Integrate nature risks into enterprise risk management

Integrate nature risks into enterprise risk management

Applied by
SCGSCG

Summary

Applied TNFD LEAP across 52 sites to identify and prioritize nature-related risks and integrate them into enterprise risk management and future planning.

Key resources

Context

Siam Cement Group (SCG) is one of Thailand's largest industrial conglomerates with operations across cement and construction materials, chemicals, packaging, building products, and mining and forestry in the value chain (1). Its operations depend on water, land, and ecosystems. Shifting rainfall, biodiversity loss, and extreme weather highlighted the need for a more systematic assessment of nature-related dependencies, impacts, risks and opportunities (DIROs) alongside existing sustainability and risk-management processes. (1)

Alignment with global standards, such as the Kunming-Montreal Global Biodiversity Framework (GBF), and growing demand for nature-related transparency also increased the need for credible disclosure of nature-related dependencies, impacts, risks and opportunities. Customers, suppliers, investors and other stakeholders increasingly requested nature-related disclosures that clearly explain how these issues are identified, assessed and managed (1).

Location of the initiative: The assessment covered 52 sites across company's operations and value-chain activities in Thailand, Lao PDR, Indonesia and the Philippines, with priority sites identified for further attention in those countries. (1)

Solution

Through the Nature Reporting Preparer Forum (NRPF), programme convened by WBCSD and funded by Germany's International Climate Initiative (IKI), the company applied the Taskforce on Nature-related Financial Disclosures (TNFD) framework across five main business units. The assessment combined site screening, analysis of nature-related dependencies and impacts, specialist validation, and integration with existing risk-management processes. It covered direct operations and selected value-chain sites across four countries and informed the company’s nature-related risk priorities, disclosure, and SCG Nature Roadmap (1).

Figure 1: TNFD LEAP approach used to identify, assess and prepare for nature-related risks and opportunities.

TNFD LEAP approach used to identify, assess and prepare for nature-related risks and opportunities

Impact

Sustainability impact

Climate

The exercise complements the company's existing climate adaptation planning, including water-related assessments, and helps to connect nature-related risk management with climate-relevant topics such as water resilience

Nature

The nature assessment covered 52 sites across the company’s five business units, comprising of:

  • • 38 direct operation sites, representing approximately 60% of total revenue in 2024; and

  • • 14 value-chain sites, comprising 8 upstream and 6 downstream sites.

The assessment gave the company a structured basis to identify nature-related risks and opportunities and review how existing mitigation measures respond to them. It helped organize nature-related information into the company’s risk and impact management process and inform future action through the SCG Nature Roadmap (1).

The TNFD process also brought together existing nature-related initiatives and planning coverage that were relevant to the assessment, including 318,863 rai of terrestrial forests, mangrove forests and seagrass beds conserved and restored, 127,618 check dams constructed, and 100% coverage of both mine rehabilitation plans and biodiversity management plans for Thai limestone quarries (1). These figures should be understood as existing initiatives and management measures considered through the assessment, rather than outcomes created directly by the TNFD exercise. The assessment helped the company identify where such measures reduce residual risks and where further action or more location-specific targets may be needed (1).

The company also established a water taskforce to address persisting risks and is refining broad water targets into more location-specific targets, particularly in water-stressed areas. This enables the company to prioritize further action after considering the mitigation measures already in place and the residual risks identified through its assessments (1).

Social

The assessment improved visibility into locations where nature-related risks may affect local communities and potentially affected stakeholders, building on company's existing human rights due diligence processes (1). It also highlighted opportunities for the company to strengthen the community dimension of its nature-related initiatives, including educating communities and keeping them involved throughout the process, helping build awareness, participation and ownership of nature-positive actions. The TNFD exercise has therefore helped connect nature-related risk management with broader efforts to strengthen relationships with communities and maintain social license to operate (1).

Business impact

Benefits

  • Enhanced risk awareness beyond initial expectations across five business units and 14 industry categories (1).

  • Provided a structured basis to review, refine and strengthen existing mitigation actions (1).

  • Embedded nature-related risks into the enterprise risk universe and the company’s medium-term plan, with assigned risk owners, key risk indicators and Board-level oversight (1).

  • Established the foundation for a more robust, forward-looking SCG Nature Roadmap (1).

  • Leveraged the company's Nature Positive governance structure, including dedicated working mechanisms for water, biodiversity and air quality, to help translate assessment findings into coordinated action (1).

  • Created opportunities to strengthen community education and involvement in nature-positive actions, helping ensure communities are informed and engaged in the process (1).

  • Informed related business initiatives, including the development of new water projects (1).

Costs

The initiative required an internal analytical effort to conduct site screening, evaluate nature-related dependencies and impacts, validate findings, and integrate results into enterprise risk management processes (1). External biodiversity specialists were engaged to validate assessment outputs and strengthen the robustness of the assessment (1).

Implementation

Typical business profile

Relevant to large, diversified industrial groups with manufacturing operations, resource-intensive activities and complex upstream and downstream value chains that have material impacts and dependencies on nature; to sustainability and enterprise risk functions transitioning from climate-related (TCFD) reporting toward nature-inclusive (TNFD) disclosure; and to companies operating in ecologically sensitive geographies, particularly across ASEAN.

Approach

  1. Define scope: Select sites and business units by proximity to important natural habitats, environmental footprint and portfolio significance.

  2. Locate your impacts and dependencies: Run GIS analysis overlaying biodiversity, ecosystem-integrity and ecosystem-service indicator layers, with buffers set by activity type.

  3. Evaluate your data: Apply ENCORE across relevant industry categories mapped via ISIC, weighted by revenue contribution and validated by internal and external experts.

  4. Assess: Combine outputs with the WWF Biodiversity Risk Filter, TNFD sector guidance, existing TCFD and human rights due diligence work, and expert input.

  5. Prioritize and test risks: Test prioritized risks against the corporate risk matrix, scoring likelihood against potential impact before and after mitigation.

  6. Integrate findings into ERM: Integrate findings into the enterprise risk framework with assigned risk owners, key risk indicators, and Board-level oversight.

  7. Disclose and shape your future actions: Publish a TNFD-aligned disclosure and use gaps identified to shape a forward-looking nature roadmap.

Stakeholders involved

  • • Corporate Sustainability Office: Led and coordinated the TNFD/LEAP assessment across the company, developed the assessment approach, consolidated inputs from business units, and coordinated the review of nature-related risks and opportunities.

  • • Business-unit ESG teams: Provided site-level and business-specific information, supported the assessment of nature-related dependencies, impacts and risks, and validated findings against existing operations and mitigation measures.

  • • Risk Management and Finance teams: Worked with the sustainability teams to consider how prioritised nature-related risks could be connected with existing enterprise risk management and business planning processes.

  • • Management and governance bodies: The Sustainable Development Committee and Nature Positive Committee provided strategic direction and management oversight, while relevant working teams supported follow-up actions on priority nature-related topics.

  • • External biodiversity specialists: Provided technical expertise and independent challenges to support validation and interpretation of assessment results.

  • • Selected suppliers and customers: Provided relevant value-chain perspectives and information to support the assessment of selected upstream and downstream activities.

  • • WBCSD Nature Reporting Preparer Forum and TNFD: Provided methodological guidance, technical learning and peer exchange throughout the process. The Forum, convened by WBCSD and funded by Germany’s International Climate Initiative (IKI), also enabled the company to learn from and exchange practical experience with peer companies.

Key parameters to consider

  • Start with a smaller number of sites to pilot and learn from doing.

  • Plan early for staff time, analytical resources and data consolidation across business units. Participation in the Nature Reporting Preparer Forum (NRPF), convened by WBCSD and funded by Germany's International Climate Initiative (IKI), provided methodological guidance and peer exchange at no additional cost.

  • Build on existing enterprise risk, climate and human rights due diligence processes where available, rather than creating a parallel nature-only process.

Implementation and operations tips

  • • Build on existing risk management processes rather than creating a parallel nature-only process.

  • • Interpret tool outputs against site-level context and existing mitigation measures before prioritizing risks or disclosing results.

  • • Validate results with internal subject-matter experts and external biodiversity specialists before disclosing.

  • • Plan early for data consolidation, internal review and approval when working across multiple business units.

  • • Disclose risk levels before and after mitigation so external stakeholders can see the effect of controls already in place.

  • • Engage more people in early stages (internal trainings) to build capacity and understanding on nature.