ESG – more than a new burden for compliance

For the foreseeable future ESG and DEI will be at the forefront of making human systems equitable for all. This article talks about the burden of leadership with the responsibilities of the ESG plan to rest on the shoulders of COO’s, who are already bearing considerable responsibility.

NEW YORK(Thomson Reuters Regulatory Intelligence) – Compliance departments are tackling an expanding universe of responsibilities as environmental, social, and governance (ESG) issues and potential regulations have emerged as a critical priority within organizations.

What began many years ago as “socially responsible investing” where some investors began scrutinizing and restricting investments in companies like makers of alcohol, tobacco, gambling and weapons, or so-called “sin stocks,” has morphed in recent years into something different and eventually much bigger.

The addition of ESG to the growing and complex list of compliance responsibilities including cybersecurity and data privacy have raised concerns with some compliance experts about “mission creep.” It has prompted questions about exactly where responsibility for a firm’s ESG efforts and commitments should lie.

A challenge faced by compliance departments is that ESG concepts in financial services are still evolving and nebulous. Debate is active over standards for “environmental” and “social” considerations and how to define, benchmark and measure them. The “governance” element, however, should not be a challenge. It should be the starting point for firms in building a framework.

In 2006 the United Nations published the Principles for Responsible Investment(Link:here), where the focus broadened from sin stocks to other areas such as the environment, economic sustainability and social justice. The ESG movement has since gradually gathered momentum. In 2020, the COVID-19 pandemic, a heightened awareness of social and racial justice, and the presidential victory of Joe Biden created a perfect storm that has emphasized ESG and corporate responsibility at an unprecedented level.

Historically ESG was viewed as a set of specialty obligations primarily related to investment managers. However, it has expanded into many other areas of businesses, industries, and society in recent years. Firms are now approaching the ESG challenge by catching up and putting governance as the cornerstone of their effort.

A recent blog published by Mike Volkov at the Volkov law group asked whether Chief Compliance Officers (CCOs) should take responsibility for the new ESG function and reporting. The answer is a “resounding no,” he wrote. “CCOs have enough responsibilities on their respective plates, and the last thing they need is to assume responsibility for a whole new set of tasks, controls, reporting obligations, and international ESG regulations mandating disclosure and substantive requirements,” Volvkov wrote.

As we venture forth into this brave new attempt to right the wrongs of humanity, we will be forced to make a lot of changes. The wheels are already turning and setting unforeseen changes into motion. But what we may see is external parties move to fill the gap, providing direction and support from without. The option is to add it to an existing company officers to-do list, but that will not likely last for long, with so much riding on the ESG portfolio. Or perhaps, some companies will create a specific position to take the mantle of compliance and governance. We are sure that the market will show us several models from which to choose, depending on company size and budget. We watch with bated eyes.

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What is ESG for Companies in Vancouver,BC?

ESG has been around for decades. Recent events have accelerated the need for businesses to make changes.  Environment, Social and Governance may well determine your future success, or failure. Whether you have business in Vancouver or anywhere else.

The term ESG investing was first coined in 2004. It was a part of a study by the UN Global Compact. ESG stands for environmental, social and governance, the 3 cornerstone indicators for investors. The report proposed that “Who Cares Wins.” In 2005, the UN Principles for Responsible Investment, or (UN PRI). The report detailed a plan for investment designed to make life fairer for all and save the planet.

Do ESG Investment Principles Matter in Vancouver?

E, S & G are 3 pillars of ethics measurement for a business or enterprise. They are factors which are driving investor decisions around the world. ESG criteria measure non-financial features which determine how attractive you are for investment. A low ESG score may prevent a company from getting a sustainability score. A low sustainability score will most likely prevent any relevant confidence by investors.

If you have a business in Vancouver, then you will want to read further. If you are looking for investment or want to list on an Exchange, then you will want to examine your portfolio. You will need to establish a Score for potential ESG compliance issues.

What is CSR for Companies in Vancouver?

CSR stands for Corporate Social Responsibility. It is a measurement of a company’s ethical impact on the society it serves. This can include positive impacts like philanthropic endeavours or negative impacts like pollution. It is a report which shows a company’s contributions to the greater community of Vancouver.

The CSR Policy should cover many core elements with regular reporting. These include care for all stakeholders and ethical functioning. There should be a section on respect for Workers’ Rights and Welfare and Human Rights. It should detail all aspects which show respect for Environment.  Finally, the report should include activities for Social and Inclusive Development.

What is DEI for Business in British Columbia

The world has changed and smart companies are changing within it. Diversity, equity and inclusion are terms which are a part of your ESG. Many companies implement these strategies through governance. With the direct effects will be seen in social and environmental actions. They are programs which encourage the participation of diverse groups of people.

Workplace diversity includes people of different genders, races and ethnicities. It also includes abilities and disabilities, religion, culture, age and sexual orientations. socioeconomic status, language or political perspective. The goal is to create more inclusive working environments for everyone.

A good outline for a Diversity, Equity and Inclusion plan will include a DEI Strategic Plan. It will also include a leadership commitment to the plan. It will address the recruitment and hiring of diverse talent. This could include neurodiverse candidates. It will require reporting on inclusive performance management. It will detail equitable and inclusive culture. The report will conclude with highlights listing the effects on the marketplace. It will also outline community impact. There is an increasing demand for reporting for companies in Vancouver, the Island and around the world