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By Henry Uche
With the evolving nature of business environment, a risk management expert has warned that any organisation that fails to factor in Environmental, Social and Governance (ESG) issues in their decision making process and corporate strategy does that at its peril.
Speaking virtually at the Strategic Risk Management Forum, the Chief Risk Officer, WAICA Reinsurance Corporation, Mr. Monday Utomwen, said that every organisation, irrespective of size and sector must consider these salient issues if they must navigate through the turbulence in the business world and remain in business profitably.
According to him, corporate leaders must plan ESG, set the tone, design frameworks and principles, get relevant personnel involved and take actions to achieve desired results, noting that, this was essential since organisations do not live or operate in a vacuum.
“ESG are set of criteria that investors, businesses and organizations use to evaluate and measure the sustainability and ethical impact of an investment, company, or business operation. ESG factors are used to assess how a company or entity is managing and addressing environmental, social, and governance issues that can have an impact on its long-term financial performance and overall societal contribution.
“Those who focused on risk avoidance are creating systemic risks for themselves. Bloomberg data suggests global ESG assets are set to exceed $25 trillion by 2025, representing a third of total projecting assets under management. Risk-focused firms are therefore at risk of losing access to significant sources of capital investment,” he said.
He also said that companies must manage their environmental impact and issues like carbon emissions, energy efficiency, waste management, ethical conduct, water usage, efforts to combat climate change risk, resource scarcity, pollution and emissions among others.
On social issues, labor practices and risks, human rights violations, community relations among others must be given due attention, while governance risks bothers on board independence, executive compensation, transparency, ethics, and anti – corruption measures.
Quoting Cority, who said, ‘It’s no secret that Environmental, Social, and Governance (ESG) and sustainability are rising to the top of the priority list for many organisations. As ESG performance continues to play a larger role in financial decisions and access to capital, more organizations than ever before are actively aligning overall business strategy with ESG goals to remain competitive and resilient,” Utomwen urged business leaders to pay attention to issues like these that matter.
