Geneva/Singapore 23 October 2018: The Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the World Business Council for Sustainable Development (WBCSD) released today the final version of “Guidance for Applying Enterprise Risk Management (ERM) to Environmental, Social and Governance (ESG)-related Risks.”

This guidance, which underwent an extensive public comment exposure, is intended to bring ESG risks and opportunities into a clearer focus for mainstream business and other organizations around the world. It is designed to enhance organizations’ resiliency as they confront the increasing prevalence and severity of ESG-related risks, ranging from extreme weather events to product safety recalls.

The guidance aligns with COSO’s widely accepted Enterprise Risk Management - Integrating with Strategy and Performance. The ERM Framework is used by organizations around the world to improve their approach to managing risks amid an ever-evolving business environment.

“This application Guidance to the COSO ERM framework is something that can have a massive impact. For those of us who know the relevance of COSO, this is a major step toward the vision that business can speed the transition to a more sustainable world,” said Peter Bakker, President and CEO at WBCSD. “When companies have a better grasp on their risks, they can make better business decisions – often with more sustainable outcomes. We believe this work will help drive positive change in corporate governance, worldwide."

“The Guidance is a valuable contribution for applying COSO’s ERM Framework to ESG-related risks,” said Paul J. Sobel, COSO Chairman. “The prevalence of ESG-related risks globally is increasing, and there is a growing demand from stakeholders for ESG-related insight. Using the common language of ERM, this Guidance helps to meet the needs of risk management and sustainability practitioners for integrating ESG-related risks into ERM.”

Highlights of the Guidance include:

  • Approaches to overcome ESG-related risk challenges across the ERM process, from governance to risk identification and assessment through to communication and reporting;
  • Innovative responses to manage both upside and downside of ESG-related risks;
  • Methods for developing and maintaining a culture of continuous improvement for managing ESG-related risks.

An Executive Summary and Guidance can be viewed at coso.org or wbcsd.org. Further details will be available on the COSO website.

This project was funded by the Gordon and Betty Moore Foundation.