Is It Necessary to Revamp Risk Matrix to Accommodate ESG Aspect?

Often, ESG aspects (consist of sustainability focus of the organization, GRI requirements and SDgs target) are not yet explicitly written in organization’s risk matrix.? This could hinder organization’s effort to build sustainability culture through bottom-up approach where grassroot workers use the organization’s risk matrix as inseparable part when doing their daily task

However, changing risk matrix to accommodate ESG is easier said than done due to common reason: ‘risk matrix meant to be simple to be usable while ESG are comprised of excessive list of expectations & requirements’. Long story short, forcing that will risk organization’s risk matrix to be unusable for daily basis and the risk matrix will lose the purpose to exist.

What is the most feasible solution to be proposed, then? My proposal would be as follows:

1.????? No change for the current risk matrix, with the assumption that the risk matrix’s maturity level is high and covers wide range of aspects from people, environment, financial, reputation and legal, asset & equipment. And;

2.????? Provide ‘a bridge’ between current risk matrix with ESG requirements through revision of existing procedure or even an additional procedure.

For example:

·?????? In ‘people’ aspect: Multiple Fatality and outbreak to neighborhoods considered as consequences with the highest severity. In ESG, it falls into ‘social’ part to ensure the safety and wellbeing of the workers as well as protecting the community where the operational activities exist

·?????? In ‘Asset’ aspect: Total Loss of Plant or estimated repair cost for some millions of dollars considered as consequences with highest severity. In ESG, it falls into ‘social’ part to ensure the safety and wellbeing of the workers as well as protection the community through process safety implementation.

·?????? In ‘Environment’ aspect: Very serious and long term environmental impairment of ecosystem function considered as consequences with highest severity. In ESG, it falls into ‘environment’ part such as climate change (CO2 emission), environmental footprint, and biodiversity

·?????? In ‘Reputation and Legal’ aspect: International and national wide impact and coverage affecting the company considered as consequences with the highest severity. In ESG, it falls into several categories such as environment, social, and governance. For governance, inability of a company to avoid cyber security attack might make a national headline. Lack of good corporate governance implementation could also make national headline.

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Conclusion:

Integrating ESG into existing risk matrix is not necessarily revamping the risk matrix, since that is indeed not an easy task. Excessive list of ESG requirements might overcomplicate the risk matrix and make the matrix unusable for daily task of grassroots workers. The win-win approach is to provide ‘a bridge’ between current risk matrix with ESG requirements that serves as additional attachments or footnote in risk matrix’s related procedure.

This approach will effectively help organizations build the sustainability culture bottom-up over the time without the necessity causing cultural reset that can effect current performance of the organization from administrational change