At an international finance bank, a lack of staff clarity regarding sustainability, climate, and ESG definitions led to overlapping and inefficient initiatives. To minimize inefficiencies, the sustainability department develops new terminology for use across the bank.
What should the department include in this new terminology?
The sustainability department's new terminology should include all governance and social risks. Sustainability encompasses not only environmental concerns but also social and governance dimensions, which are fundamental to comprehensive sustainability strategies. Thus, ensuring that sustainability includes governance and social risks is crucial for minimizing inefficiencies and achieving holistic improvement across the bank.
Sustainability should include all governance and social risks.
I'd choose C. Why not D? 1. (2.1) "Investors and financial institutions, for their part, practice sustainability through the ESG policies.." 2. (2.2) "Sustainability...encompasses social and environmental awareness, and it seeks to ensure that economic activity does not harm either society or the broader environment." My comment: it refers to social and environmental instead of social and governance.
As far as I understand it Sustainability is the broadest of all these categories. It is not right to say ESG risks are broader than all sustainability risks. ESG is used mostly by the finance world, so I really don't think of it as that broad.
Sustainability is a broad category; ESG, or measuring the environmental, social, and governance performance of firms, often by financial counterparties, sits within sus-tainability. (p.30)
Governance is not part of sustainability. The Turnbull report and Cadbury report precede Sustainability in corporations.
Sustainability includes social and environmental risks. ESG includes environmental, social AND governance. Hence, ESG is broader than Sustainability.
C is wrong. Sustainability is the broadest category