Are CEO salaries out of control?

Last year, the median pay for the UK’s FTSE 100 CEOs was 80 times the median salary of their employees. As Patrick Temple-West reports, in the US the gulf is even greater, with S&P 500 CEOs earning on average 245 times more. The massive disparity has prompted criticism from many investors, with even billionaire Carl Icahn describing such wage gaps as “unconscionable”. From FT Moral Money.

Is it time to unbundle ESG?

“ESG should be boiled down to one simple measure: emissions”; so writes The Economist in a Leader in its June 21st edition.

One of the hottest trends in finance these days is environmental, social and governance (ESG) investing.

This is an attempt to make capitalism work better and deal with the critical threat posed by climate change.

ESG investing has mushroomed in recent years. While the ESG process began with such high hopes in 2004 or thereabouts, the three letters have mutated into shorthand for hype and controversy.

• Right-wing American politicians blame a “climate cartel” for spiraling prices at pump.
• Whistleblowers accuse the industry of “greenwashing” by deceiving its clients.
• Firms from Goldman Sachs to Deutsche Bank face regulatory probes.

While ESG in concept is well meaning it is deeply flawed. The danger is in creating conflicting goals for firms, conning savers and distracting from the now critical vital task of tackling climate change.

The Economist maintains that ESG is “..an unholy mess that needs to be ruthlessly streamlined.”

Read the full story HERE.

Understanding ESG in the Banking Industry

Surface temperature on the Earth have risen at a record pace in recent decades, creating risks to life, ecosystems, and economies. Climate science warns us that further warming is unavoidable over the next decade, and probably after that as well. Climate change poses a real threat and a huge risk to banks as key providers of finance for commerce and industry.

Climate change is putting banks at risk. This risk is being driven by two requirements facing the banking sector:

• Banks need to manage their own financial exposures, and these exposures are at risk because of climate change.  
• Banks are being driven by regulatory pressure to help finance a green agenda, a process that is critical to temper the impact of global warming. 
  

This course examines the outlined problems that banks are facing and provides practical guidance to assist them in complying with ESG requirements.

This online training course carries 2 CPE credits.

To register and access this online training course clink HERE. 

New Online Course - Understanding Environmental, Social, and Governance (ESG)

Environmental, Social, and Governance (ESG) has gained increasing attention over the past few years. Today many institutional investors will only invest in those companies that provide ESG performance reporting. ESG provides a set of standards for a company’s operations that today’s socially conscious investors use to screen potential investments in terms of how a company treats the environment, manages social issues (relationships with employees, suppliers, customers, and the communities where it operates), and deals with governance issues.

This course has a three-fold focus;

• Provide the participant with an understanding of ESG. Here we look at what ESG is, its evolution and why it matters. We illustrate this, using examples of three ESG incidents (the Deepwater Horizon oil spill; the Volkswagen emissions scandal and the Facebook – Cambridge Analytica debacle).
• Show how an ESG framework supports a company’s overall risk management strategy/structure. Here we explore issues like; • Key ESG factors, • Sustainable Investing, • Corporate Pressure, • Stakeholder Expectations, • ESG Risks and Opportunities, • Unique Risks in Corporate Supply Chains, • ESG Investing Trends, and • Information Needs and Sources.
• Provide the hands-on knowledge you need to conduct more effective ESG due diligence, and to make better investment decisions. Here we present a step-by-step guide on the actions you need to take to ensure that your company becomes ESG compliant. We conclude by examining some current ESG myths.

ESG is an increasingly popular way for investors to evaluate companies in which they might want to invest. On the flipside, ESG can also help investors avoid companies that could pose a greater financial risk due to below par environmental or other practices.

ESG is relevant to analysts and investors, consumers and employees, and has become a major topic of discussion at Board meetings.

To register CLICK HERE

An Introduction to Environmental, Social and Governance (ESG) Criteria - New Online Course

Environmental, Social, and Corporate Governance (more commonly referred to as ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. Analysis of these criteria can help determine the future financial performance of companies (in other words the return capital and the risks that they face).

ESG criteria are a set of standards for a company’s operations that today’s socially conscious investors use to screen potential investments.

• Environmental criteria look at how a company performs as a steward of nature in protecting the planet.
  

• Social criteria examine how the company manages relationships with employees, suppliers, customers, and the communities where it operates.
  

• Governance deals with a company’s leadership, the pay of its executives, audits, internal controls, and shareholder rights.

Environmental, social, and governance (ESG) criteria are an increasingly popular way for investors to evaluate companies in which they might want to invest. Using ESG criteria can also help investors avoid companies that could pose a greater financial risk due to below par environmental or other practices.

This course is an introduction to these criteria and how they may be used.

For full details and Registrations click HERE.

Welcome to the Era of the Activist Accountant - FT Moral Money

Accountants turned activists? In an unexpected modern tale, activist accountants have become vital advocates towards standardizing 'ESG' risks

ESG - What is next and what do you need to do?

Over the last couple of years we have seen a flurry of activity on the environmental, social and corporate governance (ESG) front. The plethora of scattered, fast-paced ESG developments across the public and private sectors are putting corporate compliance teams in a difficult position, especially as some companies are still reeling from staff and resource cuts caused by the pandemic.

Want to know more about what is coming up and what you need to do? Read Alexandra Wrage's article in Forbes HERE.

Enterprise Risk Management - Three Lines of Defense: A New Principles-Based Approach

Across industries and time, the “three lines of defense” has been a cornerstone of operationalizing risk management programs. The Institute of Internal Auditors (IIA) provided valuable guidance regarding the three lines of defense initially in 2013, followed by updated guidance in July 2020 (called the “Three Lines Model”).

The three lines of defense represent an approach to providing structure around risk management and internal controls within an organization by defining roles and responsibilities in different areas and the relationship between those different areas. GARP has provided a detailed breakdown of the new approach. 

Get all the details here - Three Lines of Defense: A New Principles-Based Approach

Big Short: Fintech Fraud Wirecard Explained (EY Accounting Scandal)

Eddie Donmez takes a look at the German Payment processing Fintech- Wirecard. He dives into the 15-year long accounting fraud that saw €1.9bn go missing and draws parallels to previous scandals like Lehman Brothers and Enron. Are there more FinTechs out there that have grown too quickly and let their standard slip?

What Percent of Financial Services’ IT Budgets Are Devoted to Regulatory Technology?

• As of 2017, the cost of regulatory compliance is equal to 14.3% of IT budgets on average
• That’s a 30% increase in compliance costs over the last 6 years
• The regtech market’s compound annual growth rate is 25% through 2023, growing to revenues of $7.2 billion
• Solution categories in the regtech market include:

• Data management
• Reporting
• AML/KYC
• Risk management
• Records management
• Change management
• Governance

• More than $9 billion was invested in regtech firms between 2014 & 2018
• In 2018 alone, $4.5 billion was invested in reg tech firms
• The bulk of the regtech investments have been in the AML/KYC space

The Evolving Role of the Front Line in Risk Governance

From GARP –

“The risk responsibilities of front-line units at financial institutions have increased significantly. The front line must now cover the risks associated with their activities, and should therefore be held accountable by the CEO and the board for effectively assessing and mitigating those risks, according to the Office of the Comptroller of the Currency (OCC).

Until recently, it was largely the second line of defense (the independent risk management team) that led the risk management exercise, while the front line focused more on sales and revenue targets. The latter’s risk responsibilities were largely limited to not breaching risk thresholds.”

Read more>>