The most common ESG risks that financial authorities are asking companies to address

Based on my research studies for the Austrian Chamber of Labour, the most common ESG risks that financial authorities are asking companies to address include:

Climate Change Risks

Companies are being asked to assess and disclose their exposure to climate-related risks, both physical (such as extreme weather events) and transition risks (such as policy changes aimed at reducing greenhouse gas emissions).

Social Inequalities

Companies are expected to address social issues, including labor practices, diversity and inclusion, and human rights.

Governance Issue

Authorities are interested in how companies are managing ESG risks at the board level, including the oversight of ESG strategies and the integration of ESG considerations into risk management frameworks.

Disclosure-Related Risks

Companies are being asked to provide transparent, accurate, and timely disclosures about their ESG performance and risks.

Conduct-Related Risks

These risks relate to the company's behavior in relation to ESG issues, such as non-compliance with environmental regulations or unethical business practices.

Reputational Risks

Companies are expected to manage the reputational risks associated with ESG issues, which can arise from negative public perception of a company's ESG performance.

Legal and Regulatory Risks

Companies are being asked to anticipate and prepare for potential legal and regulatory changes related to ESG, including new disclosure requirements and standards.

Supply Chain Risks

Companies are expected to assess and manage ESG risks in their supply chains, such as labour rights abuses or environmental damage caused by suppliers.

Data Privacy and Security Risks

With the increasing importance of data in business operations, companies are being asked to address risks related to data privacy and security.

Financial Risks

These risks are associated with the potential financial impacts of ESG issues, such as fines for non-compliance with regulations or loss of business due to reputational damage.

These risks highlight the broad range of ESG issues that companies need to manage. Financial authorities are increasingly expecting companies to integrate ESG considerations into their risk management processes and to disclose their ESG risks and performance in a transparent and accountable manner.