Page 54 - CMA Journal (Nov-Dec 2025)

Focus Section

Metrics & Targets
Avoid; Investment, purchase, loan, funding or any type of agreement (Especially Banks for funding)
Actual Target Achieved
En ty / Business to avoid Risk Current/Avoiding Strategy
2025 2026 Next FY
Electricity produced in Coal fired plant 100% X
Coal Fired Power Plant E -Risk - Carbon emission
Electricity to be used-Alternate energy X 100%
Steel Mill not Adap ng S-Risk-Human rights Shi ing to another supplier 12 X
Human Rights Policy Viola on.

Klein bricks used bonded labour X
Bricks Kiln - With bonded S- Risk, Child labour & 250,000
labour & carbon emission bonded labours
C e m e e t n e s u s k c o l b d d X
125,000
XYZ Steel Mill- Tax Evasion G-Risk, Tax evasion & Purchases from XYZ Steel Mill 400 ton X
& Environment Rules Non-compliance of
Viola on ESG standards A B l e e t S C M l l i X 4 0 o t 0 n
Opera onal Risk-Climate No. of diesel operated fleet 15 X
Diesel-Powered Transport
Change No. of electric operated fleet X 17
XYZ Company has not Invest in XYZ Company 50 m X
adopted the ESG framework S-Climate Change Invest in XYZ Company X 50 m

c) Risk Management: Generally, it means a situation absence of industrial SOPs or DRAP SOPs are signifi-
where actual results are not in accordance with cant. Lack of access to basic needs such as clean
expectations or planning; in sustainability reporting, water, healthcare, education, and housing, popula-
it refers to the process of identifying risk factors that tion growth and rapid urbanization creating
make a universal or tailor-made ecosystem pressure on shared resources, and migration,
unsustainable. Industrial, agriculture, and household displacement, and loss of cultural heritage due to
waste in the form of GHG, liquid, and solid waste natural havoc, riots, or chaotic situations are also
damage the natural ecosystem and lead to adverse important social risk factors.
climate changes, resulting in heavy rains, cloud
Metric & Targets:
bursts, drought, global warming, thunder storms,
earthquake, and rising sea level etc., which pose LTIFR = Lost Time Injury Frequency Rate &
significant risks to the three Ps namely Planet, SMART = Smart, measurable, achievable,
People, and Profit (Business). Similarly, for example, relevant & Time-bound.
drought or flood hamper agricultural output and • Economic and Financial Risk: These include supply
seriously affect the value of supply chain, which
chain disruptions caused by natural havoc such as
represents a man-made tailored system. There are floods, earthquakes, and pandemics, rising
four major sustainability related risk factors affecting operational costs from sustainability regulations for
the three Ps, including Environmental, Social, example, carbon taxes, and rising overall costs if
Governance, and Economic along with financial, as a
unsustainability prevails due to reduced production
company is bound to report the measures adopted
in future plans through clearly defined metrics and or sales volume. Market volatility from ESG
noncompliance, use of fossil fuels and outdated
targets to reduce or eliminate these risk factors, as
they pose serious threats to sustainable operations, technology where new technology may displace
products made with old technology, and resource
financial viability, and legal exposure; therefore, this
discussion focuses on two of the four risks namely price fluctuations including oil, gas, food, and
minerals are additional economic and financial risks.
Social Risk and Economic & Financial Risk along with
their respective metrics and targets. • Metrics and Targets: Metrics and targets are
• Social Risk: Social risks include child labour, forced presented at the end of all risk and opportunity
labour, and bonded labour at kilns or other manufac- related factors. A metric is a unit used to measure a
turing or business concerns. Unsafe working condi- factor or variable, mostly to quantify changes
tions such as building issues, environmental prob- compared with the preceding year or defined target.
lems, or outsider intervention and human rights For example, tCO2e measures greenhouse gas
violations as defined under labour laws are key emissions, employee turnover in percentage,
concerns. Community conflicts over land and liquidity in ratios, amount in Rupees, and number of
resources including ethnic, sectarian, or racial riots, accidents and riots in absolute numbers. Targets are
income inequality and discrimination between those linked to a specific time period, mostly a financial
who have and those who do not, and health and year, to observe whether changes are positive or
safety risks for workers and local communities due to otherwise for further decision making.

52 ICMA’s Chartered Management Accountant, Nov-Dec 2025