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Investors demand more ESG focus from small and micro caps

According to the research carried out by the investment holding company, 87% of professional investors said ESG issues will increase over the next 12 months, with a further 31% expecting a “dramatic increase” within the next year.

Almost half of those surveyed, which collectively manage £83.2bn in small and micro-cap investments, said the focus on ESG will increase significantly over the next five years, with no investors suggesting the focus will decrease.

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Investors will also expect enhanced reporting and transparency on ESG policies and strategies from the companies they are investing in as part of the increased focus.

Vikki Sylvester, CEO of Acacia Training and executive director of MBH, said: “ESG issues sit right at the heart of the corporate and investor agenda and our study demonstrates they will only grow in importance for investors and small and micro-cap companies.

“ESG is not just something for major companies and our commitment to ESG is integral to our business as we continually look to find new ways to make sure we continue to have a positive impact on our people and the planet.”

Earlier this week, research from NN Investment Partners showed those companies that have standalone ESG committees fare better when it comes to enhanced reporting and sustainability performance.

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Adrie Heinsbroek, chief sustainability officer at NN Investment Partners, said: “How much oversight boards provide on sustainability varies and may often be quite limited. The decision to adopt standalone or combined board level ESG committees remains voluntary but is influenced both internally, such as having a company culture that values sustainability, and externally by factors such as stakeholder and regulatory pressures.

“Given these committees are voluntary, they could be viewed as signalling a company’s heightened focus on the strategic performance of ESG, but this may only reflect a superficial commitment.”

He added: “The research findings once again show the important effect of companies having ESG in focus, and the impact on their ESG performance. As active investors, we continue to engage with companies to put this on their radar and exert our influence by having discussions on this topic.”

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