ESG risks are a major concern
Source: Middle East Insurance Review | Jan 2024
ESG is increasingly being regarded as an important area of risk for business executives globally, according to a new survey by specialty insurer Beazley.
The survey has found that ESG concerns are now attracting more attention from businesses, consumers and regulators. However, along with growing social pressure, businesses are now also facing a growing regulatory burden in this sphere.
The report said corporates have to comply with a host of new ESG regulations which adds to the pressure on them. It said companies in the European Union have to comply with numerous ESG regulations, including the Corporate Sustainability Reporting Directive, Sustainable Finance Disclosure Regulation and the EU Taxonomy for Sustainable Activities, with further initiatives being discussed publicly.
As a result, ESG risks are quickly rising up boardroom agendas as executives are forced to take bold steps across all three areas that ESG encompasses.
A media release by Beazley said “Our data shows how the perception of ESG risk has developed over time with 22% of global business leaders ranking ESG as the number one business risk they face in 2023, an increase from 19% in 2022.
“Over 60% of the participating executives ranked ESG risk in their top three most concerning business risks, with only employer risk receiving a higher percentage of votes (63%).”
ESG regulation is fast-paced and continually evolving that there are now significant variations in regulations between countries and even within countries. As business efforts come under growing scrutiny, the lack of a clear measure and shifting public and governmental viewpoints present an increasingly difficult path for businesses, particularly for multinational companies operating in multiple jurisdictions.