BFSI among Sectors facing most ESG Risks

As per recent research by ESGRisk.ai, Banking and financial services have emerged as the top industries who suffered the most controversies in recent times. These controversies surrounded environmental, social, and governance (ESG) risks. The research indicated that the most number of risks appeared in business ethics closely followed by employee safety practices. This research was completed by analyzing controversies reported in NSE 600 companies in the financial year 2020-21 across ESG parameters.

ESGRisk.ai stated “Such scams and scandals have a tendency to affect the company’s reputation, goodwill, and have the potential to cause financial losses. The company may suffer investor losses, have difficulty attracting talent and retaining customers, and reduce the value of its equities or bonds.” The Research data revealed that the service sector has experienced a greater number of controversies than the manufacturing sector in the financial year 2020-21, which along with Banking and financial services includes IT and consulting, among others. Also, it was witnessed that there was an increase in contentions over environmental management issues in FY2021. Most of these were regarding the non-compliance of regulations of pollution control boards and defying environmental clearances in order to avoid delay in operations.