The Risks Of Breaking ESG Promises

In 2019, 181 CEOs signed a Business Roundtable pledge committing to serving the interests of ‘all stakeholders,’ especially local communities, the environment and investors.

This pledge and countless individual company statements that have followed have raised expectations that companies and corporate board members would put greater emphasis on environment, sustainability and governance (ESG) efforts.

Now, regulators, investors and customers are beginning to examine whether companies are living up to those expectations or falling short on executing ESG goals.

In many instances, these expectations have proven beyond firms’ capabilities, and a growing number of board members may be personally exposed to risk as a result.

A recent Willis Towers Watson survey of corporate leaders found growing concern that ‘reputational risks could result in potentially crippling business outcomes,’ such as loss of income, a reduced customer base, and an inability to retain or attract talented employees.