4
Fundamentals
Risk management joins governance, strategy, and metrics & targets in ISSB + TCFD guidance.
Sustainabilityrisk managementfundamentals
Spot environmental and social risk exposure before it derails strategy.
Use this guide to understand ESG risk assessment, climate-related business risks, and the fundamentals called out in global sustainability frameworks, so risk management stays continuous.
What is sustainability risk management?
Sustainability risk management identifies, assesses, and mitigates environmental and social risks alongside financial and operational exposures. Risk management is one of the four fundamentals in ISSB and TCFD, so teams must treat climate, social, and governance risks with the same rigor as any enterprise risk class.
3
Core steps
Identify, assess, and respond to sustainability risks across the full value chain.
365
Monitoring days
Sustainability risk monitoring runs year-round, not just during reporting season.
WHY IT MATTERS
Why ESG risk belongs in mainstream risk programs
Protect resilience. Climate, social, and governance risks can trigger supply shocks, capital restrictions, or brand erosion—treating them early protects optionality.
Strengthen compliance. ISSB, TCFD, and regulators now expect boards to describe risk exposure and mitigation plans across the four fundamentals.
Enable better bets. When ESG risks flow into enterprise risk dashboards, leaders compare investments with full context.
FRAMEWORK
How to build a sustainability risk framework
- Map the whole value chain List upstream, operations, customer, and community exposures so climate and social risks do not hide in silos.
- Unify registers + owners Keep sustainability risks inside the enterprise risk register with shared scoring, owners, and escalation rules.
- Run scenarios + drills Test severe-but-plausible events so teams know how to respond before a disruption hits.
CADENCE
How to measure exposure and report mitigation
- Prioritise exposures Score risks by likelihood, impact, and velocity to see which ones merit board attention.
- Link to controls Document the policies, controls, and programs that treat each risk plus the owners responsible.
- Assign treatments Choose to accept, avoid, reduce, or transfer exposure and log the tasks required for each decision.
- Report + refine Use RunSustainably dashboards to show risk trends, mitigation progress, and remaining gaps every quarter.
Keep risk work continuous
Refresh the ESG risk register
Ensure every ESG risk includes triggers, controls, owners, and evidence requirements.
Connect incidents to exec dashboards
Route sustainability incidents into the same reporting packs used for other enterprise risks.
Practice response drills
Schedule tabletop exercises for climate events, supply disruptions, or social impacts so teams stay ready.
RISK GLOSSARY SNAPSHOT
Risk glossary snapshot
ESG risk assessment. A structured review of environmental, social, and governance exposures, often aligned to ISSB/TCFD guidance.
Climate-related business risk. A financial or operational impact linked to acute events, chronic shifts, or transition pressures from climate change.
Risk mitigation plan. The owners, controls, and timeline that reduce a priority risk to an acceptable level.
FAQS
Sustainability risk FAQs
Where do we start if no ESG risk register exists yet?
Start with a workshop listing climate, social, and governance risks across the value chain, then score them and add them to the enterprise risk register.
How does this tie to ISSB or TCFD filings?
Both frameworks expect organisations to disclose risk identification, assessment, and management processes—this guide mirrors that structure.
How often should we review sustainability risks?
At least quarterly, with immediate reviews after incidents or regulatory changes.
What if we lack hard data?
Use scenario planning, proxy data, and external research to get started, then replace estimates with RunSustainably evidence as systems improve.
Drova RunSustainably connects sustainability risks, strategy and reporting in one workspace.
Ready to keep sustainability risks visible?
SUSTAINABILITY HUB
Explore related sustainability guides
Sustainability & business strategy
Connect risk insights back to strategy decisions.
Sustainability metrics & targets
Tie mitigation plans to measurable KPIs.
Sustainability data governance
Ensure risk data and evidence stay audit-ready.
GRC 101 — Risk overview
Revisit core enterprise risk terminology and workflows.
IFRS S2 climate guidance
Align climate risk disclosures with IFRS S2 requirements.
Operational resilience strategy
Extend ESG risk insights into resilience planning.
