ESG Risk Management in Alyne

While no single framework has emerged as the industry standard for ESG risk management, there are different relevant classifications and approaches. Alyne's ESG Risk Framework is mapped to various expert sources, and combines powerful technology to enable you to assess, identify and analyse risks, and report on ESG programs. Access our White Paper to learn more about delivering cutting-edge ESG Governance, Risk and Compliance (GRC) capability across your enterprise.

Global Efforts Towards Environmental, Social and Governance Sustainability

Last year in 2020, Microsoft declared its corporate commitment and investment in carbon negative environmental plans to combat climate change. Moving forward to 2021, search giant Google announced that it will develop next-generation geothermal technologies to cut reliance on carbon at their annual developer conference, Google I/O 2021.

Large global organisations have been declaring their corporate commitment and investments to sustainability. The embankment of this journey would make Environmental, Social and Governance (ESG) Risk Management highly relevant for organisations across industries in 2021.

Socially conscious investors, regulators and consumers have increasingly been advocating for Environmental, Social and Governance (ESG) topics. This rising attention however, has not yet brought with it a clear mandate or industry standard on how to best achieve the reporting requirements. Without clear definitions and guidelines, business leaders can find it challenging to determine the appropriate measures for their ESG Risk Management process that sufficiently addresses the non-financial information relevant to their organisation. Leveraging the right tool that is designed to address regulation ambiguity and easily identify risks can provide great value to organisations looking to align with ESG reporting and requirements. 

Environmental, Social and Governance (ESG) Risk Assessments in Alyne

Alyne's platform enable powerful ESG Risk Assessments cabability, focused on four core drivers:

  • Time to Value Insights
    We believe that it is more valuable to be gaining insights into the ESG exposure on a specific asset or organisation quickly, rather than having an extended analytical process. The main purpose is to ensure timely information to help support risk-informed decisions as it can affect company performance. 

  • Comprehensive Information
    ESG-related risks must extend beyond purely focussing on climate change risks. At Alyne, we focus on providing a comprehensive and sustainable view of the other ESG pillars that includes social and governance factors. 

  • Adaptable to the Context Used
    The ESG risk framework must be adaptable to the context that it is being used, be it an asset, object or organisation. Areas of the ESG framework that are not applicable as it reduces risk data quality.

  • Scalable to Other Aspects of the Company
    ESG governance becomes meaningful when the coverage extends to all areas of risk. For financial institutions, ESG risk could include ESG financing. Simply put, Alyne's capability offers businesses a method that is scalable and sustainable to avoid a linear increase in corporate effort.

Alyne's ESG Risk Framework is Mapped to Various ESG Expert Sources

At Alyne, we have created an ESG Risk Framework based on our own in-house expertise and research from various ESG expert sources such as the World Economic Forum Global Risks Report, MSCI ESG Megatrends and the United Nations Sustainable Development Goals (SDG).

While no single framework has emerged as an industry standard, there are different relevant classifications and approaches. Firms are expected to follow the recommended disclosures to the extent that is necessary for all stakeholders to understand their ESG position, development and performance. As a result, we have selected three key standards to map the Alyne ESG Risk Framework to, to support corporate reporting based on these standards or classifications. 

1. United Nations 17 Sustainable Development Goals

The United Nations have agreed on 17 key goals for sustainable development. These are to be reached by the year 2030. The 17 Sustainable Development Goals or 17 SDG were agreed in 2015 and serve as a good structure for analysing risks. Some organisations are guided by the structure for their reporting. On its own, the UN SDG is not a complete ESG framework to assess risks, however the enrichment of it through the Alyne Framework adds considerable value.

2. Sustainability Accounting Standards Board

The Sustainability Accounting Standards Board (SASB) has built an extensive framework of ESG risks. These are further broken down by individual industries. The focus is on measurability and comparability for sustainable finance decisions and accounting. The breadth can be overwhelming, but the structure is certainly helpful. We have mapped the SASB Materiality Dimensions and the General Issue Category to the Alyne ESG Risk Framework.

3. EU Sustainable Finance Taxonomy

The European Union Regulation 2020/852 on the establishment of a framework to facilitate sustainable investment has published a taxonomy. It is widely followed in the ESG sustainable finance industry. Article 9 of the act identifies six core environmental objectives: 

  • (a)  climate change mitigation;

  • (b)  climate change adaptation;

  • (c)  the sustainable use and protection of water and marine resources;

  • (d)  the transition to a circular economy;

    (e)  pollution prevention and control;

    (f)  the protection and restoration of biodiversity and ecosystems.

How do I Manage Environmental, Social and Governance Risks in Alyne?

Based on the curated ESG Risk Framework mapped to core objectives, Alyne has also combined powerful Assessment and Risk Analytics to provide cutting-edge ESG GRC capabiliIes, to new and existing Customers.

Download our latest White Paper to learn more about how Alyne can help you best identify ESG risks applicable to your organisation and assist in not only kick-starting your ESG program, but take you right through to a fully quantified ESG Value at Risk. 

Ready for launch? Book a demo with an Alyne Expert in your area, our team will be happy to hear from you.

Interested in learning more? Register for our upcoming webinar:

 

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Bayley Benton

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