Companies in the US and Canada are three times more likely to risk violating standards compared to other regions worldwide. Meantime, Asian companies rank worst across the full range of standards. These include labour, human rights, anti-corruption and environment.   

The analysis coincides with the release of ESG Book’s Risk Score. This is a transparent, data-driven assessment of corporate exposure to critical ESG topics based on the UN Global Compact.

ESG Book’s study is based on over 10,000 corporations. It found that North American companies are the most susceptible globally to infringements of the UN Global Compact’s environmental principles. Some 60% of companies identified as being at heightened risk of contravening the international agreement coming from the US.

The UN Global Compact principles incorporate the environment, human rights, labour, and anti-corruption. Asia is identified as the most vulnerable of the major markets. Specifically, 15% of Asian companies are at risk of infringing the universal principles. This is driven by companies in Korea (28%), Japan (19%), China (16%), and the risk of anti-corruption breaches in particular.

US companies: low exposure to anti-corruption risk

European companies are less likely to breach the majority of the Compact principles compared with North American and Asian counterparts. An exception to this is the low exposure of North American companies to anti-corruption risk (0.5%). By this metric, where US firms perform seven times better than the rest of the world (3.5%). And three times better than European corporates (1.5%).

ESG Book says its score is a solution to many of the current market challenges around risk analytics. It includes opacity around methodologies and data, multi-purpose frameworks that conflate ESG performance and risk, and systematic bias.

Daniel Klier, CEO of ESG Book, said: “Risk considerations are integral for clear decision-making around ESG investing and management. However, markets are currently being failed by many of the analytics and ratings available. These are often inconsistent, one-dimensional, and based on black-box methodologies.”

“As part of ESG Book’s suite of, the Risk Score brings a new level of sophistication to corporate risk analysis. It provides complete transparency around how and why companies might be at risk of violating universal principles of corporate conduct.”