sustainAX ESG Risk Library

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STRATEGIC RISKS

There are many types of ESG risks, what they have in common is that they are all risks that will have an impact on the longevity of a company’s business model and the valuation of the company.

MOSTLY LONGER HORIZON

It should be noted though that some of these risks can be relevant in the short run when there are disruptions due to disruptive business models emerging, price dislocations. inevitable political action, etc.

ESG RISK INTEGRATION

The ESG risks are taken into account in ESG Risk Integration and can impact P&L, Balance sheet item valuation or required risk premiums. There may be specific fixed income aspect to take into account, like impact on covenant compliance and credit rating impact.

ESG RISK AND ESG OPPORTUNITY

Keep in mind that when we talk about ESG risks, this can of course be turned around and represent opportunities for the companies being best on ESG risk mitigation. In general, it is harder to dig up the ESG risks than the ESG opportunities.

THE sustainAX ESG RISK LIBRARY

In the sustainAX ESG Risk Library, we have divided these in General ESG risks, Environmental, Social and Governance risks. Under each section you will find subcategories with detailed explanations.

 

General ESG risks

Some ESG risks are universal and are for some external to the company and others are sector specific.

Environmental risks

Environmental risks are risks that are impacting the company and relative to environmental issues. What can impact the company is also including the boomerang effect of the impacts the company has on the environment through the reaction of the stakeholders.

Social risks

Social risks are risks that are impacting the company and relative to social issues. What can impact the company is also including the boomerang effect of the impacts the company has on the social factors through the reaction of the stakeholders.

Governance risks

Governance risks are different in nature from the Environmental and Social risks in the way that it is judged not only from what the company is doing but also how they have organised the governance. In governance is included both how the company’s activity is guided by policies and programs to ensure compliance, and the corporate governance.