ERM’s role in ESG

There is a growing pressure on organizations from investors, consumers, lawmakers, and even business partners to demonstrate progress on environmental, social, and governance (ESG) practices. As companies make progress toward incorporating more of ESG into their business model, this creates its own set of risks, including financial and reputational, which the Enterprise Risk Management (ERM) function should consider assessing and addressing.

Today, companies are operating in an environment where mandatory reporting standards are well underway and continue to evolve. In fact, all major regulations set by the U.S. Securities and Exchange Commission (SEC), Corporate Sustainability Reporting Directive (CSRD), and the International Financial Reporting Standards (IFRS) S1 and S2 require businesses to disclose:

•       The processes and related policies used to identify, assess, prioritize, and monitor sustainability-related risks and opportunities

•       The extent to which, and how, the processes for identifying, assessing, prioritizing, and monitoring sustainability-related risks and opportunities are integrated into and inform the entity’s overall risk management process.

ERM and ESG integration is no longer a feature that organizations would consider “nice to have”. Instead, it’s a “must have”. Our new POV provides insights on how ERM can play a supporting role in ESG’s strategy, planning, and oversight including:

-          ERM’s role in the evolution of ESG programs

-          ESG risks that ERM can address

-          The interception of ESG with ERM