Companies operating in the United States and Canada are three times more likely to risk violating United Nations environmental standards, compared to firms in other regions, a study by ESG Book has found.
The findings coincide with the publication of ESG Book’s Risk Score, a data-driven assessment of corporate exposure to critical ESG topics, based on the United Nations Global Compact.
Its study of more than 10,000 corporations found that North American firms are most susceptible globally to infringements of the UN Global Compact’s environmental principles, with 60% of companies identified as being at a heightened risk of contravening the agreement.
UN Global Compact
The UN Global Compact‘s principles focus on the environment, human rights, labour, and anti-corruption standards.
Asia is identified as the most vulnerable of the major markets, with 15% of companies at risk of infringement. In Korea, however, this is as high as 28%, while in Japan and China, it’s 19% and 16% respectively.
In Europe, companies are less likely to breach the majority of principles, compared with their North American and Asian counterparts, the study found.
Notably, North American firms, particularly in the US, stand out for their exceptionally low exposure to anti-corruption risk at (0.5%), surpassing both the global average (3.5%) and European companies (1.5%).
Considering risk
“Risk considerations are integral for clear decision-making around ESG investing and management,” commented Dr Daniel Klier, CEO of ESG Book. “However, markets are currently being failed by many of the analytics and ratings available, which are often inconsistent, one-dimensional, and based on black-box methodologies.
“The Risk Score is designed with both investors and corporates in mind. Investors can use the score as a universe selection, portfolio monitoring, and engagement tool by identifying companies that are more exposed to critical ESG issues, while corporates can use the score to systematically assess their own exposures, conduct peer comparisons, and identify disclosure gaps.”
More information on the findings can be found here.
