The ESG Report - How the Russian Invasion Changed ESG Forever

Thomas Fox - Compliance Evangelist
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In this brief solo episode, I am reflecting on the Russian Invasion's impact on ESG and talk about how the invasion changed how businesses viewed their ESG programs, the importance of ESG in business and national security, and what it means for businesses to be purpose-driven.

ESG is Business Change

ESG is not driven by a specific political ideology See more +

In this brief solo episode, I am reflecting on the Russian Invasion's impact on ESG and talk about how the invasion changed how businesses viewed their ESG programs, the importance of ESG in business and national security, and what it means for businesses to be purpose-driven.

ESG is Business Change

ESG is not driven by a specific political ideology or political group. What drives ESG is the business world. "What the Russian invasion of Ukraine drove home was the need for a more holistic approach to corporate ESG, which integrates each of those letters into the fully formed ESG," I say. ESG also is key to a national security interest. "The transparency required by ESG programs through government required disclosure, or private sector required disclosure also ties into other areas of business change," he adds.

Reputational Risk

The Russian invasion caused a major disruption in the global supply chain and created higher reputational risk for companies. Some companies were hit with sanctions, and customers boycotted others. "Hits to reputational damage are above-the-line costs meaning they eat directly into sales revenue and overall business success," I remark. If consumers view your organization as supportive of oppressive and autocratic regimes or your goods created by slave labor, they will not want to do business with you. "The risk is simply too high. Consumers want to purchase and transact with purpose-driven businesses," I add.

Be Purpose Driven

"People are demanding that a company align with their values and ethics," I iterate. An organization must fully incorporate ESG into an effective business strategy. "You have to look at ESG proactively and react to situations based upon the turmoil that is ongoing literally across the globe," I stress. ESG is now seen as a 'must have' in businesses across the US and Western Europe, and companies need to understand that regulators do not drive these requirements. To unlock capital and cash and grow your business, you have to have an effective and transparent ESG program so that people will want to invest in you and do business with you. See less -

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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