ESG Risk Assessment: Gaining Control Over Sustainability in a Shifting Geopolitical Landscape

In a world where sustainability and social responsibility are becoming increasingly important, many organisations have embraced ESG (Environmental, Social & Governance) as a strategic anchor. As of January 1, 2025, ESG risk management is no longer a voluntary ambition—it is a formal obligation. Companies falling under the scope of the Corporate Governance Code are now required to provide insight into sustainability risks in their management reports through the Risk Management Statement (Verklaring Omtrent Risicobeheersing, or VOR).

In this VOR, the board must outline the principal risks, the associated risk appetite, and the design, operation, and effectiveness of internal control systems related to operational, compliance, and reporting risks. The statement must also address shortcomings, improvement measures, and the sensitivity of results to external influences. Sustainability risks are taking on an increasingly prominent role within this risk management framework. The VOR should provide insight into:

• the nature and scope of sustainability risks;
• the potential impact on the organisation;
• the control measures in place.

At the same time, geopolitical shifts are reshaping the tone and direction of ESG regulation. The election victory of Trump in early 2025 has fueled a strong anti-ESG sentiment in the United States. In response, the European Union—previously a frontrunner in sustainability—now seems to be reconsidering its approach, working on consolidating and potentially softening existing ESG frameworks (CSRD, CSDDD, Taxonomy).

This creates a complex tension for financial institutions. On one hand, there are legal obligations to take sustainability seriously; on the other, there is growing societal polarization and political pressure to simplify or delay ESG requirements. What does this mean for implementing ESG policy—and how can organisations maintain control over their sustainability ambitions in a world that’s shifting?

In this context, a well-designed ESG risk assessment becomes essential—not only to comply with regulations but also to remain aligned with the organisation’s strategic direction. An ESG risk assessment maps out risks related to environmental factors, social issues, and governance challenges—always in connection with strategic goals and external developments.

Think of environmental risks such as climate change or biodiversity loss, but also social risks like poor labor conditions in the supply chain or data protection issues like breaches. Governance risks may involve conflicts of interest, lack of transparency, or ethical concerns, such as investments in the defense industry. By systematically identifying, assessing, and managing these risks, organisations not only achieve compliance but also build greater trust with stakeholders.

The fragmentation of regulations—and the political uncertainty surrounding them—requires agility. Organisations would do well to embed ESG as an integral part of their broader risk management strategy. This allows them to respond quickly to changing requirements while staying true to their sustainability objectives. Moreover, a solid ESG risk assessment enables them to seize opportunities emerging in the transition to a more sustainable economy—from entering new markets to developing innovative products and services.

The Ruler Risk Assessment Tool supports organisations with a structured approach. It offers an extensive library of ESG risks and control measures, visual dashboards and reports, and the ability to clearly assign roles and responsibilities. This makes ESG risk assessments not only practical but also demonstrable and traceable for both internal and external stakeholders.

In times of geopolitical instability and growing social pressure, the ability to continuously monitor and manage ESG risks is more important than ever—not just to avoid fines or reputational damage, but to remain steady and credible as an organisation.

With a well-executed ESG risk assessment—supported by Ruler’s tools—organisations gain clarity, structure, and decisiveness. This transforms ESG from a political football into an embedded part of future-proof business operations.

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