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Book part
Publication date: 17 September 2014

Anson Wong

Emphasising the significance of managing environmental and social issues for businesses, the chapter aims at highlighting the need of developing a non-financial risk management…

Abstract

Purpose

Emphasising the significance of managing environmental and social issues for businesses, the chapter aims at highlighting the need of developing a non-financial risk management system for elevating corporate social responsibility (CSR) performance in China. Particularly, through discussing its importance, opportunities, and challenges.

Design and approach

Analysis and discussion of the chapter are based on multiple sources of information. Review of literature includes authoritative academic articles, reports from renowned global organisations, media coverage of corporations, and examples of business cases in China.

Findings

Several key findings are covered in the chapter. First of all, environmental and social concerns are usually being deemed as intangible issues that need to be properly articulated and managed by an effective non-financial risk management system for enhancing corporate sustainability in China. Secondly, through different interpretations of sustainability, links could be drawn for non-financial risk management and sustainability. Thirdly, by explaining the impacts from non-financial risk management to sustainable development and profits, the chapter has argued CSR as a clear business case for any company in China. Fourthly, challenges are also portrayed for the effective management of non-financial risk management by corporations. Finally, the need of a well-defined non-financial risk management system for helping businesses to be more competitive, thus, moving closer to sustainability in China and elsewhere is provided.

Social implications

Integrating environmental and social risks is critical to the effective management of any corporation’s real risks and to improve resource allocation in a sustainable fashion. This demands a systematic and strategic identification of issues through non-financial risk management. Most significantly, this chapter has shown the way this can be achieved by any corporation in China, and the concepts can be applied into other societies.

Originality/value

The contribution of the chapter is thought to be significant. Although there exists a wide body of research on sustainable development, risk management and CSR in China, there is limited insight into how corporations can effectively conceptualise such intangible or non-financial risks in relation to sustainability.

Details

Corporate Social Responsibility and Sustainability: Emerging Trends in Developing Economies
Type: Book
ISBN: 978-1-78441-152-7

Keywords

Book part
Publication date: 24 January 2022

Oya Korkmaz

Introduction: Looking at the risks faced by enterprises in recent years, we see that the risks have shifted radically from traditional economic and financial risks to those posed…

Abstract

Introduction: Looking at the risks faced by enterprises in recent years, we see that the risks have shifted radically from traditional economic and financial risks to those posed by environmental and social factors. Developments in the field of activity of enterprises (climate change, the increasing relationship between the society and enterprises through shareholders and partners) have led to an increase in the number and diversity of risks faced by enterprises. It is only possible for enterprises to cope with these increasing risks by adopting a proactive and contemporary management approach. One of these contemporary management approaches that businesses should adopt is sustainability. Many researches have shown that the integration of sustainability into risk management has proved successful in risk management.

Purpose: Looking at previous literature, this study sets forth what financial (economic), environmental and social risks businesses may face today, explains with a few examples what measures companies can implement to eliminate these risks, and a future perspective is presented to companies. In addition, this study makes recommendations on how to successfully manage the risks that companies may face and emphasizes what the positive results of sustainable risk management can be (increasing the business value, ensuring sustainability and increasing the shareholder value). Mention was made about the fact that the ability of enterprises to successfully manage sustainability risks depends on their ability to prevent, identify, mitigate and manage risks, and it was emphasized that the environmental, social and governance risks must, to a large extent, be taken into account by many circles (regulators and customers), mainly investors. In addition, this study aims to identify and evaluate the current and possible future risks and to serve as a guide for actions to be taken to minimize risks or keep them at an optimum level.

Methodology: In this section, a compilation study on sustainability risk management (SRM) was done in the light of information obtained from various reports, scientific articles and books. In other words, in this section, information from various scientific sources on SRM was systematically collected, analyzed, interpreted and evaluated, and effort was made to present an up-to-date, extensive conceptual framework related to SRM. In addition, the scientific literature – especially in the historical development process of the last decade – on the debate of SRM was examined in this study, and the highest point reached in this debate today is revealed. Thus, the positioning of different views on the sustainability issue and the latest developments in the literature were also evaluated properly.

Findings: As a result of the examination of the scientific literature on SRM in the last decade, it has been determined that SRM has led to many other favorable outcomes, from the sustainability of the enterprise to gaining competitive advantage, increasing its goodwill, reputation and efficiency.

Details

Insurance and Risk Management for Disruptions in Social, Economic and Environmental Systems: Decision and Control Allocations within New Domains of Risk
Type: Book
ISBN: 978-1-80117-140-3

Keywords

Article
Publication date: 5 December 2018

Joe Miemczyk and Davide Luzzini

Companies are increasingly challenged by sustainability-related supply chain risks. Research has developed linking supply chain sustainability priorities, practices and triple…

5891

Abstract

Purpose

Companies are increasingly challenged by sustainability-related supply chain risks. Research has developed linking supply chain sustainability priorities, practices and triple bottom line performance; however, risk is rarely included in these models. The purpose of this paper is to understand the link between sustainable supply chain strategies, practices and performance, and to test the importance of risk management practices in this relationship focusing on the product category level.

Design/methodology/approach

The paper includes a survey of supply managers in four countries with 305 responses, with a focus on upstream supply chain strategies at the product category level.

Findings

The environmental and social sustainability strategies lead to sustainable supply sustainable performance, through focused practices in either area, but the effect on operational and cost performance is not significant. Social supply chain strategies positively impact environmental and cost performance when mediated by risk assessment practices.

Originality/value

This paper shows a more nuanced view of the impact of supply chain practices on the strategy–performance link. It is one of the first papers to empirically test the role of risk practices in sustainable supply chain management and emphasize the importance of alignment across the main dimensions of sustainability to achieve positive sustainable performance outcomes, but not necessarily cost and operational performance. Unlike other studies, social sustainability priorities may positively impact environmental and social performance and is linked to cost advantage when implemented with risk assessment practices.

Details

International Journal of Operations & Production Management, vol. 39 no. 2
Type: Research Article
ISSN: 0144-3577

Keywords

Abstract

Details

Responsible Investment Around the World: Finance after the Great Reset
Type: Book
ISBN: 978-1-80382-851-0

Article
Publication date: 10 June 2022

Arash Arianpoor and Seyyed Sajjad Naeimi Tajdar

This study aims to explore the relationship between firm risk, capital structure, cost of equity capital and social and environmental sustainability during the COVID-19 pandemic…

Abstract

Purpose

This study aims to explore the relationship between firm risk, capital structure, cost of equity capital and social and environmental sustainability during the COVID-19 pandemic for companies listed on Tehran Stock Exchange.

Design/methodology/approach

To this aim, the information about 190 companies in 2014–2020 was retrieved to be analyzed. The total risk and systematic risk were used as the indicators of company risk; the industry-adjusted earnings price ratio (IndEP) and GORDON were used for the cost of equity capital. To measure social sustainability and environmental sustainability, the procedure suggested by Arianpoor and Salehi (2020) was used.

Findings

Underleveraged firms have had a lower total risk during the COVID-19 pandemic, while overleveraged firms have not had a higher risk during this time. In overleveraged firms, using systematic risk has a negative impact on social sustainability during the COVID-19 pandemic. In overleveraged firms, using total risk and systematic risk has a significant negative impact on environmental sustainability in the pandemic. Besides, overleveraged firms have a lower cost of equity capital (IndEP) during COVID-19.

Originality/value

To the best of the authors’ knowledge, no similar study has so far examined the joint impact of COVID-19 and corporate risk on social and environmental sustainability and also the joint impact of COVID-19 and capital structure on the cost of equity. This study contributes to the related literature by providing corporations with insightful post-pandemic directions on capital structure decisions and social and environmental activities. Furthermore, this research and the relevant findings can help understand and develop social responsibility in Iran as a developing country.

Details

Journal of Facilities Management , vol. 22 no. 2
Type: Research Article
ISSN: 1472-5967

Keywords

Article
Publication date: 29 July 2014

Anson Wong

This paper aims at highlighting the significance in developing non-financial risk management, emphasizing the need of managing environmental and social issues for enhancing…

3831

Abstract

Purpose

This paper aims at highlighting the significance in developing non-financial risk management, emphasizing the need of managing environmental and social issues for enhancing corporate sustainability. Particularly, through discussing the implications of non-financial risk management, its benefits, opportunities and challenges will also be presented.

Design/methodology/approach

Drawing on authoritative academic literature, reports of corporations’ studies, current articles and documents, the researcher has managed to examine and construe the development and implications of non-financial risk management.

Findings

Several key findings are covered in this article. First of all, environmental and social concerns are usually being deemed as intangible issues that need to be properly articulated and managed by an effective non-financial risk management system for enhancing corporate sustainability. Second, through different interpretations of sustainability, links could be drawn for highlighting the significance of non-financial risk management and corporate sustainability. Third, by explaining the impacts from non-financial risk management to sustainable development and profits, the article has illustrated corporate sustainability as a clear business case for any corporation. Fourth, challenges are also portrayed for the effective management of non-financial risk management by corporations. Finally, and most importantly, the need of a systematic and strategic non-financial risk management system for helping businesses to be more competitive, thus, moving closer to sustainable development, is discussed in this paper.

Originality/value

The contribution of the article is thought to be significant. Although there exists a wide body of research on sustainable development, risk management and corporate sustainability, there is limited insight into how the corporations can effectively conceptualize such intangible or non-financial risk in relation to sustainability. Integrating environmental and social risks is critical to the effective management of any corporation’s real risks, and to improve resources allocation in a sustainable fashion. This demands a systematic and strategic identification of issues through non-financial risk management. Most significantly, this article has shown the way this can be achieved by any corporation, and the concepts can be applied globally.

Article
Publication date: 1 August 2008

Jill Frances Solomon and Carla Rhianon Pel Edgley

An important outcome of the UK Company Law Review (CLR) involved draft regulations for a mandatory operating and financial review (OFR). The unprecedented abandonment of this…

Abstract

Purpose

An important outcome of the UK Company Law Review (CLR) involved draft regulations for a mandatory operating and financial review (OFR). The unprecedented abandonment of this mandatory OFR in November 2005 threw debate about the genuine motivations underlying the CLR into disarray. This paper seeks to reinterpret the abandonment of a mandatory OFR using interview research.

Design/methodology/approach

The authors conducted a series of 24 interviews with companies from the FTSE100 between May and August 2004, prior to the abandonment.

Findings

The interviews showed that the OFR was perceived as an appropriate vehicle for social and environmental reporting (SER). The interviewees considered that a mandatory OFR would provide a means of forcing SER into the mainstream and making it mandatory at a basic level. The interviews revealed that processes for the identification of material SER differ widely between organisations, ranging from embryonic to highly structured. Further, interviewees believed that directors had the final veto on inclusion of information. Despite directors' inclination to hide behind materiality as a means of avoiding SER, interviewees did not view the proposed mandatory OFR as “greenwash” but as a vehicle that would increase stakeholder confidence, as processes underlying the proposed OFR would be audited.

Practical implications

The research implies that abandoning the mandatory OFR represented a lost opportunity for SER.

Originality/value

The paper provides new evidence on the processes of materiality decision making in the SER area as well as strong endorsement of the mandatory OFR, contrary to the government turn‐around.

Details

Social Responsibility Journal, vol. 4 no. 3
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 7 September 2012

Kernaghan Webb

The aims of this paper are: to explore the nature of political risk insurance (PRI) contracts as a form of regulation in the context of mining projects in developing countries; to…

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Abstract

Purpose

The aims of this paper are: to explore the nature of political risk insurance (PRI) contracts as a form of regulation in the context of mining projects in developing countries; to examine how PRI providers factor corporate social responsibility (CSR) policies and practices of applicants in their initial decisions to provide PRI; to examine how CSR criteria are reflected in the terms of PRI contracts; to understand how failure to exercise good CSR practices by recipients of PRI affects insurance coverage; to shed light on how good CSR practices which minimize risk to companies and communities can be or are rewarded through PRI contracts; to identify opportunities for reform.

Design/methodology/approach

This article adopts a conceptual approach through analysis of the practical effects and public policy implications associated with use of PRI contracts as a regulatory mechanism to promote good CSR practices.

Findings

PRI contracts represent a form of proactive risk management used by investors. Because of the significant regulatory effect of the CSR provisions of PRI contracts provided by state‐based agencies, there is considerable potential for and value associated with greater transparency in the implementation of such contracts.

Originality/value

This article sheds light on the regulatory dimensions associated with the CSR provisions of PRI contracts. This represents a new contribution to the literature on CSR contracts, which until this point has focused largely on the CSR aspects of supply chain contracts.

Details

International Journal of Law and Management, vol. 54 no. 5
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 1 February 2016

Lukasz Prorokowski

This paper aims to provide an index benchmarking financial services firms against their environmental performance. The paper also introduces a new definition of the environmental

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Abstract

Purpose

This paper aims to provide an index benchmarking financial services firms against their environmental performance. The paper also introduces a new definition of the environmental risk that fits the current business and regulatory landscape of financial services firms. The Environmental Risk Index (ERI) helps financial services firms review their corporate social responsibility (CSR)/environmental and social governance (ESG) frameworks and address any shortcomings. With this in mind, every financial institution should understand that the Index is not primarily about the ranking, but about the highlighted areas that require significant investment to improve the overall management and understanding of environmental risk. This paper points to the link between being “green” and financial performance. As it transpires, addressing environmental risk serves not only the planet but also banks themselves by bringing in new business, reducing costs and avoiding reputational damage.

Design/methodology/approach

The ERI relies on 44 variables grouped into ten thematic vectors that relate to different aspects of environmental risk management. Data for calculating the ERI are obtained by reviewing CSR and Sustainability Reports produced annually by financial services firms. Reports encompassing 2013 have been analysed to ensure objectivity and comparability of the results. A universal approach to all organisations has been taken in the numerical calculation of this index. The variables have been constructed such that they fit a wide range of institutions, from G-SIB banks and international asset managers through to smaller, domestic firms. As it transpires, the efforts to become “greener” are similar for financial institutions regardless of their market capitalisation or international reach.

Findings

As far as the general ranking for the ERI is concerned, the range between the first and the last bank equals 524 points. With the maximum of 1,000 points that could be achieved in the ranking, the average score is 633 points and over 50 per cent of the banks have scored above the average. As it transpires, European banks outperform institutions from other regions with the average ERI score of 700. Banks repressing the Middle East region lag behind in their environmental performance. Interestingly, ERI scores and revenue figures are almost uncorrelated for large banks. This proves that any bank, despite its global presence and revenue, can develop similar environmental risk initiatives. The empirical analysis of the index results and revenue figures suggest that the revenue is related to the environmental performance. In other words, it is profitable to become “greener”. For every point in the ERI score gained, the revenue should increase slightly by a factor of 0.02.

Practical/implications

This paper cuts through the environmental jargon, extensive literature review on environmental issues, socio-political issues and scientific study to deliver a clear picture of what needs to be done in the area of the environmental risk for financial services firms to reduce costs, increase business, improve reputation, address certain regulatory initiatives, strengthen the environmental and social governance and become more environmentally responsible.

Originality/value

This paper, in a pioneering attempt, has presented the ERI encompassing financial services firms. At this point, the paper serves as a benchmarking tool for financial institutions willing to compare their “green” status. Looking at environmental risk has become an important part of the journey towards carefully managing business processes to generate a positive image. The importance of environmental risk is further underscored by investors, shareholders and regulators taking an increasing interest in banks’ activities. With this in mind, financial services firms need to scrutinise their operations with a particular focus on the quality of management in terms of people, environment and processes.

Details

Qualitative Research in Financial Markets, vol. 8 no. 1
Type: Research Article
ISSN: 1755-4179

Keywords

Book part
Publication date: 1 September 2008

Rebecca Lawrence

This chapter analyses the private financial sector's policy responses, lending practices and various forms of engagement with non-governmental organisations (NGOs), communities and

Abstract

This chapter analyses the private financial sector's policy responses, lending practices and various forms of engagement with non-governmental organisations (NGOs), communities and institutional clients involved in controversial commodity industries. The chapter demonstrates that secrecy plays a constitutive role in this engagement. For investment banks, client-confidentiality is the ultimate limit to transparency. At the same time, NGOs campaign to make public and reveal links between investment banks and clients in commodity industries. The chapter also explores techniques within the financial sector for the assessment of social and environmental risk. The chapter argues that these techniques combine both practices of uncertainty and practices of risk. For civil society organisations, NGOs and local communities, these techniques remain problematic, and various campaigns question both the robustness of the financial sector's social risk screening methods as well as the sustainability of the investments themselves.

Details

Hidden Hands in the Market: Ethnographies of Fair Trade, Ethical Consumption, and Corporate Social Responsibility
Type: Book
ISBN: 978-1-84855-059-9

1 – 10 of over 75000