17 July 2020
The Covid-19 crisis is refocusing the way investors view environmental, social and governance measures, reshaping their purely altruistic intentions towards performance based metrics. Corporates’ priorities have also changed since the pandemic began. flow’s Janet Du Chenne looks at the drivers of these shifts in attitudes and what shape ESG will take in the new normal
When former US energy company Enron filed for bankruptcy in December 2001, it unearthed one of the largest accounting scandals in corporate history. A sophisticated web of loopholes, special purpose entities and poor financial reporting hid billions of dollars in debt from failed deals and projects. The scandal was cited as the biggest audit failure1, brought to light by the dotcom bubble burst2, which also uncovered improper accounting at WorldCom in 20023.
As a consequence, the Sarbanes-Oxley Act of 20024 enforced improvements in the accuracy of financial reporting for public companies and mandated increased penalties for destroying, altering, or fabricating records in federal investigations or for attempting to defraud shareholders.
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