Corporate Risk Radar
Corporate Risk Radar podcast series: Europe | Episode 3 | AI and cyber risks dominate concerns for business leaders
Asie-Pacifique, Amérique du Nord, Royaume-Uni et Europe
Climate change risk
This is the first episode of the Corporate Risk Radar Podcast Series, which explores the findings of Clyde & Co’s Corporate Risk Radar research, carried out with Winmark Global. In this inaugural episode, host Eva Maria Barbosa delves into the ESG and regulatory risks facing business leaders and general counsel, in the context of current economic challenges. She is joined by Heidi Watson, a partner who provides support to HR and legal teams on employment issues, and Rob Lowe, partner in the global Corporate & Advisory practice, specialising in energy and energy transition.
The episode begins with an overview of the ESG issues raised in the Corporate Risk Radar report, before focusing specifically on the biggest social risks, and why these are a growing compliance concern for organisations. Guests then discuss how organisations are addressing environmental risks, how these impact employees, and the role of innovation. Finally, where do these issues sit within the current economic landscape and how can organisations embrace the opportunities, as well as overcome the challenges, they present?
Organisations are currently “grappling with the tension between the short-term imperative to deal with a deteriorating economic outlook and the long-term mission… to address climate change” says Barbosa to kick off. Yet, despite this challenge, the Corporate Risk Radar shows that reducing carbon emissions and being more sustainable remain high on the business agenda, while respondents believe that ESG regulation and climate risks will dominate the next two to three years.
A case in point is the social element of ESG, which Watson says has become an executive level priority since the pandemic, as employee expectations have increased, and staff have become more “willing to complain”. Consequently, cultural issues are increasingly becoming compliance issues, with regulators such as the Financial Conduct Authority taking steps to introduce regulatory reporting around diversity and inclusion, for example. And while these initiatives place new demands on employers, Watson says they should be “a win-win,” driving better decision-making and more effective management.
In the environmental sphere, Lowe notes a similar growing focus on compliance, with “governments and regulators looking at ways of addressing the underlying ESG related risks”. Also discussed is the value of engaging employees in environmental challenges, which can help organisations achieve sustainability goals, while also aiding attraction and retention. Watson recommends that “everything related to the employee lifecycle is living the sustainability goals of the company,” for example incentivising employees to become engaged in sustainable activities.
In the big energy sector specifically, Lowe agrees that there is a huge opportunity for innovation as companies become “concerned about being left behind.” Under pressure from the public, governments, and regulators, they must “look to engage in the energy transition and take a lead in that.” That means embracing technology, investing in renewable energy projects, and bringing the whole organisation with them through education, and retraining.
Finally, guests give their views on how the current economic situation will impact the ESG agenda. From an employment perspective, Watson says that agility will be key to navigating changes introduced by AI and other technologies, to minimise job losses and ensure employers remain compliant. Lowe believes that, despite challenging times, the ESG agenda will continue, albeit “the pace of change might abate a little bit in the coming years.”
For organisations, there may be challenges, but Lowe believes that they can turn these to their advantage: “We have large clients looking at areas where they can… do things more efficiently, to assist them with saving costs, taking advantage of technology.” And for lawyers, it’s an exciting time with numerous interesting challenges to overcome and the chance to have a role in “...creating a better, more sustainable business environment going forward.”