by Daphne Biliouri-Grant
Traditionally, making the connection between ESG considerations and security was not at the forefront of how security professionals dealt with managing risk. ESG concerns were not a priority within risk assessments as they were often perceived as long-term risks with no material impact on the current security level of a company.
However, the shift towards a more value-driven market due to the rise of environmental and social concerns to the top of the agenda has led to the emergence of a new perception of security.
The annual Global Risk Reports published by the World Economic Forum are a great indicator of the type of risks that dominate the global agenda. Over the last decade there has been a clear indication that environmental and social risks are gaining momentum. ‘Extreme Weather’ has been identified as the top global risk for the past five years, while other environmental issues, such as ‘Climate Action Failure’, ‘Natural Disasters’ and ‘Biodiversity Loss’ have been dominating the top five positions.
This showcases that ESG concerns are beginning to dominate the risk environment and as a result, security teams need to re-evaluate the way they operate. There is no doubt that the mitigation of ESG risks is critical to a corporate entity’s security, reputation and financial performance, as the reduction of ESG risks provide more stability and address uncertainty.
Applying a holistic approach to risk allows security teams to develop a comprehensive understanding of all aspects of risk, including ESG risks, and increases the resilience of the company whilst also creating a competitive advantage.
Therefore, security professionals need to a) be aware and understand the ESG challenges that companies are facing, b) recognise the threats that could emerge as a result of the lack of ESG integration and c) identify opportunities to support the business and protect the assets of the company. In addition, as the regulatory framework increasingly requires ESG disclosures on a global scale, the expectations are that companies need to develop a pre-emptive rather than a reactive approach when it comes to risk to reflect the shift of focus towards more long-term security issues, such as ESG concerns.
This means that security teams need to a) communicate and coordinate their activities with all other departments within a company, b) engage external advisory services to help them understand ESG concerns and how they relate to that specific corporate entity, and c) ensure that all third parties that the company engages with are also aligned to these new challenges. A company needs to be prepared to engage in an informal manner and often the most successful type of engagement is in the form of constructive dialogue with various stakeholders. For example, community engagement is vital in safeguarding the physical security and reputation of a company.
The Head of Security for a large telecoms company highlighted: “Initiating good communications with civil society groups in the jurisdiction we operate is paramount to securing company assets. Engaging with them on a regular basis and understanding their concerns allows my team to operate more effectively.”
What we also encounter today is a sense of urgency that has pushed ESG concerns to the forefront of risk management. The climate emergency, the pandemic crisis and an increasingly stringent regulatory environment has created a new set of security concerns manifested through shareholder and employee activism, as well as environmental activism.
This reinforces the fact that the link between ESG and security is undeniable. Security professionals today should be engaging with a diverse group of stakeholders to ensure effective communication, mitigate risk and promote the company’s ESG priorities. By addressing ESG concerns, such as employee welfare, community engagement, environmental sustainability and increased transparency and accountability, security professionals can ensure that the company does not face significant backlash.
There is now extensive evidence that companies genuinely committing to sustainability by integrating ESG considerations within their business strategy are better prepared to face risks, increase their profitability and have a positive impact on the wider community.
To that effect, ESG-driven risk assessments encompass a more balanced approach to risk, with the aim of enhancing the positive environmental and social impact of the company in relation to the wider environment in which it operates.
It is time for security leaders to embrace ESG challenges within their remit and adapt to the changing environment.
It is the responsibility of security professionals to gain an in-depth understanding of how ESG concerns fit within the rapidly evolving security landscape and implement the right processes that will allow them to respond to these challenges in an agile way.
Once the security team can communicate effectively the link between ESG and security, they will exhibit the manner in which they can ensure that the corporate entity can realise its strategic objectives.
If you have any questions or would like to find out more about how Sibylline can help you integrate and implement effectively ESG considerations, please reach out to our ESG Senior Advisor, Daphne Biliouri-Grant