The Global Risks Perception Survey 2022-2023 (GRSP) administered by the World Economic Forum captured the top 10 risks in the two-to-five-year landscape.

With regards to environmental risks, the GRPS’s results are alarmingly telling: (i) 5 risks in the next 2 years and (ii) 7 risks in the next 5, including 4 among the top 5.

Keeping in view the GRPS’s results, an important question comes to mind – What emerging risks are businesses exposed to? Based on the above, ESG/Sustainability is an immediate answer.

Although some in the fraternity undermine the significance of ESG as a risk and question its importance to a company’s business model, the need to evaluate and address ESG concerns still remains. Failure to seriously address ESG concerns poses a serious threat to the long-term sustainability and existence of the business.

Risk and governance are integrated concepts. This makes a strong case to address ESG risks through a proper and formalized governance framework.

A suggestive governance approach with respect to ESG is outlined in IFRS S1 issued by IASB and adopted by SECP for phased implementation in Pakistan commencing from accounting period beginning on or after January 01, 2025. To support its ESG agenda, a company can take the following steps to strengthen its governance structure:

Business strategy:

Usually, a company follows a business strategy,........

© Business Recorder