Mitigating reputational risk of greenwashing

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During CeFPro’s Risk EMEA 2023 Convention, Keith Davies, Group Chief Risk and Compliance Officer at Admiral PLC, took part in a fireside chat on enhancing the oversight of social programs and mitigating reputation risks with potential greenwashing. These are some of the key points’.How are firms currently dealing with incorporating environmental, social, and governance (ESG) into a sustainability strategy?Firms initially focused their sustainability initiatives on managing the “outside-in” risks to which they are exposed – most notably meeting regulatory requirements and mitigating the risks that climate change could present to operations, financial investments, and retrospective litigation. However, businesses are increasingly seeing that their own “inside-out” sustainability stance – its own impact on society and the environment – is key to an organization’s longterm performance – with a positive sustainability stance representing opportunity by:• Increasing demand by aligning products and services with customers’ evolving expectations, and by improving brand positioning.• Reducing costs by lowering energy consumption and associated costs, and reducing borrowing costs (for example, better ratings or access to alternative financing sources such as green loans), insurance costs, and costs of third-party providers.• Improving the employee proposition and productivity by attracting, motivating, and retaining employees by focusing on how well a company looks after its staff and/or addresses key social and environmental issues.• Enhancing a firm’s brand, reputation, trust, and social license to operation – with authentic delivery and communication on sustainability issues positively impacting all stakeholders’ perceptions.However, in order to fully capture the opportunities sustainability can present – the approach has to be strategic, holistic, authentic, and climate events), and because they themselves will benefit from the advantages listed before. The second is stak