Sustainability Community

Hi everyone,

I am back from my break and happy to see all of you. Hope everyone enjoyed their summer!

------------------------------
Aya Pariy
------------------------------

Its nice to see you back Aya! 

This is a very good quote indeed and Top to bottom is the best approach to integrating ESG. The first thing to come to mind are the two main climate related risks - Transition Risks and Physical Risks. As the world transitions to a lower-carbon economy, changing regulations and changing consumer preferences could result in an unsustainable business model and eventually stranded assets, if strategy is not aligned to the changing ESG landscape. Investor expectations also create pressure on cost of capital for companies that do not align with the changing investor preferences. And for Physical Risks - the physical impacts of climate change could result in uninusuarable business assets or make it expensive if not impossible to transfer risk. This risks significant loss of business assets in an event of a climate event.

Overall, resulting assets write downs, legal costs, carbon taxes, loss of sales, high finance costs - all hit the income statement bottom line, which ultimately erodes shareholder equity, weakens balance sheets and threaten's business going concern.

Hence reviewing strategy top down and selling the change proposition across the organisation by involving employees including support functions and aligning data reporting helps build resilience to ESG risks.