By: Jim Pelletier, Senior Product Manager at Wolters Kluwer TeamMate

In today’s corporate landscape, the notion of sustainability has evolved from being merely a buzzword to a critical component of business strategy. With increasing pressure from investors, employees, consumers, and regulators to address environmental, social, and governance (ESG) issues, companies are embracing a new role: the ESG Controller.

The Role of the ESG Controller

The ESG Controller serves as a linchpin between a company’s financial performance and its broader impact on society and the environment. Unlike the traditional financial controller role focused solely on financial metrics, the ESG Controller extends to non-financial factors that can significantly influence a company’s long-term viability and reputation.

One of the primary responsibilities of the ESG Controller is to integrate and embed ESG considerations into the company’s overall strategy and operations. By aligning business objectives with sustainable practices, the ESG Controller can help drive innovation and resilience across the organization.

The ESG Controller coordinates the collection, analysis, reporting, and assurance of ESG data. This entails identifying key performance indicators (KPIs) related to environmental impact, social responsibility, and corporate governance, and tracking progress over time. This is a critical responsibility as it enables and drives the development of accurate and transparent ESG disclosures, enabling stakeholders to make informed decisions about the company’s environmental and social performance.

By taking a proactive approach to awareness, understanding and assessment of evolving ESG regulations and standards, the ESG Controller plays a crucial role in risk management and compliance. While ensuring that the company remains compliant with legal requirements and industry best practices is vital, this also unlocks the opportunity to enhance the company’s reputation as a responsible corporate citizen by ensuring ESG claims are backed up by data, processes, and controls that have been subject to a sufficient level of assurance.

Integrating ESG Risks into GRC Practices

In addition to their role in overseeing ESG initiatives, the ESG Controller should ensure that ESG-related risks are incorporated into the organization’s broader Governance, Risk, and Compliance (GRC) practices. This involves several key steps:

• Identification of ESG Risks: The ESG Controller should collaborate with risk management teams to identify and assess ESG-related risks that could impact the organization’s operations, reputation, or financial performance. These risks may include supporting ESG claims (avoiding greenwashing), supply chain disruptions, regulatory changes, and human rights violations.
• Incorporation into Risk Assessment Processes: ESG risks should be integrated into the organization’s risk assessment processes, alongside traditional financial and operational risks. This ensures that decision-makers have a more complete picture of the risks facing the company.
• Development of Mitigation Strategies: The ESG Controller should work with cross-functional teams to develop mitigation strategies for addressing identified ESG risks. This may involve implementing policies and procedures, enhancing corporate governance structures, and nurturing relationships with various stakeholder groups.
• Monitoring and Reporting: The ESG Controller should coordinate the monitoring of ESG-related risks on an ongoing basis and report key findings to senior management and the board. This could include tracking relevant ESG metrics, assessing the effectiveness of mitigation efforts, and identifying emerging risks and opportunities.

By integrating ESG risks into the organization’s broader GRC practices, the ESG Controller helps to integrate sustainability considerations into decision-making processes better equipping the organization to navigate the complex and rapidly evolving landscape of ESG-related risks.

The Importance of the ESG Controller

In today’s interconnected world, businesses are increasingly recognizing the critical relationships between financial performance and ESG factors making the role of the ESG Controller central to an organization’s sustainability goals.

The ESG Controller can serve as a catalyst for innovation and value creation. By integrating ESG considerations into decision-making processes, they can encourage a culture of continuous improvement and responsible stewardship. This can lead to cost savings through resource efficiency, access to new markets through sustainable products and services, and enhanced brand reputation through authentic corporate citizenship.

The ESG Controller can play an important role in investor relations and stakeholder engagement. As investors increasingly incorporate ESG criteria into their investment decisions, companies that demonstrate strong ESG performance are more likely to attract capital and outperform their peers. By providing transparent ESG disclosures and engaging with investors on sustainability issues, the ESG Controller helps build trust and credibility with the investment community.

The rise of the ESG Controller reflects a fundamental shift in the way companies approach sustainability and corporate responsibility. By integrating ESG considerations into their strategy, operations, assurance activities, and reporting, companies can not only mitigate risks and enhance resilience but also unlock new innovation opportunities for growth and value creation. This approach represents more than just consumption reduction and enables strategic insights to inform companies’ policies and practices focused on driving business value in addition to reaching sustainability goals. In today’s interconnected world, the ESG Controller is not just a role but a strategic imperative for sustainable success.

About the Author

Jim Pelletier is Senior Product Manager at Wolters Kluwer TeamMate. Jim has over 20 years of internal auditing experience in both the public and private sectors. Wolters Kluwer TeamMate is part of Wolters Kluwer’s Corporate Performance & ESG (CP & ESG) division, headed by CEO Karen Abramson. The division is the world’s leading provider of integrated software solutions for EHS, Environmental, Social, and Governance (ESG), and Governance, Risk and Compliance (GRC). Through innovative technology and unique expertise, Wolters Kluwer CP & ESG enables business leaders to make informed, strategic decisions driving transformation, performance and risk management for a sustainable and resilient world.