ESG Greenwashing: “Nearly three out of five executives (58%) say their companies engage in “greenwashing” by exaggerating efforts to curb harm to the environment from their products, services or operations, according to a global survey sponsored by Google Cloud.
Many executives would “like to see better accountability and action” on sustainability, with 36% of respondents saying that their companies have measurement tools for quantifying sustainability performance and just 17% saying the measures are used to improve outcomes, Google Cloud said.
Thirty-five percent of U.S. executives, and 29% worldwide, agree with the phrase, “my company treats sustainability like a PR stunt,” according to the survey by Harris Poll of 1,491 CFOs and other executives in the C-suite or VP level across 14 markets.”CFO Dive
May 7, 2022
“ESG initiatives are a leading priority with two-out of three executives (64%), on par with ‘adjusting business models.’”
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To mitigate ESG greenwashing, firms must adjust their risk governance and management models from perils to process.
Reputation value is a strategic power companies use to sell more, faster, and at premium prices; and to obtain labor, vendor services, as well as capital on preferred terms.
Steel City Re mitigates the hazards of ESG (reputation) risk that threaten reputation value. We use parametric reputation insurances, ESG insurances, and risk management advisory services to make our clients reputationally resilient.
Risk management, risk financing in insurance captives, and risk transfer through reputation insurances comprise the constituent elements of a comprehensive Steel City Re reputation risk governance and management solution.
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Context and Background
Risk managers are now central to the process for managing risks to reputation and that’s a process marketers and communications professionals need to be a part of. The oversight of reputation risk management is mission-critical.
Courts have increasingly been ruling that reputation is a mission critical function and oversight of its management is a responsibility of the board of directors. Courts are also ruling that marketing statements companies make – if they related to issues that affect their reputation, like ESG – may be considered material by investors. Litigation along these lines has yielded large settlements or verdicts for plaintiffs.
And now, the SEC has proposed new rules requiring disclosures by public companies related to their ESG activities; ESG greenwashing statements could become a communications and reputational minefield.
As a result, reputation risk management is evolving into an intelligence gathering operation spanning the entire enterprise, roping in the enterprise risk manager, compliance counsel, and increasingly, reporting up to the Chief Legal Officer. There is a growing recognition that reputation is not a product merely of marketing and media coverage, but of the degree to which stakeholders’ expectations are aligned with actual performance. The reputation risk management process requires a thorough and ongoing analysis of stakeholder expectations, the risks of disappointment, and a plan for either managing those expectations or assessing and insuring against the cost of failure.
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