Environment, social and governance (ESG) considerations are moving ever further up the risk agenda. However, the ‘S’ in ESG represents a broadening range of issues and, as the findings of this survey suggest, firms’ level of understanding of these diverse risks – and their resulting approach to managing them – may vary considerably.
We surveyed over 500 compliance professionals from 111 countries. Those that we surveyed reported that, while they understand the social risks in their companies’ supply chains posed by corruption, inequality, and employment standards, they don’t always fully recognise less visible risks such as forced and child labour. Most respondents also reported addressing social risks was a mid- or lower-tier priority within their firms and suggested, moreover, that leadership at their firms either aren’t addressing social risks or are just paying them lip service.
What forces companies to examine social risks? Fear, survey respondents said, of either regulatory or legal consequences. Notably, proactively addressing social risks through company values was relatively low among motivating factors.
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