Andrew Siwo wrote in Investmentnews.com that an effective Environment Social and Governance program could have saved the Silicon Valley Bank. This is an interesting take because some business experts claim that the SVB bank had to be rescued because their ESG program went too far. In particular some felt the SVB board (governance) was too focused on ESG issues and not focused enough on sustaining the company financially.
From Siwo’s article, “Silicon Valley Bank, one of the nation’s largest banks, experienced a series of governance lapses that resulted in the mismanagement of interest-rate risk. Ignoring governance factors precipitated what could have caused another global financial crisis.”
Full article… ESG could have saved SVB (investmentnews.com)
I believe that people who think ESG may have ruined the bank and the people who think ESG could have saved the bank… may both be correct. If SVB had an effective ESG program they could have seen that their governance system had been damaged or hindered by overly zealous social efforts and stopped it. Any department can bring down a company by going to far.
If you believe the governing board of Silicon Valley Bank could have saved the company with better governance then you, by default, have to think that they could have benefited from an ESG program. One of the few business models that helps companies analyze and improve their governance. Ironically it is entirely possible that an ESG program analysis of their governance structure would have identified the risks it created.
An ESG department, much like any other department, has the ability to ruin your company or save your company from ruin. Everyone knows the legal department can ensure the law is followed or make an incorrect legal decision that could cost millions. Marketing can help or hurt… just read the current headlines. ESG can ruin you too if it ignores the need for profit or it can save you by reducing risk that comes with poor governance or failed environmental and social policy. It’s a shame that many people who are frustrated with ESG can’t see this. Those who don’t have an effective ESG program and an automated system to monitor ESG activities real time, increase their risk of failure. That risk includes risk caused by people who hurt the company with excessive ESG policies and forgetting about the need for strong organizational governance.
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