What is sustainability risk management (SRM)?
Summary
Sustainability risk management (SRM) is a strategic approach that synchronises a company’s profit objectives with its environmental, social, and governance (ESG) policies. The aim is to efficiently address potential risks while seizing opportunities related to sustainability.
SRM is often part of a broader enterprise risk management strategy, indicating that sustainability is becoming a key strategic concern rather than merely a public relations matter. Risk categories within SRM include environmental, social, and governance risks, each with its own specific challenges and considerations.
As businesses increasingly embed SRM into their operations, these strategies help in optimising their approaches to sustainability while mitigating risks associated with ESG factors.
Key Points
- SRM aligns profit goals with ESG policies, addressing risks and opportunities in sustainability.
- Three main types of ESG risks are environmental, social, and governance, each requiring tailored management strategies.
- Organisations must identify risks, establish objectives, and measure progress towards sustainability goals.
- Observing varying stakeholder priorities regarding sustainability can complicate goal-setting and implementation.
- The regulatory landscape concerning ESG is evolving, creating both challenges and opportunities for compliance.
Why should I read this?
This article provides a comprehensive overview of sustainability risk management and its significance in contemporary business strategies. Understanding SRM is crucial for organisations aiming to effectively integrate sustainability into their operations, manage ESG risks, and meet the growing expectations of stakeholders in an increasingly regulated environment. By staying informed about SRM, businesses can better position themselves for future challenges and opportunities related to sustainability.