by Joe Mendel –
As we enter the Winter season and begin the process of reflection on the past 12 months, one theme has continued to gain traction and acceptance within the financial services arena – Environmental, Social and Governance (ESG).
In the past, growth and earnings have fueled shareholder value and there was little recognition or concern for negative environmental and social impact. This however is rapidly changing. Corporate earnings are still the strongest measure of a company’s economic performance, but the sentiment is changing so that investors, shareholders, consumers – all stakeholders – are now interested in the ethics of the business of the company of which they are associated. Recent statistics have shown that companies that emphasize and prioritize ESG issues are actually outperforming companies across several financial metrics. This means ESG-centric companies can drive profitable growth through business practices that decrease risk, align with customer values, and positively impact people and the environment.
2022 demonstrated a huge swing in momentum toward ESG with a focus on transparency and reporting. Every day there is news about climate change and social justice issues that are bringing about a significant change in the ways companies conduct business. Financial Service organizations themselves have pledged to reduce carbon emissions through a number of internal initiatives but it goes deeper than that. FSI’s need to be aware of and report how they are supporting green issues and commerce by investing in or lending to companies that commit to ESG reforms. But there are other financial advantages. Statistics show that companies prioritizing environmental, social, governance (ESG) issues actually perform better in the long run across several financial metrics. Boards need access to key metrics that track their company’s leadership, business practices, and overall governance on ESG issues as there are over 2,000 laws, regulations and policies governing currently on climate alone.
To put more emphasis on the importance of ESG issues and Digital Assets, The Securities and Exchange Commission’s Division of Examinations announced its 2021 examination priorities last March, including a greater focus on climate-related risks. The Division will also focus on conflicts of interest for brokers (Regulation Best Interest) and investment advisers (fiduciary duty), and attendant risks relating to FinTech, Innovation and Digital Assets in its initiatives and examinations.
The FCA (Financial Conduct Authority) in the UK just announced new ESG guidance strategies for their member global organization that include imperatives around transparency, trust, tools, transition, and team.
This is a very new process for banks and one that requires some outside expertise. Now is the time for advisory firms to assist their financial services partners by making ESG transparency and reporting easier through standardized metrics and KPIs that are measured and reported via dynamic workflows and dashboards through advanced intelligent data analytics and automated collection. Company brand reputation as well as financial performance will benefit as we all march toward a better and healthier planet earth.
We at RCG Global Services are available to help you drive your digital revolution through our solutions, practices and advisory services. We help Financial Service organizations understand the complexity of remaining viable and competitive in todays on-demand ever-evolving consumer economy. We have been successfully solving complex business problems for financial service companies globally since 1974. Our clients rely on us to help them harness the speed of now that drives evolution to the hyper-business age. We know companies struggle to exist in an ecosystem of three simultaneously co-existing strategic states, where the adoption of an evolutionary mitosis process constantly transforms and evolves operational and engagement models. Our engagement model has evolved also to provide the expertise necessary to identify evolutionary solutions and get you from mode-to-mode efficiently with minimal disruption, allowing you to off-load, and de-risk your most critical strategic and competitive initiatives.
We ask questions to solve business problems. We engineer the velocity necessary to create competitive advantage through impactful outcomes. We make your strategy a reality by compressing the time between strategy on paper, to execution, to impact, maximizing returns on investment while creating competitive advantage.