New guidance shows how to use ERM to improve organizational resilience for environmental, social and governance-related risks
- Published: Wednesday, 24 October 2018 07:43
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the World Business Council for Sustainable Development (WBCSD) have released a jointly developed document, ‘Guidance for Applying Enterprise Risk Management (ERM) to Environmental, Social and Governance (ESG)-related Risks.’
This guidance, which underwent an extensive public comment period, is intended to bring ESG risks and opportunities into a clearer focus for mainstream businesses and other organizations around the world. It is designed to enhance organizations’ resiliency as they confront the increasing prevalence and severity of ESG-related risks, ranging from extreme weather events to product safety recalls.
The document aligns with COSO’s definitive ‘Enterprise Risk Management — Integrating with Strategy and Performance’ guidance.
“The Guidance is a valuable contribution for applying COSO’s ERM Framework to ESG-related risks,” said Paul J. Sobel, COSO Chairman. “The prevalence of ESG-related risks globally is increasing, and there is a growing demand from stakeholders for ESG-related insight. Using the common language of ERM, this guidance helps to meet the needs of risk management and sustainability practitioners for integrating ESG-related risks into ERM.”
Contents of the new guidance include:
- Approaches to overcome ESG-related risk challenges across the enterprise risk management process, from governance to risk identification and assessment through to communication and reporting;
- Innovative responses to manage both upside and downside of ESG-related risks;
- Methods for developing and maintaining a culture of continuous improvement for managing ESG-related risks.