A company’s lack of ethics is not a problem for Polish investors – only 40% of them will sell a share after incidents of unethical behavior or unethical practices, according to the latest SEC Newgate ESG Monitor survey.
- The SEC Newgate ESG Monitor 2024 global report, this year covered 13 countries and the PRC’s special administrative region of Hong Kong on as many as five continents, including Poland for the third time and Brazil and Greece for the first time.
- The survey this year included, for the first time, questions aimed at people who say they actively invest in the stock market.
- More than 14,000 respondents around the world answered questions about, among other things, their knowledge of the term ESG, as well as their assessment of companies’ ESG activities by sector.
As many as 65% of investors from the United Arab Emirates and 52% from the United States would decide to withdraw from their investments – to sell shares or stocks – in response to information about instances of untoward behavior or unethical practices in a company in which they have invested. The least concerned are representatives of Germany – only 34% are willing to take such a radical step. Polish investors also rank below the global average of 49%: respondents to the SEC Newgate survey from our country rated their willingness to exit an investment for ethical reasons at 40%.
The most likely to exit investments are, perhaps surprisingly, investors over 50 and those who regularly follow the news in the media. As many as 52% of investors in Poland say they always or often seek information about the environmental, social and governance performance of the company they plan to invest in. At the same time, factors such as sustainability and environmental issues and ethical decision-making are very important to no more than one in three investors (27% and 33%, respectively) – lower than globally (35% and 38%, respectively).
Top marks for the banking sector
Respondents in Poland appreciate the efforts of companies to improve their ESG performance, with year-on-year improvements seen in the ratings given in the SEC’s Newgate ESG Monitor survey.
The financial sector, including banks, remains high among the highest rated (in first place this year, with 49% of respondents giving them a rating of at least 7 out of 10, up from 37% last year), as well as e-commerce (48% up from 39% a year ago – which was enough to earn first place. Also among the best rated was the travel industry (excluding airlines) – up from 8th to 3rd, as well as education (47% vs. 37% last year) and the beauty industry (46% vs. 33% a year ago). At the gray end of the pile was – not a big surprise – industry, including mining (31% vs. 20% last year) and chemicals (32% vs. 23% a year ago). Third from last was nuclear power (33%), which appeared in the survey for the first time – with the plan to build Poland’s first nuclear power plant, it is clear that it will be a major challenge to win public confidence in the project in the coming years.
“However, despite the observed improvement, even the best-rated industries reached a maximum of 49% confidence, which shows that there is still a lot of room for improvement” said Zofia Bugajna-Kasdepke, president of SEC Newgate CEE.
ESG by companies yes, but not at the expense of their profits
Nearly two-thirds of global respondents (65%) also said companies should play a more active social role (58% in Poland), although only 50% of global respondents said companies should speak out on political issues (only 33% in Poland) and on social issues not directly in the sphere of interest of their stakeholders slightly more, 56% globally and 47% in Poland. Among the most important issues on which respondents expect companies to act, the top issues are treating employees fairly – 82% globally and 76% in Poland – and providing quality products and services – 81% and 77%, respectively. Almost equally important to respondents is acting in an open and transparent manner – 80% globally and 74% in Poland.
In turn, as many as 73% of respondents worldwide and 68% in Poland are convinced that high ESG performance does not have to come at the expense of profitability. Moreover, 78% of those surveyed globally and 72% in Poland believe that companies should look after the interests of all stakeholders, not just shareholders. While naturally more people who do not actively invest agreed with this view (84% globally and 77% in Poland), even acting by companies in the interests of all stakeholders is supported by 71% of active investors globally and 61% in Poland.
“The SEC Newgate ESG Monitor found that corporate communication gaps are clearly evident, with a significant majority of respondents believing that companies need to reach out to stakeholders more effectively to improve their ESG metrics. This is all the more important in light of the requirements of the Corporate Sustainability Reporting Directive (CSRD), which came into force in the EU earlier this year, as well as other disclosure regulations, including the Taskforce for Climate Related Financial Disclosure (TCFD) and the Taskforce for Nature Related Financial Disclosure (TNFD), which are becoming the de facto global standard and require companies to demonstrate measurement and an action plan for a wide range of climate and nature-related risks” said Fiorenzo Tagliabue, global CEO of SEC Newgate Group.
The vast majority of respondents (73%) agreed that companies should be more transparent in communicating their ESG activities and performance. Still, nearly half (44%) of respondents said they lacked confidence in companies’ declarations about their activities and performance in this area.
“A thoughtful approach is needed to overcome skepticism, as many people do not trust companies’ ESG declarations, and believe that companies focused on ESG initiatives are too politically oriented” added Zofia Bugajna-Kasdepke, president of SEC Newgate CEE.
Link to download the report: https://secnewgate.com/esg-monitor/reports/