With 89% of respondents revealing they’re underneath strain from stakeholders to display progress on ESG targets, and the same share is worried that these pressures improve the danger of ESG fraud. Eight in ten are involved that their group might inadvertently commit ESG fraud.
An rising threat is litigation with traders and activists doubtlessly submitting lawsuits in the event that they discover inconsistencies. That is prone to be exacerbated by the proposed disclosure necessities of the Canadian Sustainability Requirements Board (CSSB), which have been backed by the CSA.
“As soon as the CSSB requirements are finalized – and if adopted by the Canadian Securities Directors as regulation – one of many potential penalties of non-compliance might be litigation, so adhering to the brand new requirements will assist organizations mitigate that threat,” stated Conor Chell, KPMG in Canada’s nationwide chief of ESG Authorized Threat and Disclosure.
Among the many firms which have already skilled ESG fraud:
- 9% are presently coping with or have beforehand handled inside ESG fraud; that’s, staff or groups inside their firm have been discovered embellishing, distorting, or exaggerating ESG knowledge or efforts
- 8% are presently coping with or have beforehand found exterior ESG fraud; that’s, their suppliers or distributors are embellishing, distorting, or exaggerating their ESG knowledge or efforts
- 7% report that they’re experiencing or have skilled inside and exterior ESG fraud
“The truth that stakeholders are demanding accountability for ESG efficiency is a optimistic issue for driving change, however sadly it might probably inspire – and already is motivating – some people or groups inside organizations to misrepresent or inflate their sustainability and monetary metrics for company or private acquire,” stated Becky Seidler, a associate in KPMG in Canada’s forensic and dispute advisory apply. “The results of ESG fraud might be important, together with monetary and reputational hurt, and fairly presumably the lack of social license to function if stakeholder belief is broken.”
