Breaking the Silos: Aligning ESG Risks into GRC and ERM Systems
June 19, 2025
In today’s fast-evolving business landscape, sustainability is no longer just about annual reports or CSR initiatives. Environmental, Social, and Governance (ESG) risks are now strategic, financially material, and tightly linked to an organization’s long-term resilience. Yet, in many companies, ESG remains disconnected from two core functions built to manage risk: Governance, Risk, and Compliance (GRC)andEnterprise Risk Management (ERM).
In this blog article, we’ll uncover how to integrate ESG into these systems to better manage enterprise risks and opportunities. Our information is largely sourced from our webinar conversation with Dr. Andrea Bonime-Blanc (founder and CEO of GEC Risk Advisory) a specialist in the governance of change including strategic risk, geopolitics, sustainability, and exponential tech.
The Problem: ESG Still Operates in a Silo
Despite growing awareness, ESG and sustainability teams often function independently of GRC and ERM. This fragmentation leads to:
Duplicated efforts and unclear ownership
Inconsistent risk language and frameworks
Gaps in reporting, oversight, and decision-making
Sustainability leaders focus on disclosures and environmental performance, while GRC teams center on compliance and internal controls. ERM, meanwhile, is tasked with identifying and managing strategic business risks—but may overlook ESG due to structural blind spots or lack of integration.
As a result, organizations miss out on the full picture and may fail to respond effectively to emerging risks such as climate change, biodiversity loss, labor rights issues, and regulatory shifts.
Why It Matters: From Disclosure to Strategy
The role of sustainability is rapidly evolving. It’s moving beyond reporting toward managing real business risks and opportunities. ESG issues are now widely recognized as financially material.
Regulatory pressure is mounting too. Regulations like the EU’s CSRD, along with global frameworks such as the ISSB, TCFD, and TNFD, are pushing companies to report on ESG risks with increasing rigor on par with financial data. The CSRD, in particular, emphasizes double materiality: both what impacts the business and what impact the business has on the world.
Ignoring ESG in your GRC or ERM systems isn’t just outdated, it’s risky.
Bridging the Gap: Embedding ESG into Risk and Compliance
True integration means embedding ESG risks into the same systems used to manage enterprise-wide risks and compliance. Here's how it can work:
Strategic Governance: Boards and executive teams must recognize ESG as a core business issue. This includes integrating ESG KPIs into board-level oversight, particularly within audit and risk committees.
Unified Risk Frameworks: Map overlapping risks across sustainability, GRC, and ERM. Use common language and shared risk registers. This reduces duplication and allows for smarter, more proactive risk management.
Collaborative Culture: Encourage risk, compliance, and sustainability teams to break out of their silos. Cross-functional risk committees or joint task forces can foster shared ownership and integrated planning.
Practical Steps to Get Started
Consider the following strategic actions to integrate ESG into enterprise risk and compliance frameworks:
Educate Leadership
Train boards and senior executives to understand ESG risks as strategic priorities, not side issues. Establish the “right tone from the top.”
Build Internal Awareness
Engage risk, compliance, and sustainability teams early. Create cross-functional dialogue and promote shared understanding.
Map ESG Risks
Identify where ESG risks intersect with existing risk categories—whether it's climate-related supply chain disruption or regulatory non-compliance.
Update the Risk Register
Ensure ESG risks are formally included in enterprise risk frameworks and reporting systems.
Share Accountability
Assign joint ownership of ESG risks across functions. Consider performance incentives for ESG risk management at the executive level.
Align Reporting and Controls
Embed ESG into internal controls, audits, and compliance systems to ensure consistency and accountability.
Adopt Unified Materiality Assessments
Use shared frameworks to assess which ESG issues matter most, based on impact and likelihood.
Use Technology to Scale
Leverage tools that monitor ESG and enterprise risks in an integrated, real-time manner.
Looking Ahead
Breaking the silos between sustainability, GRC, and ERM isn’t just about operational efficiency—it’s about strategic improvements. ESG risks are business risks. And in a world shaped by climate volatility, social disruption, and shifting regulation, organizations that integrate ESG into their risk and compliance systems will be more prepared, more resilient, and more competitive.
The future of risk management is sustainable, and it's time to lead the change.
