RIMS-WTW: Risk managers challenged by ESG compliance

Risk managers have a key role to play in ensuring their businesses remain compliant with ESG regulations as they support their company’s climate change transition, according to attendees at the WTW Asia Pacific Risk Virtual Conference.

Marisa Trasatti, general counsel at US medical devices company Sciton Inc, said risk managers would act as a layer of defence for corporates as they adapted to new climate regulations across the globe.

Amid rising climate-related legal claims against large companies, including McDonald’s, risk managers needed to be on guard to spot risks on the horizon and review events in international jurisdictions, she said.

An exposure for D&Os

Trasatti said risk managers needed to “look at the picture of what is fuelling claims against the company, and how those cases sort of play out in the courts wherever you are”.

“ESG provides a framework for a crafty plaintiff’s lawyer to argue that a company has not met the standard of care in for example, a tort case, or a D&O case.

“The directors and officers are there to put this plan in place, with the help of the general counsel, so that also puts the general counsel on the hook also if the ESG plan is not robust enough.”

“A risk manager’s job is to look at the big picture and figure out where the gaps are in terms of compliance and potential liability,” Trasatti added.

She noted that legislation on supply chain risks, human trafficking, and modern slavery, would pose a challenge for risk managers as they attempted to ensure compliance and avoid potential liabilities.

“That’s just one example on the S [of ESG] that risk managers would have to address and have to be knowledgeable about. There are many issues under the S alone, there are many issues under the E, and many issues under the G,” she said. 

Sustainability pays off

Patrick Ho, senior sustainability manager for Swire Properties, said there were opportunities for corporates to benefit from the climate transition.

From the investment we’ve been making in sustainability over the years, we’re seeing this translate into some value creation for business, both short term and long term,” Ho said.

“One example is carbon reduction and energy reduction,” the executive at the property group said. “We have enjoyed significant cost savings from [reducing] our energy consumption,” he said.

Ho said there could be a “greenium” — or premium from going green — while businesses could also benefit from sustainability-linked loans, and secure preferential debt terms based on ESG performance.