Risks to stakeholders of ESG-oriented organisations

Organisations that prioritise ‘Environment, Social and Governance’ (ESG) aspects are becoming increasingly preferred by the employees, consumers, and investors. India is on a path to transform its ESG landscape to be future-ready. Recently, India was ranked #8 (two spots higher) in the Climate Change Performance Index (CCPI) 2023, which can be attributed to India's low emissions and the increasing use of renewable energy and stands committed to reducing emissions intensity of its GDP by 45 per cent by 2030 from the 2005 level. This makes India a major market for sustainability solutions and has an immense potential for growth in sustainable investing with an opportunity to mobilise USD1 trillion by 2030 towards the top ESG priorities, particularly for financing climate transition and achieving the sustainable development goals (SDGs).

With increased amounts being invested or lent towards ESG priorities, the potential risk of misrepresentation of the ESG performance, diversion, and misuse of funds, as well as other ESG related non-compliances is higher.

To safeguard from financial and reputational damage, it is prudent for investors, lenders and board of directors of ESG organisations to proactively evaluate the key fraud risks, which may include but not limited to:

To deep dive into understanding the various ESG related fraud risks and what may be done to mitigate such risks, download our point of view document now.