WEF framework outlines ESG resilience factors

A new whitepaper introduces a new approach to managing ESG risks. The World Economic Forum's new process, 'dynamic materiality', has been designed to help businesses reflect on the impact of change and how ESG factors may become financially material in the future.

A new whitepaper from WEF accentuates that understanding the forces that will impact the next decade, and using them to their advantage, will benefit businesses and increase resilience. This process will become increasingly important, and innovation into how management teams approach this issue is required.

The whitepaper introduces a new framework, analysing how ESG issues have become financially material over time, and includes four key components for consideration:

- Hyper-transparency of corporate practices in the Fourth Industrial Revolution

- Escalating stakeholder activism fuelled by social media

- Changing societal expectation in the new age of stakeholder activism

- Growing investor focus on sustainability issues

“As we’re learning in real-time with the outbreak of COVID-19 and its unexpected impacts, today’s companies must increasingly account for non-financial factors in their long- and short-term business plans,” said Maha Eltobgy, head of the Future of Investing at the WEF.

“As companies look to adapt their value‑creation plans in the new business landscape, they must optimise performance against current and future material ESG issues to safeguard their companies and ensure long-term success.”

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