Why ESG Risks Matter

There is a strong, positive correlation between ESG practices and financial returns.

ESG risks are real and so identifying and thereafter managing and mitigating them can help reduce costs. Conversely, failing to identify, report, manage and / or mitigate can lead to increased costs.

Equally, a well-considered strategic review of your organization’s ESG risk landscape can reap financial rewards through opportunity identification.

ESG readiness assessment report

Multiple bodies of research show that companies with strong ESG-related policies and practices typically enjoy:

  • Lower risks (number and financial exposure)
  • Lower cost of capital
  • Improved operational performance (increased efficiency; more efficiency resource utilization)
  • Better share price performance over the longer term.

Strong ESG practices can deliver significant benefits for an organization. These include:

Growth

Business Growth
Organizations focused on ESG and sustainability are much more likely to attract, acquire and retain new customers and drive customer engagement and loyalty.

Cost Management 
Organizations focused on resource efficiency (energy efficiency, water-efficiency, waste management) typically have lower cost structures.

regulatory

Regulatory and Stakeholder Relationships
Typically, organizations that are more responsible about their environmental footprint are less likely to be the recipients of adverse regulatory outcomes.

People
Millennials are increasingly attracted to mission driven, purpose driven, and socially responsible organizations. Given that millennials will represent 75% of the workforce by 2030, this is now an imperative for any forward-thinking organization.

risk management

Risk Management
Strong ESG risk management practices will include a review and understanding of both Physical risks and Transition risks. Additionally, they need to include a review of ESG-related opportunities.

Failing to identify, report, manage and / or mitigate ESG risk can
lead to a significant increase in costs.

ESG Risk Guard is ready to support you.

Contact us to benefit from expertise, insights and knowledge into the ESG risks that can impact your organisation and be better positioned to address and manage these risks within an organization.