Page 608 - COSO Guidance

3. Performance for ESG-related risks

Table 3b.10: ESG-specific risk assessment tools

Tools Examples
Natural Greenhouse Gas Protocol Greenhouse Gas Protocol Corporate Accounting and Reporting Standard provides
Capital guidance to companies for calculating greenhouse gas inventories.
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Protocol
Toolkit WBCSD Water Tool The WBCSD Water Tool is a multifunctional resource for identifying and calculating exposure
of corporate water risk and opportunities, including a workbook, (for site investors, key
44
reporting indicators and metrics) a mapping functionality and Google Earth compatibility.
InVEST InVEST (Integrated Valuation of Ecosystem Services and Trade-offs) is a suite of
open-source software models to map and value the goods and services from nature that
sustain and fulfill human life. InVEST enables decision-makers to assess impacts associated
with management choices and future climate, to identify where investment in natural capital
can enhance human development and ecosystems. 45
WRI Aqueduct WRI Aqueduct is a risk mapping tool that helps companies understand where and how
water risks and opportunities are emerging worldwide. The Atlas uses a peer-reviewed
methodology to create customizable global maps of water risk.
46
World Bank Climate The Climate Change Knowledge Portal is a central hub of information, data and reports
Change Knowledge Portal about climate change around the world. It allows users to query, map, compare, chart and
summarize key climate and climate-related information. 47
Social & B Analytics, Global GIIRS uses B Impact Assessment methodology to deliver an accounting of an investment
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Human Impact Investment Rating portfolio’s impact on workers, customers, communities and the environment.
Capital System (GIIRS)
Protocol
Toolkit Impact Measurement This collection of sector-specific frameworks identifies relevant socioeconomic impacts,
Framework indicators and metrics. 49
Organisation for Economic These guidelines provide advice on the collection and use of measures of subjective
Co-operation and well-being. They are intended to provide support for national statistical offices and other
Development (OECD) producers of subjective well-being data in designing, collecting and publishing measures
Guidelines on Measuring of subjective well-being. In addition, the guidelines are designed to be of value to users of
Subjective Well-being information on subjective well-being.
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The ESG-specific tools set out in Chapter 2, Table 2.8, such as the Equator Principles, Environmental or Social
Impact Assessments, may also support assessment of ESG-related risks.
2.2 Data, parameters and assumptions

The calculation of risk severity requires practitioners to make choices Guidance
about data, parameters and assumptions. In making these decisions,
companies can start with the following considerations in Table 3b.11 Select and document data,
which are outlined in more detail on the next page. parameters and assumptions

Table 3b.11: Considerations for data, parameters and assumptions

Aspect Considerations
Data sets • What primary or secondary data is available as an input to the measurement tool?
• What tools and frameworks can be used to support ESG-related risk assessments?
• What assumptions are inherent in the selected data?
• How reliable is the data?
• Does the data apply to the defined scope of the risk?
Timing • What time period should the analysis consider (e.g., strategic plan; 5, 15 or 30 years)?
Scope • At which organizational levels (e.g., divisions, functions and operating units) and value chain (inputs, operations and
markets) is the analysis applied?
Discount • How certain are the expected events and timing of cash flows used in the monetary estimate?
rate • Are these estimates established with enough subject-matter expertise or historical evidence to apply a discount rate?

These considerations should be documented to help companies maintain a clear view of how the severity of a
risk is being measured and allow the assessment to be replicated over time. Discussion and peer scrutiny of the
risk assessment inputs are important to build consensus and allow assumptions to be challenged.

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