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In: Finance

For company Amazon As you consider proposals with one important consideration in mind, i.e., the best...

For company Amazon

As you consider proposals with one important consideration in mind, i.e., the best long-term interests of investors, Should the ESG risk be included in the Financial Risk? Explain.

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Expert Solution

ESG Risk refers to environmental, social and governance risks that need to be integrated into financial risk. These are risk factors which can affect the investment portfolios and the fianncial position of a company. A change in legislation for instant can have a major impact on the operations of a company especially if it is in another country. Management of social and environmental risk also plays an important role in the financials of a company. There could be changes in the societal expectations of customers which again pose a risk to the business revenues. Such risks should be incorporated by adjusting the discount factors to account for the additional risk. Also such risks should be disclosed so as to allow the investors to make wise and informed decisions about the company.

jeff jeffy answered 2 years ago
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