Strategic Focus: Trends In ESG Risk Management

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Executive Summary

ESG risk management is becoming an essential component of corporates’ sustainability strategies. ESG risks are multi-faceted and complex, and can have ripple effects, impacting numerous stakeholders within an organization. As such, many businesses struggle with their effective management. Increasingly, firms are starting to incorporate ESG risks into their enterprise risk management (ERM) frameworks. This report provides an overview of trends related to the financial, operational and strategic impacts of five broad risk categories: climate risk to physical assets; governance-related risks; ESG-related compliance risks; reputational risks; and supply-chain-related risks.
Impacts associated with ESG risks are increasing in intensity
Financial impacts are expected to increase in the short term
ESG factors cause firms to rethink their daily operations and staffing needs
Firms must develop proactive strategies to mitigate the impacts of ESG risks
Figure 1. Examples of ESG-related risks
Figure 2. Definition of ESG-related risks

About the Authors

Jessica Pransky

Jessica Pransky

Principal Analyst

Jessica is a Principal Analyst at Verdantix, specializing in providing insights to sustainability leaders and analysing ESG and sustainability reporting software. She advises ...

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Bill Pennington

Bill Pennington

VP Research

Bill is VP Research at Verdantix, where he leads analysis on the evolving and interconnected landscapes of EHS, quality, AI and enterprise risk management. His research helps ...

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