Gambling on Green

Chapter 5Rating Regional ESG Progress

One important but easily overlooked aspect of managing ESG risks and opportunities centers on the countries where companies and their suppliers are located. Corporate leaders should care about environmental, social, and governance risks and opportunities in various regions because their companies—and the suppliers that service their companies—have a responsibility to enhance the regions and communities where they do business.

Thinking about how your company and suppliers impact communities can offer a holistic approach to assessing your sustainability efforts, sustainable products, practices, and policies. Your long-term planning should consider the sustainability of the goods you produce, how they are produced, and how your direct or indirect operations might impact the areas where you do business. For example, your products may be produced in a country that has loose or no human rights regulations. In those cases, your planning should include supplier screening for human rights issues.

Consideration of regional risks has become integral to ESG investing in recent years. The phrase regional risks is shorthand for the challenges a company faces in a specific location due to the economic environment, regulatory environment, and even the likelihood of physical climate catastrophes. Rating organizations assess the financial ability of regions to withstand environmental, social, or external interruptions.¹ These ratings offer information that ...