Many parallels have been drawn between the lack of global preparedness for the COVID-19 pandemic and the environmental, social, and governance (ESG) risks that confront the world. As COVID-19 took hold in early 2020, some speculated that it was a “rehearsal” for the type of calamity the world could face as a result of climate change. It has proven to be more than simply a rehearsal for anything, and businesses and governments are actively applying lessons learned to date while still managing the ongoing risk.
Over the past two years, the pandemic has brought into sharp focus social risks, such as those relating to employee wellbeing, health and safety, labor laws, and human rights. At the same time, governance risks — associated with compliance, disclosure, reputation, and ethical standards — have gained increased attention and are now also at the fore. The questions are increasingly being asked: Is ESG risk the new pandemic risk? Will the world be equally unprepared?
In Evaluating ESG and pandemic risk reporting trends, Marsh presents research and analysis regarding risk trends based on annual reports from a selection of companies listed on global stock exchanges, covering the July 2020 to July 2021 reporting period. The report summarizes over 1,100 combined risks extracted from the annual reports of companies on the Financial Times Stock Exchange 100 Index (FTSE 100) and provides cross-industry analysis on risk section maturity and corporate governance alignment.
The reporting period we analyzed is unique, with the continuing impact of COVID-19 on society and businesses globally combined with the rising prominence of ESG risks, particularly climate and sustainability.
We also compared 60 companies listed on the Hong Kong Stock Exchange (HKSE), New York Stock Exchange (NYSE), and Euronext, and their collective 200 risks, providing insight into the reporting of ESG risks of significance for all companies.