For the first issue of Risk & Resilience Magazine we explore how ESG and business continuity are stories of survival. Using tips from “The Worst-Case Scenario Survival Handbook,” Aravo’s Barbara-Ann Boehler dives into a new way of framing ESG within your organization.
By Barbara-Ann Boehler
Twenty-one years ago, “The Worst-Case Scenario Survival Handbook: Expert Advice for Extreme Solutions” was first published. The book sold 10 million copies and informed a generation on how to escape from quicksand, wrestle alligators, and land a plane. The book generated countless iterations as well as games, calendars, and even tv shows. The premise was a bit cheeky, although it would certainly seem helpful know “how to tell if a clown is murderous” (see Chapter 3: The Best Defense). The handbook was published in October of 1999 when we were on the brink of Y2K (which turns out was just another day) and the unknown was terrifying. A plan for the unexpected was in many ways a welcome relief. The corporate corollary to the worst-case scenario handbook is our modern corporate business continuity plan, albeit with less advice on jumping from moving vehicles (see Chapter 4: Leaps of Faith).
Corporate business continuity planning at its most basic is an attempt to wrap our corporate arms around the organization’s potential risks and develop strategies and corporate policies for managing risk should the worst happen. We have witnessed just how critical continuity planning was to the continuation of some organizations and the demise of others over the last year and half. While we need to plan for the expected risks facing our specific industries, we need to have an eye towards the unexpected. Most organizations are unlikely to need to provide guidance on “how to survive if your parachute fails to open” (see Chapter 7: Adventure Survival) however being prepared for when the metaphorical parachute will not open is essential.
An emerging focus area for the compliance community is the rise of environmental, social, and governance or “ESG”. While not at all a new corporate concept, as the conversation turns to issues of governance, ESG has in turn caught the attention of compliance and risk practitioners. Shareholders, investors, and consumers now more than ever demand and expect that organizations focus on how their businesses impact the world around them.
From goals surrounding net zero emissions to the promotion of ethical investing to the focus on social justice and diversity and inclusion, the governance of these initiatives will become inextricably linked to reputations and the ethos of the organization and even their continued viability. Organizations and more specifically their boards of directors need to consider about ESG concerns when assessing their corporate risk and as part of the whole of their continuity planning initiatives.
The governance aspect of ESG (or the failure to enact governance around these matters) has developed a set of teeth behind it. While a guide for managing ESG cannot be found in our “Worst-Case Scenario Handbook” although managing issues with teeth is- (see Chapter 2: Tooth and Claw, How to Survive a Shark Attack) there are recent corporate examples where we might look to for guidance.
Behemoth financial services firms Blackrock and State Street Global Advisors (SSGA) have recently taken strong positions on the importance of ESG when assessing investment options for their clients. In March 2021 Blackrock released its annual engagement priorities report, the Blackrock Investment Stewardship (“BIS”). The BIS provides an evaluation of Blackrock’s investment management relationships and sets forth its goals for how it will vote its corporate proxies. This proxy voting block represents a powerful voice in the investment community.
In the introduction Blackrock specifically states,
“Our conviction is that companies perform better when they are deliberate about their roles in society and act in the interests of their employees, customers, communities and shareholders. We use or voice as a shareholder to urge companies to focus on important issues, like climate change, the fair treatments of workers, and racial and gender equality, as we believe that leads to durable corporate profitability.”
The BIS sets forth a set of engagement priorities based on new and emerging risks and encourages company boards and management to use these priorities as a way to assess internal gaps. The March 2021 BIS specifically lists the following five areas of focus, which may a good starting point or check up for your own firm’s internal assessment or its consideration of ESG:
Organizations that fail to consider ESG issues when reviewing their risk matrix or when designing their business continuity plan will find it difficult to compete, thrive, and even survive in the coming years or even in the short term. It’s not only important to consider ESG risks, but to actually embed and account for those risks with a firm’s business continuity plan. We all know that sometimes the worst-case scenario actually happens (see 2020). Developing a handbook to manage and mitigate those risks will see your organization through all extreme situations.
Read this article, and other great pieces of ESG thought leadership in Risk & Resilience Magazine!
Barbara-Ann Boehler is an attorney and adjunct lecturer with over twenty years of compliance experience. Barbara-Ann currently serves as a Product Marketing Director, at Aravo Solutions, Inc. and teaches “Compliance Practice Skills” at Suffolk University Law School and Boston University Law School. Barbara-Ann formerly served as the Director of Programming and Education at Compliance Week, Securities SME at Wolters Kluwer Financial Services, global chief compliance officer for Arete Research, a limited-purpose, FINRA-registered broker/dealer specializing in equity research. Barbara-Ann also held compliance roles at Fidelity Investments, JP Morgan Invest, Standish Mellon Asset Management, and Babson Capital Management. Barbara-Ann holds a BA from Suffolk University, a JD from Suffolk University Law School, and an LL.M. from Boston University School of Law.
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