ESG Risk Assessment and Management

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ESG Risk Assessment and Management

Assessing potential risks and developing mitigation strategies for long-term sustainability.

  1. Identifying relevant ESG risks

Both internal and external relating to your industry or market sector – specifically regulations, but also trends and stakeholder expectations.
Risks include:

Environmental risks- carbon emissions requirements, climate change, pollution

Social risks- Diversity, Equity and Inclusion (DE&I), community engagement, employee practices

Governance risks – executive compensation, Board governance

  1. Assessing materiality

Not everything relevant is material (significant enough to focus on and dedicate resources to). Materiality depends on factors such as impact on financial performance, reputation, and stakeholder interests. Risks can then be prioritised based on their potential consequences.

  1. Data collection and analysis

Gathering relevant data on ESG risks can be time-consuming – we have trialled the best available software and can recommend and help implement the best solution for you, allowing you to keep control over your data including financial data, operational metrics, and qualitative information. We can also help you analyse the data to assess the severity and likelihood of each risk.

  1. Risk mapping and scenario analysis

Creating risk maps to visualize the relationship between different risks and their potential impact and conducting scenario analysis to assess how regulatory changes and natural disasters, for instance, would affect your organisation.

  1. Risk mitigation strategies

Develop strategies to mitigate identified risks. These may include:

  • Implementing policies and procedures
  • Setting targets for reducing environmental impact
  • Strengthening governance practices
  • Engaging with stakeholders
  • Investing in sustainable practices
  1. Integration into decision making

Embedding ESG risk considerations into your decision-making processes will ensure that ESG risks are considered alongside financial risks when evaluating investments, projects, and strategic initiatives.

  1. Reporting and transparency

Finally, we can help with communicating your ESG risk management efforts to stakeholders through ESG Impact reports, annual reports, and other channels.

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To find your nearest office or get in touch with one of our specialist advisors to see how we can help your business, please go to our contact page.

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