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Auditors Warn Policy Rollbacks Increase Climate and Nature Risks for Businesses

WHAT'S THE STORY?

What's Happening?

A survey conducted by the Chartered Institute of Internal Auditors reveals that recent policy changes are exposing businesses to heightened climate and nature risks. The survey, which included 900 senior-level experts across Europe, highlights concerns about compliance with altered laws and regulations following major elections in 2024. More than 43% of auditors believe that global policy changes related to macroeconomic and geopolitical uncertainty could amplify environmental risks. Factors such as tariffs on clean energy components, consumer reluctance to invest in low-carbon technologies, and reduced funding for environmental monitoring are undermining efforts to manage these risks.
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Why It's Important?

The rollback of environmental policies poses significant challenges for businesses, potentially increasing operational costs and compliance risks. As governments redirect investments from sustainable development to defense and AI, businesses may face increased scrutiny and pressure to adapt to changing regulations. The shift in consumer behavior, including boycotts of US-based brands, further complicates the business landscape. Companies must navigate these challenges to maintain competitiveness and ensure long-term sustainability.

What's Next?

The Chartered Institute of Internal Auditors plans to publish a full report on its survey findings in September, which may provide further insights into the evolving risk landscape. Businesses are urged to collaborate with internal audit teams to strengthen risk management frameworks and ensure agility in response to policy changes. The development of new methodologies for assessing interconnected risks, as proposed by the Accelerator for Systemic Risk Assessment, could offer valuable tools for businesses to manage complex challenges.

Beyond the Headlines

The interconnected nature of risks, such as extreme weather events and biodiversity loss, underscores the need for integrated approaches to risk management. Traditional methods may fall short in addressing cascading failures across systems, highlighting the importance of systemic risk assessment in ensuring resilience.

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