ESG (Environmental, Social and Governance) issues are a priority for many companies around the world. The environmental part of ESG, in particular, is urgent. Recent events such as extreme temperatures and wildfires that occurred this summer in France)[1], to remind us of the magnitude of the climate challenges we face. Moreover, experts and world leaders expressed it very clearly during COP27.
On the other hand, the consequences of climatic disasters encourage companies to take measures to reduce the risks to which they are exposed. On the other hand, political decisions encourage companies to reduce their impact on the environment, particularly by striving for carbon neutrality.
The role of risk managers in achieving this goal
to me risk managersThe challenge is to include flexibility of activities in achieving these SDGs. Drawing on their expertise and support from partners, they can position themselves as climate change resilience facilitators.
Take, for example Solar Panels, one of many solutions companies are considering to reduce their carbon footprint. The team planning its installation may not be fully aware that it is likely to introduce new risks or increase existing ones. Risk managers understand these risks and are ideally placed to facilitate project implementation and ensure that technical reliability is not forgotten in favor of the environmental scope.
Internal collaboration for better results
It is important to involve risk managers as early as possible in ESG initiatives. Working in close collaboration with the Director of Sustainable Development, or with the person responsible for the company’s ESG strategy, will make it possible to identify resources, data and information useful for the project. It will also provide them with more opportunities to share their experiences and suggestions with the senior management of their company.
Data, an essential component of strategic decision making
Risk managers can also find information and support outside of their company. If a partner is consulted from the early stages of a project, their experience, research and data can help risk managers determine the best solutions in terms of climate resilience. The idea is this: protecting your business today will make it thrive tomorrow.
Another great way to start collaborating with the Director of Sustainable Development: Offer him analysis tools (which can be developed by external partners) to assess and prioritize the company’s climate and environmental risks. As companies seek to enhance their resilience to climate change and be more transparent about their ESG commitments, an analysis of this type of risk in particular may be appropriate.
Tools and data are needed to assess the impact of climate change on business to incorporate risk management into strategic decision-making. By obtaining reliable information, the public administration can prioritize investment in reducing identified risks, and even relocate facilities that are at high risk of physical damage to avoid activity stoppages. At the same time, enhancing the resilience of supply chains is an absolute must given the many disruptions observed in recent years.
Climate change is probably the greatest challenge of our time, and risk managers will be at the forefront of addressing it. By encouraging internal mobilization around the topic and providing expertise, data and solutions, risk managers can increase visibility of their risk management work with their senior management, contributing to the company’s ESG strategy and supporting it on its journey towards climate resilience.
[1] https://meteofrance.com/actualites-et-dossiers/actualites/changement-climatique-lete-2022-et-ses-extremes-meteorologiques
The Tribune is written by Loïc Le Dréau, Managing Director of Paris Operations at FM Global
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