Managing ESG risk for financial institutions

With Environmental, Social and Governance concerns now at the forefront of public and industry agendas, firms that slip up find themselves exposed to potential reputational, stakeholder, litigation and regulatory fallout. Arwen Handley overviews the main areas of risk for financial institutions and preventative steps for managing them.

Arwen Handley is a partner at Hogan Lovells International, advising financial, corporate and government clients on regulatory enforcement matters, internal investigations and litigation. Contact Arwen on arwen.handley@​hoganlovells.com.

Over the past few years, ESG has gone mainstream. The drive to net zero, the growing expectation that corporations will act sustainably and responsibly, along with a sustained regulatory focus on ESG, means that companies are ever more aware of the need to address ESG in their businesses. ESG and profitability are not mutually exclusive, of course - ESG often makes good business sense. But with the rise in ESG comes a corresponding rise in ESG risk. This article looks at some of those risks from an English law perspective and considers how to manage them.