If not managed and mitigated properly, sustainability risks can adversely impact a business’ profitability, success and even survival.
Organisations that extract value from their data are better positioned to manage these risks.
The current operating environment, with complex interconnected supply chains and increased sustainability-focussed regulations present both opportunities and challenges for businesses.
Customer and Investor awareness of sustainability issues is also growing, with many of these stakeholders now taking a keen interest in the sustainability performance of organisations that they invest in or procure services and products from.
At its most basic, a sustainability risk is an event that has the potential to occur, and which can affect the achievement of an enterprise’s strategic or business objectives or/and have adverse societal impacts.
Notably, this concept captures both negative effects (such as a reduction in revenue targets or damage to reputation) as well as positive impacts (that is, opportunities – such as an emerging market for new products or cost savings initiatives).
Opportunities might include, for example, creating new products and services to meet developing sustainability needs, new technologies to improve sustainability or risk performance, or new business models to access and develop emerging markets and support the creation of sustainable societies
Sustainability risk management seeks to create long-term shareholder and societal value by embracing opportunities and mitigating sustainability-related risks.
The sustainability risks that an organisation will face at any given point will depend on that business’ location, industry and products. In a general sense however, sustainability risks may include:
Data is key for unlocking insights for identifying, forecasting, and pre-emptively mitigating sustainability risks. Additional value can be extracted with the application of advanced analytics such as data mining and machine learning, which can enable the identification of sustainability issues before they arise and the formulation of pre-emptive interventions.
In light of increasing Investor interest in sustainability issues, data that meet appropriate standards for quality, accuracy, granularity and auditability, are key for validating businesses’ sustainability claims and for boost investor confidence.
We can support you with developing data processes to ensure that the governance and quality of your sustainability data is at the appropriate standard and coverage to assess and manage sustainability risks.
We also apply advanced analytics to predict the probability of sustainability risks occurring. This enables clients to pre-emptively implement interventions before the predicted risks occur.