Investors support investment that improves long-term business prospects

Jul 22, 2019
Company’s stance on global challenges an increasingly important investment criterion, says EY study

A majority – 60 percent – of institutional investors support investment that improves long-term business prospects, even if it diminishes short-term corporate performance, according to the EY CEO Imperative Study 2019.

In addition, more than two thirds (67 percent) of the world’s largest company CEOs say they are likely to take a public stand on politically charged issues related to global challenges, according to the study.

The survey of 200 CEOs, 100 senior institutional investors and 100 independent board members also finds that 76 percent of board directors and 79 percent of investors are likely to support a CEO taking a stand.

According to 57 percent of CEOs, 63 percent of board directors and 54 percent of investors, it is in the best interests of large companies for CEOs to take a more active role on global challenges.

The majority of CEOs – 57 percent – see more opportunity than risk in taking action on global challenges, with close to half (49 percent) of board directors and 42 percent of investors supporting this view.

A company’s stance and actions on global challenges are increasingly important investment criteria, with 55 percent of survey respondents stating that CEO activism on global challenges has been frequently or very frequently taken into consideration for funding decisions in the last two years. Thirty-five percent of investors say CEO activism on global challenges has been occasionally taken into consideration for funding decisions in the last two years.

Crucially, 83 percent of investors say corporate stance and actions on global challenges will become more important factors in decision-making over the next five years.

CEOs around the world report that national and corporate cyber-security, job losses from technological change and income inequality are the top three global challenges threatening business growth and the global economy over the next five to 10 years.

Additionally, 58 percent of board directors, 54 percent of institutional investors and 51 percent of CEOs all believe to a great or very great extent that corporate action is needed to solve the top global challenges.

Carmine Di Sibio, EY global chairman and CEO, says in a statement: ‘CEOs, boards and investors recognize they have a role to play in addressing social challenges that speak to their values and in pursuing inclusive, sustainable growth. It’s encouraging to see signs of support within the investment community for long-term value creation.’

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