Ghanaian companies must align their vision with the strategy to mitigate ESG risks

Bernard Owusu-Ansah, manager at KPMG Ghana’s Governance, Risk and Compliance Services (GRCS) department, has urged Ghanaian companies to first align their organizational vision with their strategy to improve Environmental, Social, Governance (ESG) -effectively limit risks in their companies.

Mr Owusu-Ansah made the call while speaking at a UK-Ghana Chamber of Commerce (UKGCC) webinar with KPMG Ghana on “Mitigating and Managing ESG Risks: Building Resilience for a Sustainable Future”.

According to Mr Owusu-Ansah, recent studies show that more than 70% of companies globally are now exposed to moderate to high ESG risks. This exposure makes companies more vulnerable to ESG-related impacts that could weaken their ability to withstand and adapt to operational and financial shocks.

Environmental risks include potential negative impacts of the natural environment, such as extreme weather events, pollution and emissions, and resource scarcity. These risks can impact a company’s reputation, financial performance and long-term sustainability. Social risks, on the other hand, are challenges related to a company’s impact on its workforce and communities.

These include failure to adhere to labor standards, inadequate compensation or inadequate protection of workers’ health. Governance risks relate to issues surrounding governance structures, ethical practices and general corporate behavior.

To effectively manage these risks and strengthen business resilience, Mr Owusu-Ansah noted: “It all starts with your strategy”.

“It all starts with strategy and spreading your vision and ambition throughout the organization, because if you implement a business strategy that runs parallel to your risk approach, you will encounter many problems,” he explained.

He advised companies to first create a vision statement that incorporates ESG principles, and then consider the opportunities available in the strategy.

Next, business leaders must define ESG ownership from the board level up. Here, Mr Owusu-Ansah warned that whoever is appointed as owner of ESG within the company must be able to quantify how the company is benefiting from the ESG strategies implemented to counter the potential perception that the company is ‘money wastes’.

However, he emphasized that “Risks are not always counterproductive to the business; they can also create opportunities.”

“You can thrive by using risk as a competitive advantage or by developing new products that exploit those risks,” he explained.

How to align vision and strategy

To align your company’s vision with strategy, Mr Owusu-Ansah suggested that companies can assess their risk landscape and identify who is important to their objectives (i.e. key stakeholders) such as investors, regulators, members of the community, employees, customers and the supply chain. .

“It’s important to consider the community in which you operate, because it’s not just about the financial impact on your business. For example, there are powerful people, leaders and social influencers in communities who can change public opinion about your company. It is essential to understand and consider what is important to these people.”

He further advised companies to focus on material issues that matter to their business, and clarified what they want to achieve with ESG as a function, i.e. whether they simply want to be regulatory compliant, strategic or transformative with their entire business model; and consider both the local and international regulatory landscape.

“There are many problems. You can’t tackle everything at once, but prioritize the things that matter most to your business, and that leads to what your ambition is,” he said.

ESG: opportunities and challenges

ESG also offers opportunities, such as enabling companies to grow and innovate with new products and services, making it attractive to business leaders.

However, challenges such as integrating ESG into business strategy, a complex regulatory environment and the difficulty of defining what is sustainable, in addition to the responsibility for reporting and measurement, among others, can make its adoption difficult for several companies.

Despite these challenges, Mr Owusu-Ansah emphasized that it is worthwhile to apply ESG principles and manage associated risks.

“ESG is ultimately about doing the right thing. If you want to do the right thing in every aspect of your business, you will realize that you are compliant with most regulations no matter where your business extends.”

The webinar, moderated by Emma A. Opoku-Pare, an Assistant Manager in the Financial Risk Management Unit of KPMG Ghana, also covered topics including ESG Risk Factors, Enterprise Risk Management Frameworks, Creating Value from ESG, Risk Identification and materiality assessment, and prioritization. and mitigation strategies, among others.

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