Environmental, social and governance (ESG) risks continue to move to global centre stage in line with increasing regulations and the growing expectations of investors, customers and other stakeholders around accountability in ESG-related areas. Find out how LSEG can help businesses manage this risk with confidence.
- Discover how LSEG can help businesses manage ESG risk with ease and confidence.
- Understand how to improve your third-party risk management programme and make informed decisions.
- Access deep data and expertise in delivering targeted insights into ESG risks.
Managing ESG risk
LSEG delivers accurate, targeted content that allows businesses to more fully assess organisations and individuals through the lens of ESG risk, in turn empowering them to manage and mitigate such risk.
ESG risk should be included as part of a range of risk detection processes and assessments, including:
- KYC processes: Robust KYC needs to ensure that customers are not linked to any ESG-related crimes, such as human rights or environmental violations.
- Third-party risk assessments: It is crucial to ensure that third-party networks are not introducing ESG-related risk into supply chains.
- Investment risk assessments: Investors are ever-more concerned about ESG standards in their investments, including mergers and acquisitions, private equity and initial public offerings.
As ESG-related concerns continue to attract the attention of global audiences, building a comprehensive risk management programme that includes a core element of ESG risk management is now a necessity.
Steps to a building comprehensive risk management programme
Screening
The first step to building a comprehensive risk management programme is screening. Our market-leading World-Check database delivers accurate data – relating to sanctions, anti-money laundering (AML), anti-bribery and anti-corruption (ABAC), counter terrorism financing (CTF), organised crime, human rights, supply chain and environmental legislation and more – to help firms screen for potential risk. A wide range of specific ESG topics is covered within the World-Check database.
ESG topics covered in World-Check
The World-Check database supports ESG-related screening requirement, including all the crimes below. As well as subjects convicted of these crimes, World-Check lists subjects who have been accused, investigated, arrested, charged, indicted, detained, questioned or placed on trial in connection with one or more of the listed crimes. World-Check always makes this distinction clear.
Environment: Wildlife crime, Environment crime, Energy crime
Social: Exploitation of children, Human trafficking, Sexual exploitation, Illegal immigration, Forced and slave labour, Labour rights violations, Human rights violations, Hate crime, War crime
Governance: Abuse of office, Bribery and corruption, Breach of fiduciary duty, Tax and customs violation, Antitrust violation or unlawful competition, Consumer protection violation
Data is drawn from a variety of trusted sources – including published sanctions, law enforcement and regulatory enforcement lists, and records related to politically exposed persons (PEPs), implicit sanctions and adverse media. All data is researched by our team of more than 500 analysts across the globe.
LSEG’s ESG-related data offers unsurpassed breadth and depth of coverage across key areas of coverage, as well as advanced AI tools – such as Media Check – which structures media content using intelligent tagging and detects and enhances relevancy between content themes and entities to improve screening efficiency and reduce false positives.
Due diligence
While screening is a vital first step in the process of pinpointing potential risk in customer and third-party networks, due diligence must be carried out in instances where risk is detected or suspected.
Our due diligence reports unpack any areas of concern and deliver detailed ESG risk-relevant information tailored to specific needs.
Supported by a global research team across 200 jurisdictions and covering more than 60 languages, we offer four levels of due diligence reports, ranging from a basic level of coverage – essentially an overview or snapshot of risk, to our premium report.
Our premium report incorporates business intelligence that looks beyond publicly available information to identify risks ranging from money laundering, corruption and sanctions risks to ESG risk and more. Specific ESG-focused enquiries include, for example, environmental risks, labour and employment issues; diversity, equity and inclusion; and human rights.
Examples of additional areas we can cover include:
- Corporate registry filings: these can be checked for registration details, required shareholding and ultimate beneficial ownership (UBO) disclosures, management/officer disclosures and financial information. Risks that arise from improper and inactive registrations, missing licenses to operate and non-compliance will be flagged in our due diligence reports.
- Litigation, bankruptcy, regulatory and law enforcement: we can include screenings of the subject and associated companies and individuals within litigation, bankruptcy, regulatory and law enforcement databases available in the jurisdictions where targets are located. Our comprehensive country- and region-specific databases cover breaches in environmental laws, labour violations, financial and bankruptcy listings, police and criminal records, and more.
- Country risk: our Country Risk Ranking tool is a powerful instrument that enables a sophisticated risk analysis of a country or territory. This service is available as a subscription and can be added to a due diligence report. ESG risk-related factors considered include human rights violations, environmental degradation, modern slavery, animal welfare, employment practices, sales and marketing practices, governance and management, health and safety, and regulatory enforcement.
Hands-on help
Our centralised platform allows users to visualise multiple domains of risk to develop a holistic, 360-degree view of potential risk. It also offers valuable tools, such as questionnaires to help companies gather information on ESG performance from suppliers, and a proprietary risk scoring algorithm that includes ESG metrics.
We also offer Managed Screening and Managed Onboarding services for companies that need support – for example, where bulk database screening is needed.
LSEG’s deep data and expertise in delivering targeted insights into ESG risks can help businesses more fully understand areas of ESG-related concern and more adequately manage and mitigate customer and third-party risk.
Our deep domain expertise, combined with our unsurpassed depth and breadth of data, can help all businesses to identify, manage and mitigate ESG-related risk as an integral part of broader customer and third-party risk management strategies.
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