Climate Action

Controversy Risk Assessment: 2020 Snapshot

A report from Moody’s affiliate, V.E, analyses companies’ involvement in ESG controversies.

  • 26 April 2021
  • V.E, a Moody's affiliate


 A changing world brings with it new risks and opportunities for investors. Monitoring and analysing companies’ involvement in ESG controversies is an increasingly important part of the risk assessment process. It supports investors in understanding where gaps may exist between public ESG commitments, and operational practice.

It can reveal where companies are exposed to reputational, operational and even legal risks that often sit outside the scope of traditional risk mapping activities. V.E have been building our controversy database since 2015 and to date, have over 20,000 cases logged and analysed across a broad range of ESG issues. In this 5 minute read, we provide a snapshot of our 2020 analysis. Many stakeholders have provided commentary on how social-risks have ‘come to the fore’ or ‘ have been exposed’ as a result of the COVID-19 pandemic.

This is clearly reflected in the high concentration of social controversies we captured in 2020. We are in the midst of a transition into an increasingly digitalised socioeconomic environment that brings with it new and challenging risks for corporates and stakeholders. Unsurprisingly, we see software, technology and telecommunications companies amongst the most exposed to ESG controversies as regulators and civil society raise concerns on their operational activities.

As ESG investing continues its rise, the scrutiny of the financial sectors (Diversified Banks, Insurance and General Financial services) remains high especially on issues such as Climate Change. In short, our findings appear to be a good reflection of the macro-trends that we see transforming the world today. 

Read the full paper here.