How to find your way through ESG risks?

ESG is a framework that helps stakeholders understand how an organization manages risks and opportunities around sustainability issues, focusing on the dimensions of Environmental, Social and Governance risks. Addressing ESG risks raises strategic and operational questions. One does not have to look far to see ESG (environmental, social, and governance) risks materialize into financial and non-financial impacts.

We have identified 6 different types of ESG related-risks:

• Transition risk :
• Physical risk
• Social risk
• Governance risk
• Legal risk
• Strategic risk

Legal and strategic risks encompass all risks of financial and reputation resulting from lack of awareness, disregard, denial of ESG stakes in its policies, is essential as any failure to consider other ESG risks will have legal and strategic risks impacts and is often minimized.

Best practices to apprehend those risks

1. Ensuring alignment on ESG regulatory requirements
2. Implementing measures of transparency to anticipate greenwashing litigations (awareness, communicating on ESG commitments…)
3. Defining internal processes, controls associated to prevent from legal risk

Regulators and supervisors are extending the regulatory requirements and driving improved transparency addressing ESG risks. These transparency requirements are gradually being rolled out (EU Green Bond Standard Regulation, SFDR, Pilar 3 on ESG risk disclosure, EU taxonomy, MIFID, IFR/IFD, TCFD, TNFD)

Our assessment of global financial market impact and strategic position within the sustainable sector provides structuring insight into ESG risks, financial and non-financial risks, by market and on operational impacts. We look forward to supporting you in your sustainability journey, helping you assess your ESG risks and solving your ESG-related issues.