​Improving Organizational Resiliency: New Guidance Addresses Environmental, Social and Governance-related Risks


​​​Geneva/Singapore 23 October 2018 –  The Committee​​​ of Sponsoring Organizations of the Treadway Commission (COSO) and the World Business Council for Sustainable Development (WBCSD) released today the final version of “Guidance for Applying Enterprise Risk Management (ERM) to Environmental, Social and Governance (ESG)-related Risks.” 

This guidance, which underwent an extensive public comment exposure, is intended to bring ESG risks and opportunities into a clearer focus for mainstream business and other organizations around the world. It is design​ed to enhance organizations’ resiliency as they confront the increasing prevalence and severity of ESG-related risks, ranging from extreme weather events to product safety recalls.

The guidance aligns with COSO’s widely accepted Enterprise Risk Management — Integrating with Strategy and Performance. The ERM Framework is used by organizations around the world to improve their approach to managing risks amid an ever-evolving business environment.  

“This application Guidance to the COSO ERM framework is something that can have a massive impact. For those of us who know the relevance of COSO, this is a major step toward the vision that business can speed the transition to a more sustainable world,” said Peter Bakker, President and CEO at WBCSD. “When companies have a better grasp on their risks, they can make better business decisions – often with more sustainable outcomes. We believe this work will help drive positive change in corporate governance, worldwide."

“The Guidance is a valuable contribution for applying COSO’s ERM Framework to ESG-related risks,” said Paul J. Sobel, COSO Chairman. “The prevalence of ESG-related risks globally is increasing, and there is a growing demand from stakeholders for ESG-related insight. Using the common language of ERM, this Guidance helps to meet the needs of risk management and sustainability practitioners for integrating ESG-related risks into ERM.”

Highlights of the Guidance include: 

  • Approaches to overcome ESG-related risk challenges across the ERM process, from governance to risk identification and assessment through to communication and reporting; 
  • Innovative responses to manage both upside and downside of ESG-related risks;
  • Methods for developing and maintaining a culture of continuous improvement for managing ESG-related risks.

An Executive Summary and Guidance can be viewed at coso.org or wbcsd.org. Further details will be available on the COSO website.

This project was funded by the Gordon and Betty Moore Foundation.

​About CO​​SO 

Originally formed in 1985, COSO is a voluntary private sector organization dedicated to improving organizational performance and governance through effective internal control, enterprise risk management and fraud deterrence. COSO is jointly sponsored by the American Accounting Association (AAA), the American Institute of Certified Public Accountants (AICPA), Financial Executives International (FEI), the Institute of Management Accountants (IMA), and The Institute of Internal Auditors (IIA). For more information, visit COSO’s website.​

About W​BSCD

The World Business Council for Sustainable Development (WBCSD) is a global, CEO-led organization of more than 200 leading businesses working together to accelerate the transition to a sustainable world. WBCSD helps make its member companies more successful and sustainable by focusing on the maximum positive impact for shareholders, the environment and societies. WBCSD member companies come from all business sectors and all major economies, representing combined revenue of more than $8.5 trillion and 19 million employees. 

The Gordon and Betty Moore Foundation fosters path-breaking scientific discovery, environmental conservation, patient care improvements and preservation of the special character of the San Francisco Bay Area. Visit Moore.org or follow @MooreFound.​

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John Babinchak
The Institute of Internal Auditors