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Investor and shareholder action is increasingly��focused on environmental social and governance��(ESG) issues, and companies are challenged by the��growing raft of regulation and guidance in many��territories, leading to tougher disclosure and reporting��rules, according to the �ǿմ�ý Risk Barometer.��Respondents rank cyber security resilience as��their major ESG priority (see graphic), driven by��the growth and severity of cyber-attacks, and an��increase in data security regulations.

“In the past, it was mainly technology companies that��were assessed on cyber security resilience, but these��days, businesses across a range of sectors are subject��to such scrutiny,” explains Michael Bruch, Global��Head of Liability Risk Consulting/ESG at AGCS.

“Increasingly, cyber security considerations are��incorporated into the ESG risk-analysis frameworks��of data providers, who look into companies’ dataprotection��and information security practices to��evaluate their preparedness for cyber crime.”

Climate change is another major ESG presence on��the list with respondents ranking it as their second��top ESG concern. This should be no surprise so soon��after COP26, the UN Climate Change Conference,��when building a decarbonized future rose high on��the agenda. Net-zero commitments made by the��private sector were unparalleled, reflecting the��emphasis businesses now place on climate risk and��transitioning to a low-carbon economy.

Within climate change, resource depletion is an��emerging risk that will likely receive increasing��attention in 2022. Thehas identified biodiversity loss as an existential��global threat, stating: “$44trn of economic value��generation – more than half of the world’s total GDP��– is moderately or highly dependent on nature and��its services and is therefore exposed to nature loss.” [1]��Biodiversity loss can result in natural catastrophes��such as droughts and floods, the disappearance of��pollinators, or the collapse of fishing or agricultural��yields. The construction, agricultural, and food and��beverage sectors are most likely to bear the brunt, but��the impact on secondary and tertiary industries, and��their supply chains, should not be underestimated.

“Regulation and global standards around��biodiversity are rising,” says Bruch. This year, the��Taskforce on Nature-Related Financial Disclosures��(TNFD) is expected to launch a framework for��organizations to report and act on nature-related��risks, while French financial institutions will be��required to disclose biodiversity-related risks��alongside climate-related risks, as well as their��strategies for reducing biodiversity impacts.

If global warming is to be kept below 1.5°C,��nature-based solutions will play a significant role,��according to the and the International Union for��the Conservation of Nature (IUCN) [2]. This will mean��protecting ecosystems from loss and degradation,��restoring those already degraded, and sustainably��managing working lands such as fields and forests.

“As part of their net-zero commitments, companies��will not only need to develop and implement��strategies to decarbonize, they will also have to��manage their impacts on the land and the natural��resources they use,” Bruch concludes.