The collapse of Silicon Valley Bank had everything to do with the 'G' in the ESG acronym — the now-controversial moniker for Environmental, Social and Governance measures.
by lawmakers in the House Wednesday, Barr and FDIC chairman Martin Gruenberg both rejected the idea that ESG played a role in the failure of SVB.Most corporate failures, whether it was Enron or Lehman Brothers or now Silicon Valley Bank, were in fact governance failures, said Paul Washington, executive director of the Conference Board ESG Center.Yet, that is often forgotten in the politically charged debate over ESG.
In the wake of SVB's failure, for example, conservatives have blamed the company's focus on environmental and social justice for its undoing. But they haven't much mentioned how the bank was governed.In its 2022 ESG report, the company says it seeks directors on its board with “knowledge of, or experience with, key risk oversight and risk management functions to help oversee the dynamic risks we face.
But the key risk the bank failed to deal with was a “bread and butter” issue, as Barr explained this week. That is the bank failed to manage its interest rate risk. That failure was its undoing."Good governance, I have no issue with," Vivek Ramaswamy, the author of the book "Woke Inc.
That's what happened with SVB, he said, clarifying that he doesn't think ESG is why the bank collapsed.
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