Quote from sachinm on 2 October 2023, 1:25 pmIdentify Industry Specific Challenges relevant to the ESG SIG to be included in the Practice Guide.
Set the challenge, for other SIG members to identify potential solutions, by pooling their collective experience and knowledge.
Press "reply" to share your story...
Identify Industry Specific Challenges relevant to the ESG SIG to be included in the Practice Guide.
Set the challenge, for other SIG members to identify potential solutions, by pooling their collective experience and knowledge.
Press "reply" to share your story...
Quote from sachinm on 6 October 2023, 9:49 pmTo get the ball rolling here, we can consider what the atypical risks are for ESG (Environmental, Social, & Governance), and how complexity affects our ability to measure how sustainably an organisation is operating.
Firstly let us define what the atypical risks for E,S, and G...
1. Environmental risks:
- Carbon footprint
- Water usage
- Waste disposal
- Greenhouse gas emissions
- Impact on biodiversity
- Deforestation
2. Social risks:
- Wage equality
- Workplace safety conditions
- Supplier/vendor practices
- Human rights violations
- Diversity, equity, and inclusion
- Data privacy
3. Governance risks:
- Transparent communications
- ESG disclosures
- Board structure and diversity
- Corruption and fraud prevention
- Organisation integrity and ethics
- Executive compensation
What is the potential impact of ESG risks when they occur? ESG risks can be costly when they occur...For example, in April 2010, BP’s oil rig Deepwater Horizon exploded in the Gulf of Mexico, creating an environmental disaster and significantly impacting biodiversity. The total bill topped an estimated $65 billion between fines and cleanup costs.
Although three distinct areas, we often see interconnectedness and interdependence across the E, S and G. And so, when they are interconnected, their combined effects can be a raising social issues and impacting reputations in addition to causing financial stress
- When the Covid-19 pandemic struck in the USA, in many cases, the poorest communities were the hardest hit, thus causing further hardship.
- A loss of biodiversity caused by increased ocean temperatures can impact fish stocks which in turn impacts livelihoods and economic wellbeing in fishing communities.
- In late 2018, severe drought conditions impacting water levels on the Rhine river significantly disrupted supply chains, forcing chemical giant BASF to cut production due to a lack of transportation and thereafter lowered its yearly profit forecast after a slowdown in the third quarter partly from the extra costs incurred.
Citation: Examples used from https://esgriskguard.com
In a more recent example on the interconnectedness and interdependence across the E, S and G...Think about the example of the Nova Kakhovka dam collapse in 2023 during the Russian and Ukraine conflict. Here, we could identify the following interconnected E, S, and G impacts:
- Farm flooding and irrigation: Fields downriver from the dam sufferred from the immediate flooding and crop destruction, but a more serious issue was that about half a million acres of fertile farmland rely on the Kakhovka reservoir for irrigation. So, farmers lost water for their crops during the summer months, with a potentially severe knock-on effects on food production and security. This then increased inflationary pressures on western economies.
- Drinking water: Much of the southern part of Ukraine and Russian-annexed Crimea relied on the dam for fresh water.
- Energy: A major hydropower plant connected to the dam on the Dnipro River was severely damaged.
- Displacement: Between 35 to 80 settlements, towns and villages were flooded, making the immediate aid effort challenging.
- Ecosystems and animals: The ecosystems downriver of the dam, including the Black Sea Biosphere Reserve and the Oleshky Sands National Nature Park, were impacted. So for example the flooding killed around 300 animals at the Nova Kakhovka Zoo.
What other potential challenges can the complexity, interconnectivity and enormity risks of E, S, and G raise? How can we cope with the interconnectedness and interdependence between these three distinct areas?
To get the ball rolling here, we can consider what the atypical risks are for ESG (Environmental, Social, & Governance), and how complexity affects our ability to measure how sustainably an organisation is operating.
Firstly let us define what the atypical risks for E,S, and G...
1. Environmental risks:
2. Social risks:
3. Governance risks:
What is the potential impact of ESG risks when they occur? ESG risks can be costly when they occur...For example, in April 2010, BP’s oil rig Deepwater Horizon exploded in the Gulf of Mexico, creating an environmental disaster and significantly impacting biodiversity. The total bill topped an estimated $65 billion between fines and cleanup costs.
Although three distinct areas, we often see interconnectedness and interdependence across the E, S and G. And so, when they are interconnected, their combined effects can be a raising social issues and impacting reputations in addition to causing financial stress
Citation: Examples used from https://esgriskguard.com
In a more recent example on the interconnectedness and interdependence across the E, S and G...Think about the example of the Nova Kakhovka dam collapse in 2023 during the Russian and Ukraine conflict. Here, we could identify the following interconnected E, S, and G impacts:
What other potential challenges can the complexity, interconnectivity and enormity risks of E, S, and G raise? How can we cope with the interconnectedness and interdependence between these three distinct areas?
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