EP 46: From ESG to Risk Intelligence

Ella Williamson: Welcome to Sustainable Intelligence, where we discuss all things sustainability for the private markets. Today we’re joined by Christina Anselm, a manager on Novata’s advisory team, where she works closely with the firm’s largest banking clients on ESG strategy, and is part of the team building out Novata’s very exciting risk intelligence module.

Her work focuses on turning complex sustainability and climate topics into really practical data-driven insights, helping both investors and banks understand what risks matter, why they matter, and how to really act on them. And that brings us to today’s topic: risk. We all know that for a long time, sustainability has largely been framed through the lens of compliance, meeting disclosure requirements, publishing reports, and keeping up with new regulations.

But today, in 2026, we’re seeing a real shift. Regulatory momentum is changing. Reporting requirements are being rolled back in some regions, and many teams are asking a bigger question, “If sustainability isn’t about compliance anymore, what is it really about?”

So Christina, I think that’s a really brilliant starting point for today’s episode. For years, compliance has been driving the sustainability agenda, why is that no longer enough?

Christina Anselm: Yes, that’s an excellent question. So the last years in sustainability were heavily influenced by the momentum of the Paris Agreement. And so like many countries have implemented laws to enhance transparency simply to also make sure that there’s more data that is being reported across the entire economy. And so new regulations came up and new legal requirements came up for companies, for banks, for investors. And Europe was very much leading the way and then other jurisdictions followed. But recently we’ve noticed a general sentiment shift, mostly also driven from populism that we experience across various countries worldwide. And so in the European Union, for example, we had the Omnibus that kind of led to a lot of restructuring in the regulations to a lot of like reduction in bureaucracy and a lot of the things that we saw in the last couple of years being built up were all of a sudden being cut back again. And we’ve also seen this in other countries where there’s now a lot less reporting obligations.

But the issue is that without less reporting, the underlying issue actually is not being solved of actually needing transparency to understand what’s going on from a sustainability perspective. And that’s the reason why you still need to understand what’s going on, on a non-financial risk perspective to really have a good understanding of what’s happening for your company.

For example, if you’re an investor within your portfolio or if you’re a bank within your loan books, for example.

Ella: Absolutely, and it’s definitely been a cycle. We’ve seen more reporting followed by less reporting, and that really opens this question of what is risk about today?  So to you what does it actually mean and include?

Christina: Yes, very good question. So previously the focus was very much on financial risks. So it was very much focused on liquidity. What about interest rates? What about foreign exchange rates? What about credit risk scores? And now this sort of shifted to a more holistic approach where non-financial aspects can also be translated into financial risks. Let me give you an example. For example, if you’re a food manufacturer you might have a high exposure to climate risks because there’s more frequent flooding or there’s more frequent droughts, which then also like lead to business interruptions or even like cost impacts, because all of a sudden it just makes less economic sense to grow certain crops, for example. And this awareness about non-financial risks being also financial risks really came from Mark Carney, who was in 2015, the Governor of the Bank of England that talked about ‘the tragedy of the horizon,’ because financial risks are usually in thought of risks in very short cycles, for example, quarters or years. But when we talk about climate change, the laws of physics don’t really work like that. And then we have to look at things in a more long-term perspective, which is ignored in financial accounting still. And so looking at risks today really comes down to can we actually bridge this gap between the traditional financial risks, which are very much short term, but then also translate the new non-financial risks that are there today into actual financial risks.

Ella: I love the framing there. It’s bridging that gap, but also shifting your thinking from a very short term lens to that longer term lens. Where will your business be in two to three years if you don’t take account of these things? Now, all of this stems from data. If companies don’t have the data, how will they start to tie non-financial risks to financial risks in a business?

And a lot of the data that the companies do have, if they have any, isn’t perfect. How would you encourage teams to think about decision making when they may not have the full picture today?

Christina: So I think this is a very important question to ask. So we’ve noticed among clients, but also in the market, there is this striving for perfection. But the problem is that this is inhibiting teams to actually get started. Because if we’re in an imperfect world, we’ll never have perfect data. And so teams currently feel overwhelmed or unsure to what even, what to do essentially, and how to move forward. And what we are trying to encourage anyone that we are working with is to just get started. Start somewhere, start simple. And really realize that you can already do a lot of things and leverage the data that you already have in your databases to actually get to a point where you get a lot more information to make decisions on your own. For example, data that you currently have can be connected with publicly available databases or even recent developments in AI really make data collection easier today. And so you can also, like, fill certain gaps that you might have. And we really believe that starting is the first important step. And you can think of it like running a marathon. You don’t start your first training session with the 42 kilometers, but you start incrementally and then you can also improve over time. And that’s the same thing that you would do with building up the data for your company so that you can improve the data quality over time.

Ella: And if you do start smaller, simpler, you’ll actually learn new ways of working, more efficient ways of working on the way, which will hopefully get you to a better endpoint. Now, you’ve been building this risk intelligence tool since the beginning. How would you say you think and frame risk differently to those traditional risk tools that are out there in the market today?

Christina: Yeah, absolutely. So what we have seen is that even a couple of years into Novata’s work, we still see that risk assessment is often still guesswork. And so this is coming back to what we have just discussed also on finding perfect data first, which inhibits teams to move forward. And so what we want to do in our risk work is going with four guiding principles essentially. The first one being we want to make it as simple as possible. We know that sustainability can be complex and we also want to make sure that the data you already have can be used and leveraged.

The second one is that we want to look at risks holistically, and I think this is something that we haven’t really noticed anywhere in the market. Because in the market, a lot of times risks are tackled in silos. So you have your financial risks and you have your cyber risks, and you have your climate risks. But we think of them holistically. So, for example, if you build a house that is highly energy efficient, which is great for reducing carbon emissions and making sure that we are moving towards a low carbon economy, but if you’re building that in an area that is highly affected by floods or wildfires, that might not be that wise. And so you need to think of it holistically, and that’s the reason why we have that as one of our guiding principles.

The third one is really about transparency. We do understand that anyone who’s been working with us really needs this traceability and transparency about where data comes from and what it does and how everything is calculated. So this is something that we have included in how we built our risk intelligence module.

And then, the last point is that we also understand that different users might have different needs when it comes to risk assessments. And so we do have the option to go broad in scope, which means we do cover currently various risk categories in our module, but we can also go deeper.

If you have one risk category that’s particularly important for you, we have the option to give you more granular insights in a specific category, for example. 

Ella: That analogy really resonated with me in terms of a very energy efficient house built on a floodplain.  And I think that’s a really good way for businesses to think about, although it’s important to start small and start specific to their industry, it is also important to think about what is really gonna move the needle for your business in a more holistic way.

In your role at Novata, you work day in, day out with investors, and we know that from that work, that risk visibility across investors portfolio is becoming more important, especially in due diligence. Can you talk us through why that is and what trends you’re seeing in the market?

Christina: So I think the most important aspect about risk is to understand that they’re there, whether you look at them or not. And in the complex world that we’re living in, there are so many parts to consider. And so it really is important that you stay ahead and really be aware of what risks are there, what risks could eventually materialize so that you have the option to engage with your portfolio companies, but also think about mitigating actions that you can actually take.

And so when we talk with investors, we hear a lot that they really want to understand risks. For example, in the process of whether they would want to invest in a company or not. So it’s like part of pre-investment screening. It can also be part of the overall due diligence that you would want to do on a portfolio company. And then we’ve also heard from a lot of investors that they would like to do ongoing monitoring of the companies that they have in their portfolio so that they have a better understanding of what’s going on, what risks might be there, if those risks are changing, and then you do have the option to react early if something changes.

Ella: Brilliant, and building on your point from the previous question, we live in an imperfect world where you may not always have access to perfect data, but there are risks day in, day out that will impact your business.

Now, in our previous conversations when we were prepping for this podcast, you talked about thinking of risks in levels or categories. It’d be really interesting if you could explain that and why that framing is so helpful for the market.

Christina: So as I’ve said before, we do have the option to tailor to the specific needs of users, which means we can go broad in scope in terms of categories. We’re currently covering cybersecurity risks, geopolitical risk, reputational risk, but also the climate ones on transition and physical risks. So this is like how we think of categories.

And then we also think of levels where it really is about coming back to the point of just getting started. And we know it can be scary, but we really believe that starting somewhere is the most important step that you can take today. And then you can gradually improve upon that. And our level approach is what allows you to maybe start with very basic assessments first, and then you understand, ooh, this is actually quite interesting what I see here. Maybe it actually is worth exploring the specific category a little bit more deeper and then you gain deeper insights on that. And that’s how we think of categories and levels as a matrix and this is the flexibility we want to give to users so that we can help anyone get started. And we would say like, we pick you up at the place where you’re currently at, and then we make sure that we get you to the places that you want to go and get the insights that you want to have over time. Also according to your risk appetite, for example.

Ella: I think that’s such an important point. How do you see the link between sustainability and risk, and why is it so important today, more than ever?

Christina: So I think this is exactly a question that you should be asking when you are dealing with sustainability. Because the entire field of sustainability emerged out of two perspectives. You can have positive impact because you’re doing something that is wonderful and great and good for the planet, good for the people. But you can also look at it from another perspective of what is actually going on in terms of risks and the changing world that we’re living in today. And those risks a lot of times translated from things like climate change, from biodiversity loss, but also from severe social issues that we are facing on this planet.

And so understanding the risk perspective makes you understand as a company to see what is the link to where you can take specific actions that make sure that your business is future proof. Because if you do not understand the risks that you’re dealing with, it’s gonna be very hard to work out a business model that is sustainable over a longer period of time without depleting resources on the planet. But also without having any social conflicts that you might be causing or contributing to. And, in addition to the classic ESG realm, we also look at things like the changing world in terms of geopolitical aspects or also in terms of cybersecurity aspects.

And these are just components that add on top of the things that are anyways already complex in sustainability.

Understanding where your risks are allows you to really take action where it really is needed so that you can get to a point where your business is just a lot more prepared for a sustainable future.

Ella: I completely agree with all of that, and I think with the shifting political and regulatory landscape that we touched upon earlier, right now is the time to get started. And how would you encourage firms to think about getting started with risk education and why should they get started now and make it a priority?

Christina: So, I do think that it really comes back to the point that I’ve made a couple of times already, nobody should be afraid of just getting started. We know it can be messy. We know it is complex because there are so many categories of risks to look at. So many aspects of risks to look at. But you will be amazed how far you can actually come with the data that you already have today. And I think it’s also true that getting started and getting from zero to one is harder than getting from one to a hundred. This is why we’ve developed a solution the way we have set it up in terms of trying to make sure that we start from a very basic level to get first insights and then gradually improve over time because we don’t want to overwhelm anyone. We want to encourage our clients to get started on it, to get the insights that might have not been there before. And then build on that over time.

And yes, there’s always gonna be room for improvement, but it’s really important that we understand that perfection shouldn’t be the enemy of the good. And yeah, I would say this is encouraging everyone to really get started is the step number one that you need to do. And then understanding in what direction you can go comes with time.

Ella: Brilliant. Thank you so much for that, Christina. Now we always end these episodes on three quick fire questions. No right or wrong answers. What has changed most in how you personally think about risk now and over the past few years?

Christina: I’ve been working in this industry for I think seven years now, and I’ve seen the ups and downs in this industry. And one thing that I have been quite aware about from the beginning is that perfect data just isn’t the end goal of it, but it’s the outcomes that really matter.

And if you think about risk management, it’s really about getting started with a practical framework, focus on what’s really material and then build from there. And that’s also why when I started out, I was very much focused on the TCFD framework, which is quite simple and it has been used as the foundation for a lot of the regulations and legal requirements that we have seen.

And also like frameworks like the ISSB that have developed afterwards because they’re simple, they’re decision oriented, and I think this is why they have survived over time as well.

Ella: And is there one risk category that investors consistently seem to underestimate?

Christina: Ooh. I love that question. And I think this comes to a lot of the work that I’ve done last year where I’ve looked into various risk categories, and one of them is cyber. And I want to point out why I think cybersecurity risks are sometimes a little bit underestimated. 

So we live in a very digital world these days, and there is new developments popping out left and right every single day, and it’s hard to keep up. And our digital footprint is just huge. And it can be borderline scary when you realize what is actually possible to find out about yourself as an individual person with just, for example, one leaked password. And one of the things that I have seen last year is that with just one leaked password, you can actually link back to a lot of your digital footprint, which was so scary that I would encourage everyone to like change passwords often. Don’t use them repeatedly, but if you think about from just like this individual experience that I’ve had, it just means that there’s so much more to think about from a company perspective. Because you obviously have a lot of employees, individuals within your company. And so I think cybersecurity is definitely something that might be underestimated and can be quite insightful what you can find out there.

Ella: And you are clearly an expert in this space, what are you most excited for in 2026 about the risk landscape and the space in general?

Christina: I would actually say it’s probably the application of AI. So we have seen so many rapid developments over the last couple of years and I’m just continuously amazed in how AI can actually help us to make sure we better understand risks in general. So one of the use cases that, for example, we are using it for is data collection and filling data gaps.

And this is something that would not have been possible a couple of years ago. And now it actually allows us to fill data gaps, to combine information that can be found in various databases online, or understand what kind of news coverage there is out there about a company. And so I think with developments that we have already seen, it’s gonna be very exciting what further developments we’re gonna see in 2026. And we’re obviously always excited to try new technologies and also incorporate them into our product offerings.

Ella: I’m very excited to see this application evolve this year with AI and with other learnings that we have from the market. Christina, thank you so much for all of your insights today.

I think the things that really have stuck with me is that this is a journey from financial data and translating that to the non-financial implications and it’s how we use this risk analysis and intelligence to bridge that gap.

Shifting your thinking from short term to long term that definitely has resonated with me and how companies should think about risk. I loved your analogy of the house on a floodplain. I know I’ve already said that, but I think that’s a really good way to think about risk holistically and not just focus on one category and think about it in silos. 

And finally, we all know we live in a slightly imperfect world, which is fine. Risks exist day in, day out, personally, for your company, and it’s all about just getting started and therefore staying ahead. So thank you so much. Until next time, let’s keep building sustainable intelligence together. Find out more at novata.com.