In today’s modern environment, there is a greater understanding that it is the stakeholders who would eventually determine the value of the company, and not the shareholders. Stakeholders would want to know how the organization is affecting the environment, how it treats its clients, employees and communities, and if the firm is conducting its business ethically. These environmental, socioeconomic and governance variables, which are likely to affect its financial situation or operating performance, are collectively referred to as ESG risks, concerns or issues. Since not all ESG issues affects firms in the same way, each individual organization needs to identify, manage and mitigate the ESG risks which are peculiar to its situation.

The lecture covered basic ESC concepts, ESG scores & ratings and why firms need ESG risk management. An ESG program is a form of risk management as it encompasses the examination of the firm's environmental, social and governance practice, the impact of these on the company, as well as benchmarking its progress.

ESG risks need to be taken into account regardless of the size of business and the varying levels of scrutiny they are subjected to by their various stakeholders. Businesses need to address ESG no matter the nature of the business. Any company which neglects ESG issues is at increased risk of experiencing ESG-related incidents or controversy that could affect its value and reputation.