ESG investments are expected to reach $53 trillion by 2025

ESG investments are expected to reach $53 trillion by 2025

ESG Radar Report 2023

Infosys (NYSE: INFY), a global leader in next-generation digital consulting and services, has released its latest report titled ESG 2023 radarwhich analyzed a wide range of actions that can influence earnings and returns change related to companies’ approach to ESG.

According to the survey, which included 2,565 CEOs and directors from companies with annual revenues greater than $500 million in the US, UK, Australia, New Zealand, France, Germany, Nordics, India and China, there is a trend towards a fundamental change in how companies incorporate ESG practices into their activities. The findings indicate that the value of investment assets in the sector is expected to reach $53 trillion by 2025 – a third of global assets under management.

“In this sense, one of the analyzes that can be done is that ESG initiatives create value, but companies still fall short of expectations,” says Wilson Albertoni Oliveira, HR Director at Infosys Brasil. “With this survey, we were also able to check how ESG executives and specialists anticipate the subject in the future, as well as how they adapt to this new environment,” comments Oliveira.

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Data in the report shows that 90% of respondents stated that ESG initiatives show positive financial returns in their organizations. In other words, in addition to the primary focus, the financial impact is very good. Other relevant information that the study brings is that companies seek ESG help in many places, such as business partners (74%), information agencies (56%), suppliers (50%), consulting firms (44%), clients ( 41%) and non-profit companies (26%) see positive returns to their efforts in a short time. The largest group (41%) also reported returns within two to three years. Less than a third say it took them longer to break even on their investment.

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However, companies still tend to focus more on brand benefits than on other bottom lines, indicating that the focus is still very much on the ‘E’ part of the acronym, i.e. environmental issues.

The analysis also found that greater focus on certain ‘S’ and ‘G’ initiatives promotes better profits, i.e. ESG responsibility in C-suite Having more women on the board of directors or in managerial positions is associated with higher profits.

According to the survey conducted by Infosys, a 10 percentage point increase in ESG spending indicates a 1 percentage point growth in the company’s profits. In other words, a company that spends 5% of its budget on ESG can expect to increase profits by 1 percentage point if it increases its investment in ESG to 15%. The relationship between ESG spending and the bottom line is complex, with many interrelated factors that can affect revenue and profits: customer loyalty, employee engagement, cost of capital, cost savings, reputation, and risk mitigation.

“While attention to goals must be kept in mind, the biggest financial benefits for organizations come from organizational changes at the top. This is because, in the future, sustainability will be the way to do business, and companies will need to reorient their business models so that ESG is fully integrated Oliveira concludes.

The companies surveyed for the report operate in the energy, mining, high-tech, finance, telecom, automotive, manufacturing, logistics, consumer goods and healthcare sectors.

To view the full report, visit: https://www.infosys.com/about/esg/insights/esg-radar-report.html

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About Infosys

Infosys is one of the world’s leading next-generation IT and consulting companies. We empower customers in 50 countries to navigate their digital transformation journey. With over three decades of experience managing systems and operations in global companies, we have the ability to guide our clients on their digital journey. Visit www.infosys.com to see how Infosys (NYSE: INFY) can help your business navigate digital transformation.

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