ESG risk management in practice

- [Instructor] So far, we discussed what environmental, social and governance risks were and how they impact businesses. We also touched the importance and tools for disclosing them. You may be wondering, "What do we do about these risks? How do we take action?" Here are a few steps you may consider. Understand ESG risk categories and interconnections. When you identify a material ESG risk, always investigate its interconnections. For example, a flood under the environmental pillar may displace communities that is under the social pillar and reveal poor preparedness, that's the governance pillar. Supply chain issues under the social pillar may expose fraud or control gaps under the governance pillar and lead to protests affecting air quality, that is the environmental pillar. Always examine the social and governance dimensions of environmental risks and vice versa. Risks are rarely siloed. Conduct risk and opportunity mapping. Use a double materiality lens outside in, how do environmental and social issues impact your operations and finances, and inside out, how does your company impact the environment and society? Map risks across operations, supply chains, products, committees, and governance structures. Use TCFD and TNFD to structure disclosures. These frameworks guide clear, credible risk disclosures that meet regulatory and investor expectations. For example, for the risk you're addressing, ask this governance question, who oversees this risk or opportunity? Under strategy, how are these risks and opportunities integrated into your business strategy? For risk management, how are these risks identified, assessed and managed? And for metrics and targets, what KPIs do you use to track performance? Develop ESG risk and opportunity metrics. Metrics should be specific, verifiable, consistent with your disclosures, and aligned with your business outcomes. Disclose transparently and consistently. Disclose both risks and opportunities with clarity and evidence. Avoid greenwashing and vague claims. Align disclosures with globally accepted frameworks such as TCFD, TNFD, or others depending on the jurisdiction. Back claims with data, governance oversight and risk analysis. And update disclosures as material risks evolve. Remember, greenwashing and omissions are both disclosure liabilities. Get your story right. Embed risk into strategy and transition planning. Transition planning is a complex, resource-intensive and time-sensitive process. It must be rooted in physical and transitional climate risk assessments, reflected in capital allocation and business models, and revised regularly to reflect changing signs, policy and market shifts. Every ESG risk also signals an opportunity. Whether it's transitioning to clean energy, restoring ecosystems, or creating equitable workplaces, solutions create strategic value. Managing ESG risks and opportunities protects businesses, strengthens license to operate, and builds long-term value. But it requires structure, discipline and transparency at every level of the organization. The sooner you start, the stronger your future position will be.