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Elaine Wood on ESG risk management in Reuters Digital

May 26, 2022
ESG and sustainability

Elaine Wood of CRA’s Risk, Investigations and Analytics Practice recently discussed with Sharon Kimathi at Reuters Digital about her view on the US Securities Exchange Commission’s recent rule changes aimed at tackling greenwashing.

“Recent SEC actions here in the US signal a new focus on accurate public statements and reporting – and assessment of each company’s own process and risk. The SEC crackdown is no doubt making the sustainable funds industry panic – but they don’t need to.

“ESG shouldn’t be seen as a headache, PR stunt or nice-to-have – but as a crucial part of broader standard risk management. Companies face new and emerging risks on a regular basis, and already identified risks are also constantly evolving in tandem. As a result, risk exposures and appetites are constantly changing, too.

“ESG encapsulates more than carbon emissions; it includes diversity of the workforce, inclusivity of employees and general business culture, among many other considerations. Risk management has always had to balance internal and external stakeholder demands and expectations, but as the younger generation join the workforce and demand more of a company’s internal environment, companies must find their own position when it comes to ESG.

“Companies with sound risk management practices in place have always tended to be the most sustainable and profitable, so understanding ESG just makes good business sense – but it shouldn’t require reinventing the wheel. Perhaps old-school risk management can help address this new ESG universe?”

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