Managing and Mitigating ESG Integrity Risks | Deloitte Netherlands


Managing and Mitigating ESG Integrity Risks

Navigating the link between ESG-related Misconduct, Civil Liability and Financial Crime

Businesses are increasingly expected to recognise and take responsibility for the way in which their operations impact society. Environmental, Social and Governance (ESG) factors have emerged as key pillars that influence a company’s reputation, resilience, and long-term success. In order to manage and mitigate ESG integrity risks, businesses need to navigate the nexus between ESG-related misconduct, civil liability, and financial crime.

In the ever-evolving landscape of global business, the importance of Environmental, Social, and Governance (ESG) integrity cannot be overstated. As organisations grapple with the challenges of sustainable development, ethical operations, and conscientious governance, ESG integrity emerges as a critical touchstone for long-term success and stakeholder trust. While many businesses have focused their efforts on ESG reporting obligations, the potential exposure to misconduct related to ESG factors and the nexus between such misconduct and civil and criminal liability often remains overlooked. 

A New Benchmark for Corporate Responsibility

Increasing regulatory and societal expectations require that businesses assess, manage and mitigate actions or practices which violate environmental, social and governance principle and standards in their own operations. Compliance with international commitments such as OECD Guidelines and (upcoming) EU regulations driven by the European “Green Deal” such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) expand the scope of responsibility for ESG-related misconduct. Moreover, such misconduct is increasingly being criminalised through national legislation and international regulation such as the Environmental Crime Directive (ECD). 

Critical Conjuncture of ESG Integrity Governance

Examples of ESG-related misconduct are pollution, deforestation, labour rights violations, unsafe working conditions or bribery and corruption. The ESG integrity landscape encompasses three main (criminal) misconduct areas of potential exposure to ESG-related crimes: engaging in harmful and criminalised activities, laundering the proceeds of ESG-related crimes and fraud – in some cases related to greenwashing. From a civil-liability perspective, risks mainly concern misleading disclosures and wrongful acts. Organisations must be vigilant in identifying and addressing these risks to maintain their integrity and credibility.

By prioritising ESG integrity, companies not only align themselves with the increasing demands of socially conscious investors, consumers, and regulatory bodies, but also invest in the resilience and adaptability of their operations in a rapidly changing world. As such, ESG integrity stands at the forefront of a paradigm shift, urging companies to redefine their strategies and objectives through the lens of sustainability and ethical conduct.

Managing ESG-Related Crime Risks

Exploring the nexus between ESG-related misconduct and (criminal and civil) liability

We offer a deep dive into the intricacies of managing and mitigating ESG integrity risks in our latest report. This resource provides valuable guidance on best practices, risk assessment, and the implementation of robust ESG frameworks. We invite you to enhance your understanding of ESG integrity and equip your organisation with the tools necessary to thrive in a sustainability-focused future. Download the full report on Managing and Mitigating ESG Integrity Risks and begin your journey toward ESG excellence with confidence and clarity.

Insights on ESG integrity

Delving deeper into the realm of ESG integrity, we offer a unique opportunity to gain expert perspectives directly from our specialists. We invite you to listen to Maarten Rijssenbeek, a leading voice on ESG integrity matters at Deloitte, who provides in-depth analysis and valuable insights on the importance of ESG integrity in the current business climate. This engaging discussion is an invaluable resource for anyone seeking to enhance their strategic approach to ESG issues and integrate core values into their corporate culture.

Listen to Maarten Rijssenbeek’s insights now by visiting Compliance Adviseert.

Greenwashing risks explained

The greenwashing risk round up is a series of short video insights to help companies unravel the regulatory complexity surrounding greenwashing. In each episode, the EMEA Sustainability Regulation Hub brings together Deloitte subject matter experts to explore how your organisation can navigate greenwashing risk and stay true to your sustainability promises.

Watch the videos by visiting The Greenwashing Round Up | Deloitte UK.

More information?

If you would like to know more about ESG Integrity, please contact Forensic & Financial Crime Partner Maarten Rijssenbeek, Director Sustainability Stefanie Citroen or Legal Partner Rozemarijn Bloemendal via the contact details below.

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