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COSO-基于2017ERM的环境、社会和治理风险管理框架-2018.2.pdf

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    Enterprise Risk Management Applying enterprise risk management to environmental, social and governance-related risks F e b r u a r y 2 0 1 8 PRELIMINARY DRAFT
    This document was developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the World Business Council for Sustainable Development (WBCSD). This draft guidance: Enterprise risk management: Applying enterprise risk management to environmental, social and governance-related risks is designed to supplement COSO’s updated enterprise risk management (ERM) framework, Enterprise risk management - Integrating with strategy and performance. This supplemental guidance addresses an increasing need for companies to integrate environmental, social and governance (ESG)-related risks into their ERM processes. This project is funded by the Gordon and Betty Moore Foundation. Call for public comment on preliminary draft WBCSD and COSO are calling for public comment. The consultation period will commence in February 2018 and end June 30, 2018. Comments may be submitted through a survey available at COSO.org or via email to risk@wbcsd.org.
    Content Introduction 1. Establish governance for effective risk management 2. Understand the business context and strategy 3. Identify ESG-related risks 4. Assess and prioritize ESG-related risks 5. Respond to ESG-related risks 6. Review and revise ESG-related risks 7. Communicate and report on ESG-related risks Appendices References 3 15 33 53 65 95 111 123 133 143 1 IntroductionFebruary 2018PRELIMINARY DRAFT
    2 Enterprise Risk Management | Applying enterprise risk management to environmental, social and governance-related risksFebruary 2018PRELIMINARY DRAFT
    Introduction Businesses face an evolving landscape of emerging environmental, social and governance (ESG)-related risks that can impact a company’s profitability, success and even survival. COSO and WBCSD believe that leveraging a company’s enterprise risk management governance and processes can support identification, assessment and mitigation of ESG-related risks. This guidance is designed to facilitate the process. Over the past decade, the prevalence of ESG-related risks has steadily increased while the more traditional economic, geopolitical or technological risks are less dominant. Companies worldwide have experienced measurable impacts after product safety recalls, worker fatalities, child labor, polluting spills and weather-related supply chain disruptions. Many of these have translated to financial or reputational harm – in some cases to the point of no recovery. Considering ESG challenges at an enterprise level offers an opportunity for business leaders to expand their understanding of a company’s risk profile and the value creation model – while enabling them to consider how these issues impact shareholders and society. What is ESG? ESG refers to environmental, social and governance issues that investors consider in the context of corporate behavior.1 There is a growing body of evidence that companies that manage ESG issues benefit from improved financial performance.2 The evolving landscape of ESG-related risks Business faces threats in the form of ESG-related risks that need attention. The World Economic Forum’s Global Risks Report 2018 outlines the growing severity and frequency of ESG-related risks over the past 10 years. As shown in Table 0.1 on the next page, in 2008, only one societal risk - pandemics - was reported in the top five risks in terms of impact. Ten years later in 2018, four of the top five risks were societal or environmental, including extreme weather events, water crises, natural disasters and failure of climate change mitigation and adaptation. The World Economic Forum also highlights the depth of the interconnectedness that exists both among the environmental risks and between them and risks in other risk categories—such as water crises and involuntary migration.3 3 IntroductionFebruary 2018PRELIMINARY DRAFT
    Table 0.1: Top risks according to the World Economic Forum’s Global Risks Report 2018 2008 2013 2018 Top 5 global risks in terms of likelihood Asset price collapse Middle East instability Failed and failing states Oil and gas price spike Chronic disease, developed world Severe income disparity Extreme weather events Chronic fiscal imbalances Natural disasters Rising greenhouse gas emissions Cyberattacks Water supply crises Mismanagement of population aging Data fraud or theft Failure of climate-change mitigation and adaptation Top 5 global risks in terms of impact Asset price collapse Major systemic financial failure Weapons of mass destruction Retrenchment from globalization (developed) Water supply crises Extreme weather events Slowing Chinese economy (<6%) Chronic fiscal imbalances Natural disasters Oil and gas price spike Pandemics Diffusion of weapons of mass destruction Failure of climate-change mitigation and adaptation Failure of climate-change mitigation and adaptation Water crises Economic Environmental Geopolitical Societal Technological In the business world, this evolving landscape means ESG-related risks that were once considered “emerging” or “black swans” are now far more common. Further, these are issues that can no longer be left to government or nongovernmental organizations to solve on their own. This is clear from the 2015 UN Sustainable Development Goals (SDGs), which established unprecedented expectations on the private sector to supplement global development efforts through innovation and collaboration.a Thus business needs to take a more active role in understanding and addressing ESG-related issues – whether that means reducing or removing the risk, adapting and preparing the company for if and when it occurs or simply being more transparent about what the business is doing. Table 0.2 shows how these megatrends translate to ESG-related issues, risks and opportunities that companies need to acknowledge and address. Table 0.2: Common ESG issues and related risks and opportunities impacting business Environmental Issues • Energy use and efficiency • Climate change impacts • Use of ecosystem services Social Issues • Employee engagement • Labor conditions in the supply chain • Poverty and community impacts Governance Issues • Code of conduct and business principles • Accountability • Transparency and disclosures Risks • Higher-than- average energy costs result in missed profit targets • Greater frequency of extreme weather events impacting operations Opportunities • Internal carbon pricing scheme to reduce greenhouse gas emissions and energy costs • By-products in waste process used in adjacent industry to create new income streams Risks • Low engagement and high turnover result in increased costs and missed profit targets • Lack of support for local communities results in challenges with local governments to maintain operating permits Opportunities • Greater loyalty and inclusive work force attract the best talent in the industry • Increasing the education of crop farmers improves yields, providing a greater standard and quality of life - plus increased sales Risks • Limited board oversight results in negative company performance • Limited transparency results in reduced access to equity financing Opportunities • Open and transparent board decisions for key ESG-related topics provide investors with greater sense of security in their investments leading to increased and longer equity positions . . . . . . . . . . . . . . . . a This collaboration includes the UN Global Compact and Impact 2030, which support the private sector through knowledge sharing and capacity building. The United Nations Guiding Principles for Business and Human Rights released in 2011 also highlights a shift away from the traditional approach for human rights expectations to be set and enforced by the states to establishing an expectation for business to “protect,” “respect” and “remedy” human rights. 4 Enterprise Risk Management | Applying enterprise risk management to environmental, social and governance-related risksFebruary 2018PRELIMINARY DRAFT
    Consequences from failure to manage ESG-related risks At a global level, businesses have felt the impacts of this evolving risk landscape for many years, and at an increasing rate. From small startups to large multinationals, recent history provides extensive examples in which companies have failed to identify or respond to ESG-related risks. These failures result in significant impacts on the bottom line, society and the environment,4 spanning industries, geographies and risk categories. Table 0.3 highlights some publicly available examples of ESG-related events that resulted in significant financial and reputational impacts. Table 0.3: Examples of risk events and their consequences Year 2018 Company Wells Fargo Event Business impact The Federal Reserve found that Wells Fargo workers responded to the high pressure sales culture by creating as many as 3.5 million fake accounts. The bank also forced up to 570,000 customers into unneeded auto insurance.5 The punishment included a requirement to remove four board members and imposed a cap on the growth of the company until sufficient improvements are put in place6 2017 Uber Multiple reported incidents pointed to a pervasive culture of alleged sexual harassment7 Reputational damage 2016 Samarco (Vale and BHP) 2016 7-Eleven 2015 Volkswagen A dam collapse killed 19 people and sent iron ore mining debris through the southeast region of Brazil8 Company workers were being paid less than the legal minimum wage10 Millions of cars were recalled worldwide after the company admitted to falsifying emissions tests12 USD $6.2 billion settlement9 At least USD $26 million in back pay to 680 workers11 USD $14.7 billion settlement13 2015 3M NGO ForestEthics alleged that 3M suppliers provided products from endangered forests around the world14 Led 3M to revise its policy on pulp and paper sourcing to improve environmental and social practices in more than 70 countries with 5,000 suppliers15 2014 2013 General Motors (GM) A faulty ignition switch that caused airbags to fail in a crash prompted the recall of 1.6 million vehicles16 USD $35 million civil penalty after the National Highway Traffic Safety Administration determined GM delayed reporting the ignition switch defect17 More than 25 brands including Primark, Benetton and Walmart More than 1,100 workers were killed and 1,000 were injured in Bangladesh’s Rana Plaza factory collapse18 USD $15 million of USD $40 million target raised by the International Labor Organization, a UN agency, to compensate impacted families19 2011 Automotive industry Flooding in Thailand resulted in over 500 deaths and significant disruptions to supply chain networks, particularly in the automotive and technology industry sectors The impact has been felt at the regional level, with the Thai central bank reducing its gross domestic product growth forecast for 2011 from 4.1% to 1.5%, and the Thai baht depreciating by about 3.9% in three months20 2010 BP Oil spill in the Gulf of Mexico BP paid USD $5.5 billion in Clean Water Act penalty and up to USD $8.8 billion in natural resource damages21 2000s Mattel 1990s Nike 1980s Nestle 1970s Ford Mattel experienced a number of product recalls, in 2007 recalled toys due to lead paint contamination Recalled 967,000 toys22 Company paid its factory workers, including children, less than minimum wage and forced them to work overtime23 Reputational damage and loss of sales from protests at the Barcelona Olympics in 1992 and multiple exposés of labor practices24 Infant Formula Action Coalition launched a boycott of Nestle for its marketing and sale of baby formula in emerging countries25 The boycott caught on in France, Finland, Norway, Ireland, Australia, Mexico, Sweden and the UK26 After the company learned its Pinto model was prone to fires, 1.9 million Pintos were recalled27 Initially one claimant was awarded USD $125 million in damages, which was later reduced to USD $3.5 million28 5 IntroductionFebruary 2018PRELIMINARY DRAFT
    Investor interest in ESG-related risks Institutional investors are also taking an interest in how companies are navigating the changing business environments and addressing social and environmental challenges to achieve long-term, sustained growth. An EY survey of institutional investors revealed that more than 80% of institutional investors surveyed agreed that for too long, companies have failed to consider environmental and social risks and opportunities as core to their business. They believe that ESG issues have “real and quantifiable impacts” over the long term and that generating sustainable returns over time requires a sharper focus on ESG factors. Of the ESG-related risks, poor governance, human rights-related risk from operations and lack of independent verification (assurance) over data and claims were the most likely risks to alter investor decisions (refer to Figure 0.1).29 Figure 0.1. Impact of ESG-related risks on investor decision-making Risk or history of poor governance Human rights risk from operations Limited verification of data and claims ESG risks in supply chain that is unmanaged Risk or history of poor environmental performance Risk from resource scarcity - e.g., water Absence of a direct link between ESG initiatives and business strategy to create value in the short, medium and long term Risk from climate change 39 32 20 15 15 12 12 8 58 57 63 68 76 75 59 71 3 11 17 17 9 13 29 21 0% 20% 40% 60% 80% 100% Rule out investment immediately Reconsider investment No change in investment plan Investors have experienced past consequences from failing to anticipate ESG-related risk events, and they expect these to continue in the future. Particularly related to climate change, new research findings call for regulators, governments and investors to re-evaluate energy business models against carbon budgets. Without action, a USD $6 trillion carbon bubble is predicted in the next decade because companies are not taking the cost of climate change into account.30 6 Enterprise Risk Management | Applying enterprise risk management to environmental, social and governance-related risksFebruary 2018PRELIMINARY DRAFT
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