The results of the sustainability risk monitoring need to be disclosed in a report. For this, Fund Managers need to set a reporting framework in place.

To set up a sustainability risk reporting framework, please read the Guide on Sustainability Risk Reporting below.  

Sustainability Risk Reporting Guide

1. Assess the Existing Risk Monitoring Process

Familiarise yourself with your current risk monitoring process. Understand how sustainability risks are currently identified, assessed, and managed. Identify the data sources, methodologies, and tools already in use for risk monitoring.

2. Establish a Reporting Framework

Example of a Basic Sustainability Risk Disclosure Framework:

• Step 1: Define the scope of your sustainability risk reporting, considering the material ESG risks relevant to your investment activities.
• Step 2: Identify and assess the material sustainability risks within your investment portfolio (with your monitoring framework).  
• Step 3: Develop a reporting template that covers key risk areas, such as climate change, governance, social impact, and resource management.
• Step 4: Populate the reporting template with relevant information, including risk descriptions, risk mitigation strategies, and progress updates.
• Step 5: Review and finalise the report, ensuring clarity and transparency in communicating the identified sustainability risks and actions taken.

3. Align Reporting Objectives with Risk Monitoring

Align the objectives of the sustainability risk reporting process with the existing risk monitoring process. Ensure that the reporting process captures the key sustainability risks monitored. Establish clear linkages between the identified risks, risk assessment methodologies, and the reporting framework to ensure consistency.

3. Identify Reporting Requirements

Review the reporting framework requirements and identify the specific reporting elements that need to be linked with the risk monitoring process. Determine which sustainability risk metrics and indicators need to be reported and ensure they align with the existing monitoring metrics.

4. Integrate Risk Monitoring and Reporting Workflows

Map out the workflows of the risk monitoring process and reporting process to identify integration points. Determine how data from the risk monitoring process will be transferred and used in the reporting process. Establish clear communication channels between the teams involved in risk monitoring and reporting.

5. Develop Reporting Templates and Formats

Create reporting templates and formats that align with the reporting framework and capture the relevant sustainability risk data from the monitoring process. Ensure that the templates facilitate the efficient extraction and presentation of data in a clear and standardised manner.

6. Establish Reporting Timeline

Align the reporting timeline with the existing risk monitoring cycle. Determine when and how frequently sustainability risk reports will be generated based on the availability of data, the reporting framework requirements, and stakeholder expectations. Ensure that reporting deadlines are integrated into the overall risk monitoring timeline.

7. Review, Verify, and Publish the Report

Review the draft sustainability risk report, ensuring that it accurately reflects the data and insights from the risk monitoring process. Once finalised, publish the report, linking it to your existing communication channels and reporting platforms. Set a periodic review process to ensure your reporting framework is relevant to your evolving needs.

That is it!

By following these steps, you ensure a comprehensive and consistent approach to monitoring and reporting on sustainability risks.