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.

Table of contents

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

Table of figures

Figure 1. Examples of ESG-related risks
Figure 2. Definition of ESG-related risks

About the authors

Jessica Pransky

Principal Analyst
Jessica is a Principal Analyst in the Verdantix ESG & Sustainability practice, which she joined in 2022. Her current research agenda covers ESG reporting and data management software, ESG solutions for investors, and risk in ESG and sustainability. Prior to joining Verdantix, Jessica worked at Ramboll, focusing on ESG risk and opportunity identification for mergers and acquisitions, as well as EHS due diligence. Jessica has previously held roles evaluating water resource allocation for a state municipality and ensuring EHS compliance for GE Aviation. She holds a BS from Tufts University and an MEng from Johns Hopkins University focused on environmental engineering, as well as an MBA from Boston University.

Bill Pennington

VP Research, EHS & Risk Management
Bill is the VP Research for the Verdantix EHS & Risk Management practices. His current agenda focuses on understanding the evolution of EHS and enterprise risk management, evaluating emerging strategic risks and benchmarking technology buyers’ budgets, priorities and preferences globally.

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