Survey highlights concerns when it comes to ESG strategies

Cyber, ‘green hushing’, wellbeing, and net zero rank as the pressing areas of concern for businesses when it comes to ESG strategies, according to the latest Allianz Risk Barometer. The repercussions of data breaches, system vulnerabilities, and the “shapeshifting nature of the cyber threat” have ensured cybersecurity resilience retains its top spot in the ESG risk trends of most concern in the Allianz Risk Barometer. “Cybersecurity is an important ESG issue because it affects people as well as company data,” says Funké Adeosun, global transition solutions director, Allianz Commercial. “Breaches of private data can affect people’s livelihoods, mental health, and even their safety. For individuals and companies, the loss can be reputational and financial.” According to Allianz, cyber resilience measures should include mitigation and recovery plans for a data breach, as well as cyber insurance and constant adaptation to emerging threats. “It is vital that critical information that can impact the running of societies is not lost to hostile external parties,” said Adeosun. The Barometer also noted that regulation and disclosure requirements are of increasing concern, as companies join the drive to net zero. “Organisations communicating a strong sustainability agenda can find themselves in a bind – they can be litigation targets for groups who believe they are not doing enough to meet their climate or societal commitments, as well as those who claim they are making commitments they can’t meet,” said Gabrielle Durisch, global head of sustainability solutions at Allianz Commercial. “This has led to cases of ‘green hushing’, whereby companies deliberately under-report or hide their ESG credentials from public view to avoid scrutiny. The lack of transparency makes it harder to understand the true impact of sustainability strategies and investments, which could inhibit the adoption of ESG activities by other companies.” The third-ranked ESG issue is company working conditions. Allianz explained that the human factor – or the ‘S’ in ESG – is perhaps the hardest one for organisations to contend with because it requires a broad focus on people, the workplace, and wider society. Bad working conditions can create a culture of low morale, increased staff turnover, and reputational damage. “These risks can be minimised by prioritising health and safety, fair wages, open communication, and regulatory compliance,” said Durisch. “Companies should also adopt regular employee feedback surveys and take them seriously, especially if they are from marginalised society members. That way, organisations can truly build a culture where work-life balance and employee mental health are of paramount importance, which will help to fuel their ESG journey. There is always more that can be done to support local communities and society in general, so this should also be a key consideration in sustainability strategies.” Another major ESG concern highlighted by the Barometer is decarbonisation and net-zero strategy. “With regulatory changes, technological innovations, and the potential loss of investments in the picture, there is a lot at stake,” said Adeosun. “Companies are having to shift decades-old strategies to align with new ESG and sustainability goals, which can lead to scepticism or resistance from some quarters. It’s important to engage all stakeholders, set realistic targets, and provide adequate investment. Getting to net zero will not be cost free.”

Survey highlights concerns when it comes to ESG strategies

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