Climate & Environment
Sustainability Risk
An environmental, social or governance event or condition that could materially harm an entity's financial position — the outside-in half of double materiality.
Definition
A sustainability risk is an environmental, social or governance event or condition that, if it occurs, could cause a negative material impact on the value of an investment or an entity's financial performance — the definition embedded in the EU's Sustainable Finance Disclosure Regulation. It is the outside-in lens of double materiality: not the company's impact on the world, but the world's sustainability changes impacting the company — physical climate damage, transition policy, litigation, social licence loss, governance failures.
Overview
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