

“Organisations must strengthen sustainable governance capabilities, invest in high-quality measurement and reporting systems, and seek third-party assurance for their disclosures,” he added.

“To bridge this gap and foster greater trust, organisations must reliably deliver on their sustainability commitments and enhance transparency through standardised reporting and robust data verification," added Shabana Hakim, Executive Director, Deloitte India.