As an area of governance, ESG carries a range of risks, many of which can be addressed through internal controls, training programs, and policies and procedures.
Whether your company has a formalised ESG system in place or not, starting or continuing with a risk-oriented approach can help your organisation determine your biggest areas of exposure and identify how these can be addressed.
For example, your organisation may have several service lines or areas impacted by today’s growing ESG pressures. These areas may include production and manufacturing practices, particularly as modern slavery laws come into effect worldwide, carbon emissions, information technology, finance, and HR-related issues such as underpayments and working conditions.
With a risk-oriented approach, your organisation can identify the highest risk areas and assign leaders to implement change management and risk mitigation controls that are measurable. Some of the key tools you may implement for measurement include workflow tools, data management and reporting software, and a specific ESG risk-weighting system that feeds into the company’s broader risk management framework.
Once risks are identified and systems and processes of mitigation are established, organisations can test the efficacy of implementation through a regular internal audit process.
Leasing offers a simple solution that can provide your organisation with some quick wins, help you to reduce your ESG risk, and get you started on your long-term ESG journey.
When addressing Environmental, Social, and Governance (ESG) compliance, choosing between leasing and buying assets can significantly impact your company’s sustainability efforts and risk management. Learn more about Leasing vs buying here.