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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Committees

Ganga Pharma Ltd's ESG Committee identifies that a key supplier's water-intensive process exposes the company to regulatory and reputational risk. The Board wants this tracked. Which approach best integrates the ESG committee with risk governance?

The ESG Committee should escalate the supplier water risk to the Risk Management Committee so it enters the enterprise risk register with mitigation and monitoring. ESG risks must be integrated with enterprise risk oversight, and the Stakeholders Relationship Committee only handles security holders' grievances.

  1. AKeep the matter solely within the ESG Committee and exclude it from the enterprise risk register
  2. BHave the ESG Committee escalate the risk to the Risk Management Committee for inclusion in the risk register with mitigation and monitoringCorrect
  3. CDelegate the matter to the Stakeholders Relationship Committee because suppliers are stakeholders
  4. DDefer the matter until the next Business Responsibility and Sustainability Report is prepared

Explanation

ESG risks such as supply chain water exposure should feed into the enterprise risk framework so they are assessed, mitigated and monitored. Excluding them from the register fragments risk oversight. The Stakeholders Relationship Committee deals with security holders' grievances, not supplier risks.

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