The ABCs of ESG

In the 2022 Anti-Bribery and Corruption Report, 57% of respondents from Asia Pacific and 52% in Europe and Latin America say they review ESG metrics compared to 43% in the U.S. and Canada and 38% from the Middle East. 

The type of ESG issues organizations focus on also varies by region. In Europe, labor rights and climate change mitigation have become more of a priority — with coverage increasing in that region by 17% and 15%, respectively, from 2021 to 2022. In the Americas, respondents are focused on modern slavery and human trafficking, with the U.S., Canada, Mexico, and Brazil reporting a 16% increase in coverage over 2021. 

Overall, more organizations worldwide now include ESG risks within anti-bribery and corruption programs, with the Kroll report affirming that “much progress has been made in 2022.” 

For instance, 36% of compliance leaders say they include air and water pollution in their due diligence compared to 24% in 2021. Similarly, more respondents also cover labor rights issues (34%) and human right abuses such as slavery and human trafficking (35%), compared with 22% and 24%, respectively, in 2021. —C. Janesko

To guide policymakers in this task, the IEA’s 7th Annual Global Conference on Energy Efficiency report outlines the broad steps necessary to deliver net-zero global emissions by 2050. Chief among its recommendations is fast-tracking efforts to reduce global annual emissions by at least one-third by 2030. The IEA urges nations to deploy more energy-efficient equipment in homes, buildings, vehicles, and industrial operations; encourage the adoption of smart energy controls; and motivate individuals and organizations to move from gas-powered to electric vehicles.

Equally critical, the IEA says, is encouraging people to adopt better behaviors, such as lowering thermostats, changing commuter and travel patterns, and transitioning to more remote work environments. These measures, especially in the wake of rising gas prices, are “already cost-effective and pay for themselves” and would constitute 20% of the one-third global emissions reduction goal, according to the report.

These issues were among the priorities discussed at the third Major Economies Forum on Energy and Climate, an online event in June. In a speech at the forum, U.S. President Joe Biden urged countries to accelerate actions to cut methane emissions, adopt ambitious targets for zero-emission vehicles, and strive to clean up global shipping. He also called on countries to spend a collective $90 billion to speed the commercialization of clean technologies and develop new fertilizers that cut agricultural emissions and boost food security. —L. Wamsley

Why are governments around the world regulating how organizations manage cybersecurity?

Cybersecurity is without doubt the biggest non-financial risk public and private sector organizations face — a risk U.S. and European Union regulators are turning to regulatory enforcement to manage. The average cost of a cyberattack increased in 2021 to $4.24 million from $3.86 million in 2020. Also in 2021, ransomware became the predominant cyber threat confronting businesses of all sizes. Recent cyberattacks on SolarWinds, JBS Meat, Kaseya, Colonial Pipeline, and Toyota have demonstrated the impact of cybercrime on supply chains, and the cyberattacks by the Lapsus$ group demonstrated that low-level hackers can successfully disrupt major brands. Moreover, the Ukraine crisis is the world’s first geopolitical conflict using cyber alongside conventional weapons. In response to this level of risk, the U.S. and EU have begun to regulate cybersecurity risk management, requiring the boards of impacted organizations to manage cybersecurity and cybersecurity risks with board oversight, assurance, and regulatory compliance attestation and reporting.