Ferma wants risk management more involved in CSRD

Ferma says there needs to be more strategic involvement from risk managers to help organisations meet reporting requirements under the Corporate Sustainability Reporting Directive (CSRD), in part by expanding ERM or introducing more structured risk management.

The European risk management federation has also called on EU policymakers to help drive this involvement by making explicit reference to the role of risk managers or ERM processes as being “good practice” in sustainability reporting.

It also wants the EC and the European Financial Reporting Advisory Group to consider developing simplified risk management guidance to help with double materiality and reporting on impacts, risk and opportunities (IRO).

Ferma made the comments in its first EU Policy Note addressed at risk managers and policymakers.

The note, produced with global consulting firm Protiviti, explores crucial aspects of the CSRD and the new European Sustainability Reporting Standards (ESRS) for risk managers, delivering guidance to help organisations navigate their complexities.

The document highlights five high-level areas where risk managers can have strategic involvement in meeting CSRD requirements:

  • Stakeholder identification and evaluating IRO for stakeholders
  • Materiality processes and identification of thresholds
  • Linking the risk quantification through ERM processes to sustainability reporting
  • Linking reporting to value-chain due diligence requirements, stemming from the Corporate Sustainability Due Diligence Directive (CS3D)
  • Integrating lists of key actions taken in remediation plans in the overall ERM process

Valentina Paduano, chair of Ferma’s sustainability committee, said the role of risk management will be central to how companies meet their sustainability reporting requirements under the CSRD. Risk managers will need to lead in areas such as identifying and mitigating the impacts and risks, and pinpointing and enabling related opportunities, she said.

“Companies with ERM systems in place will have to expand their risk analysis and management activities to encompass new areas of inquiry introduced by the directive. For those without such systems, they will need to introduce structured risk management programmes if they are to meet the reporting standards required under CSRD,” added Paduano.

Ferma CEO Typhaine Beaupérin said that as the scrutiny on companies over sustainability-related risks increases, there is a “growing business imperative to position the risk manager within the strategic decision-making process of organisations”.

“In the context of CSRD, FERMA has provided in this Policy Note a clear indication of how that greater strategic interaction can be facilitated,” she said.

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