A growing number of businesses are preparing for a return to nearly normal as COVID-19 steadily shows signs of abating. And as a result of this procedure, a lot of firms could rediscover sustainability and make it a priority project for 2022. However, in order to restart, it's critical for firms to review their sustainability strategy and improve their comprehension of the associated risks. Organizations may be better prepared to integrate sustainability into their whole operations in 2022 and beyond by generating accurate reporting and identifying the risk factors.
Previously voluntary, sustainability reporting is now obligatory
Sustainability reporting has typically been an optional practice. The Paris Climate Agreement, higher regulatory requirements, and increased legal inspections, among other recent events, have increased the focus on environmental, social, and governance (ESG) activities and the general movement toward coherent, sustainable, and resilient economic systems. At the same time, senior leadership and boards are better able to interpret the effects of population increase, climate change, and global warming into manageable risks and possibilities for enterprises.
But how can a company accomplish its ESG objectives and show that it is making progress as it goes? Reporting and measurement can be crucial to the profession as a whole and are now essential for companies. Decision-makers will have the essential, pertinent information to assess and determine the value of sustainability in their companies by putting in place a sustainability performance management program. Additionally, performance and advancement may be shared with several internal and external stakeholders who might be crucial in supporting and coordinating sustainability initiatives in the present and the future.
Sustainability risk indicators and risk ownership
While corporations may want to think and behave in a sustainable way, for some people the idea of sustainability is still a relatively new one, and they may be further along in their development than other organizations. For instance, some firms' excitement for achieving sustainability goals could cause them to overlook or minimize the numerous hazards that doing so may have for their business.
Organizations should understand the notion of "risk ownership" as well as how to incorporate ESG risk into a framework for risk management. Future attention will be on how to include risks connected to climate change and sustainability into the overall risk management strategy as boards place more emphasis on risk quantification.
Enhancing organizational risk management capacities
How can a company become more risk-aware when it comes to ESG? Start by finding and hiring qualified personnel with experience in managing sustainability issues. Second, think about establishing a department for sustainability initiatives that collaborates closely with other teams inside the company. Conduct sustainability risk analyses next, and wherever feasible, try to address any pressing issues that are discovered. Finally, keep in mind that none of the aforementioned things can happen without the senior leadership and the board's active support. Best practices for sustainability must be established, and the top levels of the organization must be dedicated to promoting this commitment throughout all other divisions.
Affected by climate change
Organizations have realized that the world has seen enough warnings to reach the tipping point in terms of climate change. Knowing how near we are to calamity should heighten the feeling of urgency, which will assist advance the sustainability agenda globally and inspire executives to assess their companies' carbon footprints. While 2020 contributed to increasing awareness of the potential harm that climate change may cause to the environment, this year may be more about concentrating on practical, sustainable solutions that businesses might consider to address sustainability challenges.
Green issues in the boardroom
The C-suite and senior leadership are leading any policy-related changes, such as the switch to renewable energy, use of more environmentally friendly products, and a decrease in pointless (air) travel, therefore sustainability has been raised as a top boardroom discussion and priority. The Chief Sustainability Officer (CSO), who would be in charge of an organization's sustainability activities, may also need to be created. Nearly 99 percent of respondents in a recent Deloitte study said that the CSO will become more important over the next two years, playing a key role in the sustainability agenda and promoting effective risk consideration.
The focus will shift to sustainability in 2022, but firms may need to reorganize in order to have a sustainable risk mentality, as well as the right structure and procedures throughout the whole company. Senior leadership and boards will need to give sustainability a substantial amount of attention as they develop the strategy for the next three to five years. They must also take in mind the numerous risks involved as well as the possible effects of prolonged climate change. These elements are all significant change agents that influence organizations and societies globally.