The Global Reporting Initiative (GRI) has highlighted the importance of bringing together sustainability and conventional risks to ensure the long-term success of a business.
“At the corporate level, effective, pre-emptive, and dynamic enterprise risk management is more relevant than ever,” said GRI ASEAN Hub regional project manager Lany Harijanti.
“That is why the role of risk manager is no longer confined to traditional financial risks and regulatory expectations but progressively is contributing more into how to support a sustainable business model.”
Ms Harijanti opined that the commonly seen chief risk officer (CRO) role in businesses demonstrates that firms do recognise effective risk management as key to their long-term future, however, she believes the connection between enterprise and sustainability risk is lacking.
“Having a CRO that leads on sustainability is a good sign that a company is resolute in its sustainability commitment,” said Ms Harijanti.
“The CRO does not have to be a know-it-all; more important is that they have the competencies to lead and build a team, collaborate with external stakeholders such as investors and regulators, bringing the ESG and conventional risks strands together into a single, meaningful narrative.”
The GRI Standards, which are the most commonly used sustainability reporting standards globally, allow businesses to assess and communicate their impacts, which are becoming increasingly relevant from a risk management perspective, according to Ms Harijanti.
“Whatever is up next on the risk forecast – be it this pandemic, the climate crisis or a yet to be defined new threat – having the expertise to assess the multiple and concurrent sustainability risks facing the business is more essential than ever before,” she said.
In a recent survey of ASX-listed companies, 86 per cent said that focusing on sustainability and ESG had led to improved business outcomes. Additionally, 88 per cent indicated that they had a board member or senior executive who is responsible for ESG.
