What is sustainability risk management (SRM)?
Sustainability risk management (SRM) is a strategic business approach that aligns profit objectives with environmental, social and governance (ESG) policies. The intent of SRM is to efficiently address potential risks and seize opportunities associated with sustainability. As organisations integrate SRM into their overall enterprise risk management strategies, they position sustainability as a key strategic priority rather than merely a public relations issue.
Key Points
- SRM integrates sustainability into a company’s broader risk management strategy, acknowledging its importance in operational decision-making.
- It addresses three categories of ESG risks: environmental, social, and governance.
- Basic risk management practices are essential for developing a responsible SRM model, including risk identification, setting objectives, and stakeholder reporting.
- Sector-specific sustainability risks vary, impacting industries differently, including energy, manufacturing, retail, healthcare, and financial services.
- Challenges in achieving sustainability goals include varying stakeholder priorities, data issues, regulatory pressures, and resource limitations.
Why should I read this?
This article provides crucial insights into the emerging field of sustainability risk management, highlighting its growing significance in today’s business landscape. As stakeholders increasingly demand accountability regarding ESG issues, understanding SRM is essential for organisations aiming to foster sustainable practices while maintaining profitability. It underscores the challenges and strategies necessary for navigating the complex landscape of sustainability.
“`