Know where to focus across 19 key risk areas
Your ESG initiatives should be reviewed annually.
Every company should have a process by which they conduct ESG risk and materiality assessments as a whole and against each of the 19 risk areas that fall into the ESG spectrum. These risks are changing at an accelerated pace thanks to changes in the regulatory environment and the consumer and business sentiment around ESG risks.
Learn more by reading some of our client stories.
Knowing your risks is a foundation element of any ESG programme. The materiality assessment must be an annual exercise to truly identify a changing landscape.
Most companies conduct a risk assessment. However, many do not have this embedded as an annual exercise that truly considers new risks to their business brought about by regulatory changes, changes to the business through expansion or contraction or changes to consumer sentiment.
While many risk assessments consider business risks in the form of economic, financial or personnel risks, many have not considered the risks covered by the ESG spectrum which are now increasing in their importance to business.
A hybrid materiality & risk assessment of ESG risks spread across multiple countries and businesses.
A system to conduct annual materiality assessments and clear ownership and accountability.
Key increase in understanding of ESG and what it involves in a changing environemnt.
Situation or challenge
Our client had a risk assessment programme in place for years but had never considered overall ESG risks. They wanted to make sure their risk system followed best practices and included all emerging risk areas covered by ESG. There was also a lack of understanding of the company definition on ESG and a lack of understanding on the impact of ESG risks.
Our solution was to conduct a risk and materiality assessment exercise focused on ESG risks. We reviewed their current risk identification system, including their knowledge and coverage of ESG risk areas. Training was provided on these key areas and an increase of awareness on these topics. The risk assessment was done by looking at each area and assessing it with teams to workshop potential areas and exposure.
The results showed clearly that the company had a lot to do to get to ESG risks into their existing risk assessment process.
The major issue was a lack of definition and understanding on the ESG risk areas and an under appreciation for the impact of ESG risk failures on the business.
The aim of making the risk assessment system more robust, more relevant, more understood and more efficient was well achieved.