ESG Risk In TPRM – Webinar Summary

As third party risk management programs are being tasked to assist their organizations’ ESG (environmental, social, and governance) efforts with their most critical suppliers and vendors, TPRM teams have been left scratching their collective heads and asking “what does this mean to me?” 


Today, Shared Assessments and ESG experts came together to address the high level points risk managers need to know about ESG. The key takeaway is “ESG is not just about risk; it’s about opportunity.” 


Speakers in the webinar included: 

  • Gary Roboff, Senior Advisor, Shared Assessments
  • Ron Bradley, Vice President, Shared Assessments
  • Ken Wolkenhauer, VP, Vendor Management, Nordea Bank
  • Phil Redman, Offering Lead, OneTrust ESG

The panelists identified key regulations driving ESG reporting globally and went on to describe metrics and measurements for TPRM programs to integrate into their reporting. Finally, the discussion turned to how to align action with the organization’s ESG goals.


The webinar began with a poll asking attendees if their organizations have ESG programs. The results were split. Approximately one third of respondents’ organizations have ESG programs where risk management has an active role. One third of respondents’ organizations have ESG programs where risk management DOES NOT have an active role. And – you guessed it! – one third of respondents’ organizations DO NOT have ESG programs at all. 


ESG Poll

Regulations and Frameworks For ESG Risk

In the United States, regulatory requirements related to ESG reporting are on the horizon. Regulatory winds have shifted to blow from East to West (GDPR being a key example). At the G20 in March there was ample conversation about climate. 


Political and philosophical divides in the US often keep federal regulation from dominating. Instead, we are more likely to see regulations on the state level. New York State has recently instituted climate guidance. States more inclined to take action on climate issues will institute ESG reporting requirements first. 


In the private sector, the Financial Stability Board has created the Task Force on Climate-related Financial Disclosures (TCFD). This reflects the financial industry’s belief that “Climate change presents financial risk to the global economy.”


Identifying Metrics and Measurements For ESG Risk

Organizations should seek horizontal frameworks that cut across various ESG components. A collection of metrics that cover ESG and focus on issues specific to your industry is the ideal combination. Some strong frameworks for TPRM programs to use for their ESG efforts include: 

  • GRI Framework which enables organizations to be transparent and take responsibility for their impacts, enabled through widely used standards for sustainability reporting.
  • CDP Framework is a global environmental disclosure system. CDP supports thousands of companies, cities, states and regions to measure and manage their risks and opportunities on climate change, water security and deforestation.
  • Value Reporting Foundation – VRF releases SASB Standards that provide detailed industry-specific disclosure topics and metrics to inform reporting, lending insight into the subset of sustainability issues.


The notion of “Measure What Matters” (book on how Objectives and Key Results (OKRs) have driven explosive growth in tech) is key identifying metrics that are important to your organization. Identifying top priorities for your organization – and the behavior you want to influence in partners, vendors or suppliers – can be achieved through a materiality assessment. 


A materiality assessment, as defined by KPMG,  is “the process of identifying, refining, and assessing numerous potential environmental, social and governance issues that could affect your business, and/or your stakeholders, and condensing them into a short-list of topics that inform company strategy, targets, and reporting.” 


The UN Global Compact, which aims to “mobilize a global movement of sustainable companies and stakeholders to create the world we want”  offers practical, step-by-step guidance for ESG efforts across your supply chain. The UN Global Compact provides a framework to measure and protect against: 

  • Human rights
  • Labor
  • Environment 
  • Anti-corruption


Aligning Action With Organization’s Goals

To align actions around ESG with your organization’s goals, you first need to identify your organization’s goals and code of conduct. Then, share these with your suppliers and vendors. Every group your organization works with should understand the values in place and live up to this on a daily basis. 


The activities performed by your suppliers and vendors should be identified as they may cause a carbon footprint prior to arriving at your site. This is exemplified by Scope 3 Emissions. Scope 3 Emissions are described by the EPA as “the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain.” Scope 3 emissions directly impact risk management.


Greenwashing is the process of conveying a false impression or providing misleading information about how a company’s products are more environmentally sound. Rather than greenwashing, as an organization you should be reporting numbers accurately and looking for ways to collaborate with other organizations that will enable due diligence and help the environment. 


View The Webinar


To view the webinar recording and download the presentation deck, navigate here.