COSO, a large consortium of private organisations developing risk-related guidelines and frameworks, and the World Business Council for Sustainable Development (WBCSD) released their long-awaited Guidance for Applying Enterprise Risk Management (ERM) to Environmental, Social and Governance (ESG)-related Risks on 24 October.
The guidance for applying ERM to ESG-related risks appears in the context of an evolving landscape of ESG-related risks, which can impact the profitability, success and even survival of a variety of entities. COSO and WBCSD have partnered to develop this guidance to help organisations better understand the full spectrum of these risks and to manage and disclose them effectively.
There is no universal or agreed definition of ESG-related risks, which may also be referred to as sustainability, non-financial or extra-financial risks, the guidance explains.
However, showing that a business understands and manages ESG risks, by integrating them into a true business methodology like enterprise risk management, will send a powerful signal to investors and society as a whole that they are resilient and prepared to make better informed decisions to remain sustainable in the next decades, according to Rodney Irwin, Managing Director of Redefining Value and Education at the WBCSD.
Rodney was the responsible for the project and presented its main features at the FERMA European Risk Management Seminar in Antwerp on 9-10 October, during a panel session entitled “Securing our future through Responsible Business Conduct.
The COSO-WBCSD report echoes FERMA’s call last July to treat the reporting of environmental and social performance as a business process.