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ESG Risks and Opportunity

Navigating the Future Responsibly

WHAT ARE ESG RISKS AND OPPORTUNITIES?

ENVIRONMENTAL

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Risks

Climate change or natural disasters can impact supply chains and business operations, affecting profitability.

Opportunities

Investing in sustainable projects, such as renewable energy or circular economy initiatives, represents growing markets that can be highly profitable.

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GOVERNANCE

Risks

Poor corporate management can lead to lawsuits, sanctions, fraud, corruption, or bankruptcies of companies.

Opportunities

Adopting clear and transparent governance practices that improve trust among investors, regulators, and customers.

Why are ESG criteria relevant?

71%

Of customers in the UK are more likely to choose a bank with a positive social and environmental impact, according to a survey conducted by Deloitte.

Companies with better ESG practices tend to show greater financial resilience and better performance compared to their peers, according to an S&P Global report.

Of bank CEOs consider that the future growth of the sector will depend on the ability to anticipate and adapt to a low-carbon and clean technology economy, according to a KPMG study.

73%

Managing Environmental, Social, and Governance risks and opportunities involves significant challenges for companies and financial entities.

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Challenges in ESG Management

Limited internal capabilities

Problem: Many organizations lack specialized ESG staff or advanced technological tools to integrate these factors into their management.
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Impact: This limits their ability to identify, measure, and manage sustainable risks and opportunities, with no integration into strategic and investment decision-making.

Cultural resistance

Problem: Some companies have rigid organizational cultures that do not prioritize sustainability due to lack of knowledge on the subject.
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Impact: This slows the adoption of ESG strategies and limits internal innovation.

Low integration of ESG management into corporate strategy

Problem: ESG strategies and initiatives are generated out of alignment with the organization's corporate strategy.
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Impact: It limits the positive effects of implementing ESG risks and opportunities in alignment with corporate strategy.

Underdeveloped modeling techniques

Problem: Limited data availability and models that are easy to implement and use.
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Impact: Little technical progress in ESG risk modeling, limiting informed and timely decision-making.

POTENTIALLY IMPACTED RISKS DUE TO INEFFICIENT MANAGEMENT

  • Credit risk
  • Market risk
  • Operational risk
  • Regulatory risk
  • Reputational risk
  • Strategic risk

CONSULTING

Support in regulatory compliance

We advise your organization on compliance with local and international regulations related to ESG criteria, enabling you to avoid regulatory sanctions, legal risks, and improve relationships with regulators.

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Windmill at sunset

ESG Risk Analysis and Management

We implement comprehensive management systems for the identification, measurement, treatment, and monitoring of ESG risks.

We assist in creating governance frameworks, valuation methodologies, defining indicators, and setting appetite limits for those indicators.

Credit Risk Management incorporating climate scenarios

We support your organization in defining climate stress scenarios and evaluating these scenarios on Probability of Default, Loss Given Default, and Expected Loss of your credit portfolio.

Preparation of ESG reports

QF assists you in creating reports associated with S1 and S2 standards, including governance, strategy, risk management, and metrics & objectives. This improves transparency and trust with stakeholders while meeting the expectations of investors interested in sustainability.

TECHNOLOGY

We provide technology solutions that enable you to:

  • Monitor the performance of the ESG investment portfolio
  • Automate the climate stress scenarios process in the credit portfolio
  • Implement an Environmental and Social Risk Management System (SARAS)
  • Generate reports aligned with regulatory standards
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SARAS
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EDUCATION

We offer training for executives and employees on:

  • Identification, assessment, treatment, and monitoring of ESG risks.
  • Assessment of sustainable opportunities.
  • Importance of ESG criteria in strategic decision-making.

“No other problem, none, poses a threat as significant to future generations as climate change does.” Barack Obama.

DISCOVER THE POTENTIAL BENEFITS
OF PROPER ESG MANAGEMENT

1.

Improvement of reputation and trust

Organizations that demonstrate a commitment to sustainability and responsible practices strengthen their reputation with customers, investors, regulators, and society.

2.

Regulatory compliance and access to new markets

The proper management of ESG criteria ensures compliance with current and future regulations, reducing legal and sanction risks.

Reduction of financial risks

The proactive evaluation and management of ESG risks mitigate credit, market, operational, and other risks, promoting greater resilience against disruptive events.

3.

Appeal to investors and access to financing

Institutional investors increasingly prioritize companies with solid ESG strategies.

4.
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Attraction and retention of talent

Companies committed to sustainability are more attractive to talented employees, especially young people who prioritize values aligned with social and environmental responsibility.

6.

Innovation and competitive advantage

The integration of ESG drives innovation in products, services, and processes, providing competitive advantages in the market.

Do you want to discover your potential?

At QF Nexus, we are committed to being your strategic partner to mitigate risks and boost ESG opportunities.