‘There’s many a slip twixt the cup and the lip’ it is said, and so it appears to be today as the world sips slowly on the increasingly urgent need to pay attention to Environmental, Societal and Governance (ESG) issues in business and investment.

There are Directives, there is talk, and there is raised awareness. But while more than two-thirds (68%) of 175 European institutional investors now believe that companies that a focus on ESG issues produces better long-term returns for investors, 42% have not even heard of the EU Shareholder Rights Directive II (The Directive), which needs to be implemented by member states in 2019. It is part of the broad push to align the interests of those along the investment chain with stakeholders, asking they report publicly on engagement and voting decisions - as part of stewardship.

The complacency and lack of engagement reflected in the survey - A step towards sustainable capitalism - by Hermes Investment Management, the £33.5 billion manager, is striking. Only a staggering 3% believe their organisation already meets all the requirements of the Directive.

“The astonishing degree of ignorance about the Directive’s requirements among investors in most parts of Europe reflects the lack of real progress in many member states and does not bode well for the achievement of the Directive’s underlying objectives” said Dr Hans-Christoph Hirt, Head of Hermes EOS, at Hermes Investment Management.

Ironically, the survey reveals that the number of investors who believe that companies that focus on ESG issues produce better long-term returns has risen - from 48% in 2017 to 68% today, based on their response to the same question.

Awareness of ESG issues has been steadily accelerating, fueled in part by thinking broader and harder because of the urgency on climate risk, as I covered here on Forbes back in 2015. Yet there are clearly major gaps in awareness and a paralysis of sorts when it comes to translating awareness into action.

The Hermes EOS survey reveals wide discrepancies between EU member states, and also inconsistencies of attitude. A high number - 73% of Dutch, and 68% of UK investors believe companies that focus on ESG produce better long-term returns. Among German respondents (who showed the highest levels of awareness of the Directive at 88% followed by the Netherlands at 79%), as many as 73% believe the consideration of ESG factors is part of their fiduciary duty.

By contrast, in the UK the level of awareness of the Directive comes in at 45%, just above Spain at 42% and Italy, the laggard, at 36%. No investors in Spain or Italy fully comply with the requirements.

On the UK ‘s lack of awareness, Hermes EOS said: “This is likely to change as the UK catalyses a more ambitious set of policies with the update of its stewardship code and in turn, guidance on implementation of the Directive.” It is also a chance for a Britain that has spent over two years in stasis over the implementation of its decision to leave the European Union to lead - by raising its game on stewardship. See my latest Governance Watch for a boardroom consultancy on corporate stewardship by extension.

As Hermes suggests, there is clearly work to be done by asset owners, asset managers, member states and regulators in understanding and implementing the Directive in achieving the goal of more sustainable European companies and economies. Much more scrutiny is also needed of the way in which companies report on environmental and social issues.

The Alliance for Corporate Transparency project has analysed how European companies disclose information necessary for understanding their impact on society and the environment, as requested by the EU non-financial reporting directive. It assessed over 100 companies from the sectors of Energy & Resource Extraction, Information and Communication Technologies, and Health Care.

The initial findings of the project “point to one overarching conclusion - most companies acknowledge in their reports the importance of environmental and social issues, but more often than not this information is not clear enough in terms of concrete issues , targets and principal risks. “ Ouch. The report gives many examples, but here are three.

“90% of companies report on climate change, but merely 47% specify clearly what precisely their policy has been designed to achieve and how…”

“Very few companies include outsourced workers in their perspective: only 25% inform about how many there are in the workforce, less than 5% include them in their reporting on equal opportunities, collective bargaining or salaries”

“Companies commonly report information about human rights audits (58%), but the disclosure of the results of these audits is far less common (25%) as is disclosure of the actions consequently taken (16%). “

Surely this report should be required reading for institutional investors, and those concerned with revising the UK’s stewardship code. ‘Comply or explain’ only works if there is close scrutiny of how ‘comply’ has been interpreted, and a critical ear listening to ‘explain.’

There are many pieces of research being produced today that can help educate to raise the bar on how businesses conduct themselves. RepRisk, based in Zurich, is a business using AI and human analysis to produce useful data, and I have mentioned them in the past. Earlier this month they released their Most Controversial Projects of 2018 Report focusing on ten projects “that were most exposed to ESG (environmental, social, and governance) and business conduct risks last year.”

“Many of the case studies in this report describe a sequence of events that had catastrophic consequences for employees and local communities," said Dr. Philipp Aeby, CEO of RepRisk. "Sadly, the risk incidents faced by nine out of the ten projects were described as 'foreseeable,' or were blamed on negligence. “

There’s clearly no shortage of information out there about ESG issues, human cost, and reputational risk. In 2019, there is also the vast potential of how we use data to good effect for better education. What is needed then is for investors - and businesses, which means the directors in every boardroom- to wake up and smell the risk.