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Back to Basics on third Party Risk Management with Refintiv

Wednesday 11 May 2022




ESG analysis  should be recentred to look at sanctions.

This is the view of Ethical Systems Executive Director Alison Taylor speaking at the recent Refintiv online seminar titled Back to Basics in third-party management: sanctions, corruption and other integrity risks  focused on primarily on integrity risk.

Ethical Systems Executive Director Alison Taylor, “What to me the Russian invasion of Ukraine and the introduction of Russian sanctions have really taught us is the limitations in the way that we are thinking about and talking about ESG today.”

Taylor said that the current war might be responsible of revealing the limiting of current ESG frameworks.

For the Ethical Systems managing director the challenge to current ESG frameworks is a question of timing.

“We are paying, just as a society,  just as much, if not more attention, to what corporations doing about withdrawing form Russia or not as we are Biden is doing, to what the UN is doing,  to what the EU is doing.

Taylor continues, “Corporations and corporate ethics and corporate moral decision making is absolutely at the forefront of discussion.”

However, she argues that the corporate decision making to pull out of Russia because of sanctions is not as black and white as it has been portrayed in  mainstream media.

“McDonald’s for example is still paying its staff even though its closed operations. A company like BP has a taken $20 billion write down. A company like Carlsberg tried to keep things going because it was a very significant portion of Carlsberg’s business before bowing to pressure.”
The ESG analysis had previously been concerned with board diversity and board pay.
 
Sanctions and the Humanitarian Crisis
Global Governance Senior Researcher Dr. Erica Monet highlighted reasons why sanctions regimes have reached a crisis point and also creates  complexed compliance environments for  businesses.

Sanctions regime, particularly those employed by the US and the EU are a return to the de-facto comprehensive sanctions regimes of the past.

 “You will al  remember tat back in the 1990s the un and US sanctions against Iraq, Cuba, former Yugoslavia, Haiti and the outcry with regards to the humanitarian impacts of these embargoes against those countries.”

Dr  Monet continues , “What we are seeing in the cases of UN US sanctions regimes such as those against Iran or Korea, Syria, Venezuela, arguably, is that the broadening of measures to cover a range of sectoral sanctions—those that include measures against central banks, energy sectors and other important industries within a country, finance of course, start to resemble the embargoes of  the olden days.”
 
Ultimately, sanctioned spaces become  excluded from the global financial markets, and this can amplify humanitarian challenges that may have led to the sanctions form the perspective.

In the context of Russia,  because of its  integration global financial systems and the and a prominent energy provider, there will actually major impacts Europe and around the world.