- Explains how the failure to prevent fraud offence overlaps with ESG failings. For example, a breach of environmental regulations is an environmental fraud if false representations are made.
- Companies should assess their fraud risks and develop appropriate measures.
The recently published guidance on the new failure to prevent fraud offence contains a striking focus on the overlap with regulatory offences, such as environmental, social, and governance (ESG) failings. This reflects a trend of regulatory failings being treated increasingly seriously and highlights the growing level of risk for corporates.
The past decade has seen a steep increase in the penalties for regulatory offences, such as safety and environmental breaches. Regulators have also increasingly considered fraud offences in conjunction with regulatory offences, with high-profile examples in areas such as environmental compliance, food safety and building safety.
This overlap exists because there is often a financial element to regulatory offences. For example, a breach of environmental regulations would be an environmental
