What are ESG risks?
ESG risks include climate risk, environmental compliance, social licence to operate, labour practices, stakeholder conflict, governance failures, supply chain risks, ethics issues and sustainability reporting weaknesses.
Integrating ESG into ERM
ESG should be integrated into enterprise risk management so that material sustainability risks are identified, assessed, prioritised, monitored and escalated through appropriate governance channels.
Role of the board
Boards should ensure management has processes to identify ESG risks, assign accountability, develop mitigation plans, track performance indicators and report material matters clearly.
Practical tools
Useful tools include ESG risk registers, materiality assessments, board dashboards, scenario analysis, stakeholder maps, internal controls and assurance plans.