Appreciating ESG fraud risk management

ESG concept

The factors that surround the environmental, social, and governance disciplines have grown from just a few to more than 50 considerations, indicating all three ESG elements carry equal weight when evaluating a proper corporate strategy.

However, fraud risk management, born from the “G,” carries an overarching influence across ESG. Although often dwarfed, fraud risk management should maintain the central focus. To properly own an actionable ESG strategy, today’s executive must initially appreciate the “G,” which will naturally lead the organization to establish a sound fraud risk management plan, defining its ethical DNA.

What precisely is ESG fraud? It can be best explained by describing the elements that cause it. For example, pressure is mounting on the C-suite to prove meaningful progress in setting and achieving ESG goals. This pressure has created a business climate where the risk fails to adopt core ESG principles.

Further, developing and implementing ESG-friendly programs can be costly, both financially and logistically. Pressure to adopt principles of ESG creates an environment ripe for fraud, and fraud thrives wherever the stakes are high.

Now that the “what” is answered, let’s look at the “how” and “why.”

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