ESG issues in the ERM model
Faced with the growing importance of sustainability issues in the national and international context, in line with leading practices such as CoSO ERM, CoSO ERM WBCSD and TCFD, the ERM function has strengthened, in recent years, its methodology in a perspective " ESG ”, in order to facilitate a systematic incorporation of these factors into its activities and analyzes.
This was made possible through four fundamental aspects:
Megatrend, external and internal context analysis
Analysis focused on ESG topics and the European context. Starting from the studies carried out by the European Environmental Agency, 18 specific Megatrends were analysed, which can be grouped into 6 thematic areas (Global Population Dynamics, Climate Change and Environmental Degradation, Resource Scarcity, Technological Acceleration and Convergence, Geopolitical Scenario and Balance of Power, Diversification of Values, Lifestyles and Governance Models), assessing their potential impacts in terms of risks and opportunities.
ESG risk classification and mapping on Material Topics
Snam has decided to apply the definition of ESG-related and Climate-related risks within its model in a way that is completely transversal to its risk portfolio. The ERM risks were therefore associated with the Material Topics, thus allowing integration with the Materiality Analysis.
Managing the time horizon of risks and overcoming the short-term vision
A new risk assessment metric, Velocity, has been introduced, suitably calibrated to allow risk analysis on events far away in time and on long-term phenomena.
Restructuring impacts and the logic of Dual Materiality
The methodological evolution has led to the introduction / updating of the three assessment metrics related to ESG factors (Environmental, Social and Governance), this has allowed the ERM model to move closer to the new approach of Dual Materiality. It’s now possible to separate Inside-out effects from Outside-in effects, and consequently evaluate each risk in the double perspective of Financial Materiality and Impact Materiality.
29 June 2022 - 23:53 CEST