In our last piece, we argued that ESG isn’t morality, it’s risk intelligence.

Now, let’s look deeper into the first letter: the “E.”

Because every company, no matter how digital, financial, or futuristic, still depends on physical systems: air, water, energy, materials, logistics. When those systems shake, so does your business.

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The risk no one owns

Most companies don’t have a Chief Environmental Risk Officer. But they all live with the consequences of not having one.

When a factory shuts down because of a drought, when energy prices spike during a heatwave, or when regulators ban a key raw material, that’s not a climate issue, it’s a cash flow issue.

Environmental risks aren’t “green” risks. They’re operational, financial, and existential.

And they’re showing up everywhere.

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The six faces of environmental risk

At Planicorn, we look at environmental risk as a system.
Here are the six major exposure points that decide whether your business can still operate tomorrow.

1. Natural Resource Usage Risks

Every product starts with a resource. Some are scarce. Some are politically sensitive. Some are losing social license to operate.

When you rely on something that’s drying up, taxed, or banned, you’re not sustainable, you’re fragile.

The risk:

• Higher input costs
• Lower sales as consumer behaviour shifts
• Potential loss of your operational base

If you make yogurt, you care about water.
If you make batteries, you care about lithium.
If you run AI servers, you care about power and cooling.

Every model depends on a resource. The question is whether you’ve mapped it.

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2. Climate and Nature Risks

These split in two:

• Physical risks that include floods, droughts, fires, storms, rising temperatures.
• Transition risks that include policy, taxation, and behavioral shifts that come as the world reacts.

Physical damage hits your operations. Whilst, transition pressure hits your business model. Both hit your P&L.

Companies that plan for both survive.

Those that don’t are learning the hard way that resilience costs less than recovery.

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3. Environmental Innovation (or the Lack of It)

Not innovating has become its own form of risk.

Failing to decarbonize your value chain, digitize your footprint, or reimagine waste flows doesn’t just mean falling behind. It means becoming incompatible with future markets.

Green transition isn’t optional.... it’s a moving deadline.

Those who treat sustainability as an R&D problem win the market before regulation even catches up.

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4. Supply Chain Footprint Risks

Your biggest environmental risks often live outside your company; in the factories and fields you source from.

One supplier with poor waste management, illegal deforestation, or energy instability can expose your brand and halt production overnight.

You can’t outsource accountability anymore.

Your supply chain’s footprint is now your own; legally, reputationally, and financially.

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5. Process Footprint Risks

Inside your walls, your processes are the one place you have full leverage.
Weak KPIs, GHG emissions, waste, biodiversity impact, now translate into real costs: carbon pricing, investor scrutiny, loss of contracts.

Every inefficiency now has an environmental multiplier.

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6. Product and Service Footprint Risks

Once your product leaves your hands, the risk moves downstream.
If it consumes too much energy, can’t be recycled, or fails future standards, you’ll be paying for it twice: first in design, then in take-back costs.

Circular design isn’t a marketing angle; it’s insurance for product longevity.

Sustainability here isn’t idealism...it’s customer retention.

The reason these risks matter isn’t that they exist separately....it’s that they interact.‍

A drought cuts raw materials.

That slows production.
That frustrates clients.
That hurts revenue.

A heatwave strains the grid.

That disrupts your data centre.
That interrupts your platform.
That erodes trust.

Every environmental event sets off a chain reaction, the kind that ESG data helps you see before it happens.

Ignoring that isn’t just negligence. It’s blindness.

For investors, environmental risk equals volatility.

One physical or regulatory event can ripple through a portfolio, altering valuations across entire sectors.

That’s why forward-thinking funds are now stress-testing holdings not only for market shifts, but for climate and resource dependencies.

Because the next decade’s outperformance won’t come from guessing returns, it’ll come from minimizing surprises.

The companies that thrive will be those that see environmental risks not as ESG boxes

But as business design principles.

Resilient companies are rethinking what they source, how they operate, and what they sell, all through the lens of system dependency.

Because the environment isn’t an externality.
It’s the platform you’re building on.
And if it collapses, everything built on top goes with it.

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At Planicorn

We help funds and companies turn ESG data into decision tools, connecting environmental, operational, and financial insights into one view of risk.
Because survival isn’t about predicting the next crisis. It’s about understanding the system that makes it inevitable.