ROLE OF RISK FUNCTION IN THE ESG JOURNEY OF INDIAN MANUFACTURING ORGANIZATIONS

This study endeavours to examine the role of the risk function in the Environment, Social, and Governance (ESG) journey of Indian manufacturing organizations, focusing on two key objectives: determining the significance of the risk function across various stages of the ESG process and assessing and comparing ESG performance of organizations with well-developed risk functions versus immature risk functions. A quantitative approach was utilized, drawing on survey data from 30 participants representing a diverse range of manufacturing organizations. The results show that 93% of respondents affirmed the pivotal role of the risk function, particularly in materiality assessment, and significantly in target-setting, reporting, and monitoring stages. A positive association was demonstrated by Kendall’s Tau-b correlation analysis between the maturity of risk functions and ESG performance, suggesting that organizations with well-developed risk management frameworks are more likely to consistently achieve their ESG objectives. The study employs convenience sampling, which may affect the applicability of the results, making this a primary limitation of the study. Additionally, the data predominantly reflect larger organizations, limiting insights into smaller firms and their ESG practices. Despite these limitations, however, the study makes a valuable contribution to the existing literature by providing empirical evidence of the importance of risk function maturity in driving ESG success. It highlights the critical role of a mature risk function in helping organizations consistently achieve their ESG goals. Future research should examine larger, more diverse samples across organizational sizes and analyse the association between risk maturity and ESG performance in both private and publicly listed companies. Furthermore, employing more advanced analytical methods could provide deeper insights into the intricate relationship between risk management practices and ESG outcomes.