The conversation surrounding environmental, social, and corporate governance (ESG) is starting to escalate as it becomes a priority around the globe.
“For the past 10 years, stakeholders, shareholders, and leaders inside top organisations have been working to develop and implement fully articulated ESG plans governing their business practices moving forward. They are doing this because it is good for shareholder value and operational excellence and a positive way forward for their surrounding communities — and because it is the right thing to do for all of us.” – Roger Audino, EHS Practice Lead, Origami Risk
As lines continue to blur across risk management, safety, compliance, and ESG functions, it’s becoming imperative to share knowledge and practice agile risk management across organisational departments.
Risk and EHS managers' jobs are becoming more strategic. There are also bigger consequences for not keeping up with the pace of change and getting ahead of emerging risks. It’s no longer about just getting the job done. It's also about ensuring the department plays an advisory role in mapping out and adequately planning, across the organisation, for these compounding responsibilities and regulations. Risk, compliance, and safety professionals must take a proactive approach to adapt to emerging trends that are raising the importance of ESG:
- Reporting and data obligations due to regulatory changes
- Brand/reputational capital
- Link to profitability
- Stakeholder interest, including workforce, clients, and consumers
- Investor priority
- Being a good corporate citizen and positively contributing to the community
“Companies are experiencing a rising demand to not only think about ESG, but to take a proactive approach and truly act. Stakeholders, both internal and external, are expecting ESG accountability as they consider who they want to work for and work with. In addition, boards of directors are pushing for action on ESG as research continues to show that ESG activities correlate with creating value, reducing risk, and producing stronger returns.” – Jon Schulz, Senior Market Strategy Lead, Origami Risk
As we enter the “next normal,” a few clear trends have emerged. The State of Risk Report 2022 identifies that ESG is a priority for both Laggards and Leaders: fewer than 1 in 5 have ESG ranked as a lower priority.
Kim Knickle, Research Director, ESG & Sustainability at Verdantix and contributor to the State of Risk Report 2022, urges that “the data validates that it’s not enough to just talk about ESG, you also have to have the people, processes, and technology — such as systems around social performance data and metrics — in place to do it.”
While data may be scattered across the organization, new responsibilities are not yet defined, and stakeholders may feel they are aiming at moving targets, there are 7 clear steps to advancing ESG in organisations:
- Observe other geographies and frameworks used to develop strategy
- Committee formation: ensure proper stakeholder involvement
- Determine materiality in ESG, goals, and reporting frameworks
- Implement operational/organisational changes (as simple as communication)
- Collect and report on metrics (current-state mapping)
- Long-term strategy mapping
- Allow for continuous improvement
Amidst any ambiguity, organisations need to create the roadmap for their ESG journeys now. Remember, it’s not a one-person job — there is a risk, compliance, and EHS community to support forward movement. If the past few years have shown us anything, it’s how resilient, resourceful, and connected the risk community is — especially during times of change.
To request the Origami Risk Is “Good Enough”, Enough? Championing the Intersection of Risk, Governance, and ESG PERK Session at your local RMIS chapter, contact: Will Gilchrist (email@example.com) or firstname.lastname@example.org today.
To learn more about ESG, visit our resource page.