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Understanding ESG Risks

Understanding ESG Risks

Aug. 27, 2024
ESG reporting should be as imperative as financial reporting.

As the increased emphasis on ESG performance continues, a new report from Supplier.io, points out the critical need for businesses to apply the same rigor to ESG reporting as they do to financial metrics. 

The report provides these key findings:

Environmental Risk: Environmental risks are a pressing concern, with greenhouseg as (GHG) emissions standing out as the most significant threat, affecting 73% of companies.

Water withdrawal and consumption is a concern with 49% of companies impacted by water pollution from supply chain activities, including the discharge of untreated wastewater, chemical pollutants, and plastic waste. Furthermore, 67% of companies face risks from water usage and scarcity.

Air pollution is a major problem with 56% of companies reporting they are impacted by air pollution, primarily from supplier activities in transportation and manufacturing.

Additionally, 72% of companies face risks from lack of managing their products’ environmental and social impacts throughout the product lifecycle.

Social Risk: the report found that  54% of companies encounter worker health and safety risks.

Governance Risk: A large percentage of companies, 45%, said they face risks related to unethical business conduct, such as bribery and corruption.

Companies are required to report on the ESG impact of their suppliers, as a result of mandates including the Corporate Sustainability Reporting Directive.  Yet, 45% of companies are exposed to significant risks due to inadequate supply chain transparency and management.

And 43% of companies face risks related to unethical business conduct, such as bribery and corruption.

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