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Risk management & sustainability report 20231Risk &Sustainability Continuity Forum Policy Working Group Risk, Sustainability & Net Zero [SG3]2023Extract SummaryCopyright Continuity Forum 2023 | all rights reserved

Risk & Sustainability | 2023 has been developed to show how using structured riskmanagement frameworks and processes can help organizations more rapidly and reliablyachieve their sustainability and Environmental, Social, and Governance (ESG) goals. ESG criteriacan be used to measure the sustainability of a company or investment. Sustainability is a broad concept covers a broad range of activities and issues and includes ESG.Many aspects of the field, especially the economic and technical factors may feel challenging.However, the guidance that has been developed is straightforward and easy to action, and canstart producing results virtually immediately. The full guidance uses the principles of ISO 31000, the world's leading riskmanagement standard and comes with practical details and examples, aswell as reality check questions to help you develop the context andperspective needed to meet your objectives. It shows how organizations canuse risk management to make better informed decisions that create andprotect value, while addressing climate risks and societal challenges. Itprovides practical advice that can be applied to any organization, regardlessof size or sector.Success today means meeting the needs of all stakeholders, including investors,employees, customers, suppliers and society.The world is facing profound challenges. Businesses need to adapt to thesechallenges and seize new opportunities. Risk management has an absolutely criticalrole in this. Organizations can immediately apply risk management principles andprocesses to improve the effectiveness of their work and accelerate positive change. Organizations today are expected to commit to moral and social principles, haveclarity of purpose and be able to demonstrate their sustainability credentials. Thefundamental question has changed from ‘how much money do you make?’ to ‘howdo you make that money?’. Sustainability pays. There is evidence that businesses that take a longer term, moresustainable strategy are more successful. The guidance provides practical steps on how to use risk principles to accelerate the pace oftransformation effectively. These risk principles help businesses identify, assess and managethe risks and opportunities related to sustainability improving performance and contributingto a more sustainable world.Our aim is to encourage you to quickly develop a risk-based approach to sustainabilitymanagement. It explains how to use risk principles to transform businesses effectively and meetthe needs of all stakeholders in a changing world.Some of the main points contained in the guidance are:Risk management & sustainability report 20231The guidance explains how to apply risk managementprinciples to set and achieve sustainability goals morequickly and efficiently. It shows how small, medium andlarge organizations can use existing systems and processesto address sustainability issues - without addingunnecessary complexity or cost.It also provides guidance on how to use the international standard ISO 31000:2018 tostructure, implement, report and maintain your sustainability management.

To manage sustainability effectively, organisations need to adopt an integrated and objective-focused approach, as provided by the United Nations Sustainable Development Goals (UNSDGs) and ISO 31000. These goals provide a common framework and language for addressingthe global challenges we face, such as poverty, inequality, climate change, green-washing andenvironmental degradation. Rather than working in silos, organisations need to immediately prioritise the goals thatare most relevant to their activities and align them with their value creation and riskmanagement strategies. They should also communicate their evidence-basedsustainability performance openly and honestly to avoid the risk of losing trust andreputation from their stakeholders. Proactively managing sustainability is not only goodbusiness - it is the only option for our future. Using the advice offered in "Risk & Sustainability | 2023" will help you take your effortsto the next level and deliver insights into the real opportunities and threats yourorganization faces.Sustainability risks are different from other risks because they can be intangible, moral,social, broad, sudden, global, operational, implicit or long-term. Their effect can beunexpected and may initially appear immaterial, but can seriously affect the value ofinvestments and market success over time. To address these challenges, businessesneed to consider environmental, social and governance (ESG) factors across all of theirdecisions, not only around sustainability, but right across the organization.The advice provided shows how to embed sustainability into your core purpose andvision as an organization. It explains that sustainability should be a fundamental elementof your strategy, operations, products and performance. It also advises that you shouldunderstand your context, including your impacts and risks along your supply chain andin your resources and products. Understanding the context and goals of your organization is crucial for summarising theimportance of sustainability. You need to consider not only the impacts and risks of yourown operations, but also those of your supply chain, your resource consumption and theproducts you deliver. You also need to keep your sustainability targets updated andresponsive in order to integrate the opportunities offered by new technology, marketshifts and other innovations or change.Moreover, you need to look into the future and anticipate the changes and challengesthat may affect your stakeholders, your society and your world. You cannot rely on pastdecisions and actions to achieve your future sustainability needs. You need to adopt alonger-term view and a proactive approach to address global sustainability issues suchas climate change. You can use foresight tools and working groups to explore differentscenarios and plan for the future impacts of innovation, sustainability and otherchanges.By understanding your context in an holistic and forward-looking way, you can defineyour goals more effectively and align them with the expectations of your stakeholdersand society.To achieve your sustainability goals, you need to consider how your actions affect otheraspects of your organization and the environment. You should align your purpose withyour stakeholders' expectations and identify the sustainability risks and issues that mayarise. You should also use financial and economic models that value long-term outcomesand document your assumptions clearly.Risk management & sustainability report 20232

The guidance highlights how important Materiality Assessments are in helping toidentify and manage the most relevant and important issues for an organization and itsstakeholders. They are required for many sustainability reporting standards andframeworks and help develop and implement sustainability strategy, goals, policies, andperformance measurement. However, materiality assessments alone are not enough toestablish sustainability priorities and plans. An organization needs to consider theoutside-in perspective of different stakeholders, the impact of its activities onsustainability, and actions to improve sustainable performance and/or change to moresustainable methods. An organization should assess both the threats and opportunitiesof sustainability risks, which can vary depending on the stakeholder and the timehorizon. In addition, an organization should design an appropriate and risk valuationmethod to aid decision making by comparing the costs and benefits of differentoptions.There is a challenge in making decisions that align with sustainable development goals,which may involve difficult trade-offs and uncertainties. The report suggests somesteps and tools to help leaders make systematic decisions that consider sustainabilityrisks and impacts that can be clearly understood by stakeholders. The challenge ofdecision-making is influenced by multiple factors such as bounded rationality, escalationof commitment, time constraints, uncertainty, biases, and even conflicts of interest.These barriers can affect the quality and effectiveness of decisions and may requiredifferent approaches to understand, assess and overcome them.Sustainability reporting is the practice of communicating honestly how an organization'sactivities affect the environment, society and economy. Good reporting can helporganizations improve their performance, reputation and resilience, as well as meet theexpectations and requirements of various stakeholders. Poor reporting can affect at thevalue and reputation of the organization very quickly. The issue of green-washing isnow well understood, and false or duplicitous claims will likely be found out, breakingtrust built with customers and other stakeholders. Risk management & sustainability report 20233Sustainability reporting should be accurate, honest and transparent, and go beyondlegal compliance to create positive value.Poor or misleading reporting can damage an organization's brand and business, andexpose it to risks and penalties.Sustainability reporting can have various benefits, such as increasing loyalty,profitability, awareness, decision-making, employee engagement and investorattractiveness.Sustainability reporting is driven by multiple factors, such as customer/stakeholderexpectations, legislation and regulation, guidelines, lifecycle analysis, industry codesof conduct, ethical standards and activism.Key points covered in the guidance are:Sustainability reporting is a complex and evolving field that requires carefulconsideration of what to report, how to report and to whom to report.Sustainability reporting is not just a one-way communication, but a dialogue thatinvolves listening to feedback, engaging with stakeholders and taking action to improvesustainability performance.

Risk management & sustainability report 20234Design an organizational structure that assigns clear roles and responsibilities forsustainability reporting. You should have a designated person or team to managesustainability communication and ensure that there is accountability, traceability andtraining for all employees involved in sustainability reporting.Determine which metrics to disclose based on the materiality and relevance of thesustainability issues for your organization and its stakeholders. You should useinternationally recognized standards and frameworks, such as the Greenhouse GasProtocol, the Global Reporting Initiative, or the Task Force on Climate-relatedFinancial Disclosures, to guide your choice of metrics.Collect and verify data to measure your metrics using reliable sources and methods.You should ensure that your data is accurate, complete, consistent and comparableover time and across your value chain. You should also seek external assurance orverification of your data to enhance its credibility and reliability.Set a strategy for improving your metrics based on your sustainability goals andtargets. You should identify the opportunities and challenges for improving yoursustainability performance and outline the actions and initiatives you plan to take toaddress them. You should also monitor and evaluate your progress and report onthe outcomes and impacts of your actions.Prepare a simplified version of your report for customers and other externalstakeholders. You should communicate your sustainability performance in a clear,concise and engaging way that highlights your achievements and challenges. Youshould also provide feedback mechanisms for your stakeholders to share their viewsand expectations on your sustainability reporting.Review your policies and industry practices regularly to ensure that you are up todate with the latest regulations and standards for sustainability reporting. Youshould also benchmark your performance against your peers and best practices inyour sector, and identify areas for improvement.In order to meet the regulations and standards developing for sustainability reporting,organizations should consider following these best practices:Following these best practices will help you demonstrate your sustainability credentialsin a transparent, consistent and credible way.This document, and the research on which it is based, have been delivered through aninitiative of thePolicy Working Group (PWG) of the Continuity Forum (a NGO) and theBSI Risk Management Standards Committee. Thank you to all who contributed to theresearch and review of this document, especially the Key Authors.Project Management and Review: Sara McKennaEditors: Sara McKenna, Russell PriceContributors: Mark Boult, Adrian Clements, Ian Davies, Steve Fowler, Melissa Wellings